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U.S.. DEPARTMENT OF ENERGY 

CLOTHES WASHERS WORKSHOP 

U.S. Department of Energy 

1000 Independence Avenue, S. W. 

Washington, D.C. 

Wednesday, 

March 11, 1998 

9:00 a.m. 

Attendees 

MR. THOMAS BEE 

Transformation Technologies, Inc. 

5608' Clermont Drive 

Alexandria, VA 22310-1310 

MR. PETER J. BIERMAYER 

Lawrence Berkeley Laboratory 

MS-90-4000 

1 Cyclotron Road 

Berkeley, CA 94720 

MS. LAUREN CASENTINI 

Pacific Gas & Electric 

Mail Code H28L 

P.O. Box 770000 

San Francisco, CA 94177 

MS. CHRISTINE EGAN 

Product Manager 

Consortium for Energy Efficiency 

1 State Street, Suite 1400 

Boston, MA 02109-3507 

MR. EUGENE C. FOLEY, JR. 

The Alliance to Save Energy 

1200 18Th Street, N.W., Suite 900 

Washington, DC 20036 

MR. DAVID B. GOLDSTEIN 

Natural Resources Defense Council 

71 Stevenson Street 

San Francisco, CA 94105 

OR/Gf f~AL 

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ATTENDEES: (Continued) 

MR. C. EDWARD BARBOUR 

Arthur D. Little, Inc. 

966 L'Enfant Plaza, S.W., Suite 8600 

Washington, DC 20024-2119 

MR. L. DAN BARZEL 

Senior National Buyer 

Circuit City Stores, Inc. 

9950 Maryland Drive 

Richmond, VA 23233-1464 

MR. DICK BEST 

Director, Environmental Programs 

Whirlpool Corporation 

701 Main Street MD 9015 

st. Joseph, MI 49085 

MR. DOUGLAS R. BROOKMAN (Facilitator) 

Brookman-King Collaborative Solutions 

5 Ingleside Avenue 

Baltimore, MD 21228 

MR. TOM ECKMAN 

Northwest Power Planning Council 

Suite 1100 

851 SW Sixth Avenue 

Portland, OR 97204-1348 

MR. BRADFORD W. FLORA 

Whirlpool Corporation 

2000 M-63 NORTH 

BENTON HARBOR, MI 49022 

MR. CHARLES R. FOSTER 

Manager, Marketing Codes & Standards 

Edison Electric Institute 

701 Pennsylvania Avenue, N.W. 

Washington, DC 20004-2696 

MR. LARRY HAWKINS 

General Electric Company 

Appliance Park, AP1-2NC-68 

Louisville, KY 40225 

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ATTENDEES: (Continued) 

DOUGLAS C. HORSTMAN 

Maytag 

1310 G Street, N.W. 

Suite 720 

Washington, DC 20005 

MR. EARL F. JONES, Senior Counsel 

Government & Industry Relations 

General Electric Company 

Appliance Park, AP1-310, Bldg. 2, Rm 225 

Louisville, KY 40225 

MR. ALAN F. KESSLER 

Vice President-Engineering & Quality 

Amana Appliances 

2800 220th Trail 

P.O. Box 8901 

Amana, IA 52204-0001 

MR. PHILIP J. MANTHEI 

Senior Mgr., Washer Engineering 

Raytheon Commercial Laundry 

Shepard Street, P.O. Box 990 

Ripon, WI 54971-0990 

MR. STEVE MARIANO 

Arthur D. Little, Inc. 

Acorn Park 

Cambridge, MA 02140-2390 

MR. WAYNE E. MORRIS 

Association of Home Appliance Manufacturers 

701 Pennsylvania Ave., N.W., Suite 900 

Washington, DC 20004 

MR. CURT RIECHMAN 

Whirlpool Corporation 

St. Joseph Technology Ctr., 303 Upton Drive 

St. Joseph, MI 49085-1175 

MR. STEVE ROSENSTOCK 

Edison Electric Institute 

701 Pennsylvania Ave., N.W., 5th Floor 

Washington, DC 20004-2696 

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ATTENDEES: (Continued) 

MR. JACK LINARD 

Unilever-HEP-USA 

Research & Development Center 

45 River Road 

Edgewater, NJ 07020 

MR. R. MICHAEL MARTIN 

California Energy Commission 

1516 Ninth Street 

Sacramento, CA 95814 

MR. JAMES E. McMAHON 

Lawrence Berkeley Laboratory 

Bldg .. 90, Room 4000 

University of California 

Berkeley, CA 94720 

MR. DAVE MODTLAND 

Frigidaire Company 

400 Des Moines Street 

Webster City, IA 50595-1499 

MR. STEVEN M. NADEL 

Deputy Director 

ACEEE 

1001 Connecticut Ave., N.W. 

Washington, DC 20036 

MR. MICHAEL C. RIVEST 

Arthur D. Little, Inc. 

955 L'Enfant Plaza, S. W., Suite 4200 

Washington, DC 20024-2119 

MR. CHARLES A. SAMUELS 

Government Relations Counsel 

Association of Home Appliance Manufacturers 

701 Pennsylvania Ave., N.W., Suite 900 

Washington, DC 20004 

MR. GLENN R. SCHLEEDE 

President 

Energy Market & Policy Analysis, Inc. 

P.O. Box 3875 

Reston, VA 20195-1875 

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ATTENDEES: (Continued) 

MR. CHARLES STEPHENS 

Oregon Department of Energy 

Policy & Planning Division 

625 Marion St., NE 

Salem, OR 97310 

MR. ALAN TARRANT 

Frigidaire Company 

400 Des Moines Street 

Webster City, IA 50595-1499 

MS. VALARIE WHELAN 

Natural Resources Canada 

580 Rue Booth 

18 Stage 

Ottawa, Ontario K1A DE4 

MR. RICHARD E. STILWELL 

Maytag Appliances 

403 West Fourth Street North 

Newton, IA 50208 

MR. TERRY THIELE 

Associate General Counsel 

White Consolidated Industries, Inc. 

11770 Berea Road 

Cleveland, OH 44111 

MR. MICHAEL WASSON 

Standards & Quality Assurance Manager 

Asko, Inc. 

1161 Executive Drive West 

Richardson, TX 75081 

MS. LINDA W. GREINER 

White Consolidated Industries 

1317 F Street, N.W., Suite 510 

Washington, DC 20004 

MR. ED C. KLECZKO 

Miele Appliances, Inc. 

22D Worlds Fair drive 

Somerset, NJ 08873 

MR. ERIC J. ESSMA 

The Chlorox Corporation 

Frederick, MD 21702 

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ATTENDEES: (Continued) 

MR. STEVE MEJEUR 

Whirlpool Corporation 

St. Joseph Technology Center 

303 Upton Drive, Mail Drop 0207 

St. Joseph, MI 49085-1175 

MR. MOHAMED IBRAHIM NOSSEIR 

Global Marketing Consultancy 

20 Mahmoud Hassan Street 

4th Quarter Heliopolis 

Cairo, EGYPT 

MS. AIMEE N. REIVER 

Kaiser Associates 

1595 Springhill Road 

Suite 700 

Vienna, VA 22182 

MR. DOUG RINGGER 

Maytag Corporation 

40E West Fourth Street North 

Newton, IA 50206 

MR. RICHARD E. SUBLER 

Maytag Corporation 

1310 G Street, N.W., Suite 702 

Washington, DC 20005 

MR. LEON B. TYNES, II 

Energetics 

7164 Columbia Gateway Drive 

Columbia, MD 21046 

MR. ROLAND G. WEINGARTNER 

Miele Appliances, Inc. 

22D Worlds Fair Drive 

Somerset, NJ 08873 

MR. CONSTANTIN VON WENTZEL 

Arthur D. Little 

Acorn Park 

Cambridge, MA 02140-2390 

MR. LAWRENCE R. WETHJE 

Air-Conditioning & Refrigeration Institute 

4301 North Fairfax Drive, Suite 425 

Arlington, VA 22203 

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AGENDA 

AGENDA ITEM: 

Introduction/Review Agenda 

Opening Remarks 

Overview of the Preliminary Clothes 

Washers Rulemaking Schedule and 

Analytical Framework 

Discussion of Preliminary Results and 

Analytical Methods and Tools Used in 

the Analysis 

Engineering Analysis/Data Collection 

Life-Cycle-Cost (LCC) 

National Energy Savings Forecasts 

Reverse Engineering 

Consumer Issues 

Adjournment 

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1 P R 0 C E E D I N G S 

2 9:10 a.m. 

3 MR. BROOKMAN: Good morning, everybody, and 

4 welcome. This is the Close Washer Workshop, and thank 

5 you for being here on time and allowing us to start 

6 just about on time. 

7 As is our custom, let's start off by having 

8 everybody introduce themselves. If I could start here 

9 on my left. 

10 MR. MARGOLIS: Eugene Margolis, Counsel for 

11 the Program. 

12 MR. BROOKMAN: And Gene, thanking for saying 

13 who you're affiliated with, what your organizational 

14 affiliation is. 

15 MR. ADAMS: Carl Adams, with the Office of 

16 Codes and Standards. 

17 Mr. McMAHON: Jim McMahon, Lawrence Berkeley 

18 National Lab. 

19 MR. BIERMAYER: Peter Biermayer, Lawrence 

20 Berkeley National Lab. 

21 

22 

MR. SAMUELS: Chuck Samuels, AHAM . 

MR. MORRIS: Wayne Morris, AHAM. 

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1 MR. MANTHEI: Bill Manthei, Raytheon 

2 Commercial Laundry. 

3 MR. KESSLER: Alan Kessler, Amana Appliances. 

4 MR. MODTLAND: Dave Modtland, Frigidaire Home 

5 Products. 

6 MR. RIVEST: Mike Rivest, Arthur D. Little. 

7 MR. HAWKINS: Larry Hawkins, General 

8 Electric. 

9 MR. JONES: Earl Jones, GE. 

10 MS. GREINER: Linda Greiner, Frigidaire. 

1 1 MR. STILWELL: Dick Stilwell, Maytag. 

12 MR. MARTIN: Michael Martin, California 

13 Energy Commission. 

14 MR. BEST: Dick Best, Whirlpool Corporation. 

15 MR. MORROW: Randy Morrow, Whirlpool 

16 Corporation. 

17 MR. WASSEN: Michael Wasson, Asko, 

18 Incorporated. 

19 

20 Office. 

21 

22 Energy. 

MR. STEVENS: Charlie Stevens, Oregon Energy 

MR. McCABE: Michael McCabe, Department of 

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1 MR. BERRINGER: Bryan Berringer, Department 

2 of Energy. 

3 MS. LAUGHLIN: Qonnie Laughlin, Office of 

4 Codes and Standards. 

5 MR. FOLEY: Gene Foley, the Alliance to Save 

6 Energy. 

7 MR. NADEL: Steve Nadel, American Council for 

8 an Energy Efficient Economy. 

9 MR. GOLDSTEIN: David Goldstein, NRDC. 

10 MR. ROSENSTOCK: Steve Rosenstock, Edison 

1 1 Electric Institute. 

12 MR. BROOKMAN: Thank you, very much. And I'd 

13 like to have everybody else introduce themselves. 

14 We have a limited amount of space in this 

15 room and that's why you see so many of you that can't 

16 make it around the table here today. 

17 So let's start with you, sir. Could you 

18 stand and say your name and who you represent? And I'm 

19 going to go right around the room like this. 

20 

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MR. LINARD: Jack Linard, Unilever HPC-USA. 

MR. BROOKMAN: Thank you. 

(Other audience introductions off mike.) 

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1 MR. BROOKMAN: Did everybody get a chance to 

2 introduce themselves? 

3 (No response.) 

4 I think so. 

5 Once again, thank you all for being here and 

6 allowing us to start on time. 

7 Brian is going to start off by just giving 

8 some general information about the workshop today. 

9 Then I'm going to review the agenda and then we're 

10 going to launch right into it. 

1 1 MR. BERRINGER: Good morning. If you're not 

12 here for the Clothes Washer Workshop, you're in the 

13 wrong place. So if anybody needs to leave right now, 

14 go ahead. 

15 (Laughter.) 

16 Good morning, everybody. I appreciate 

17 everybody showing up today. I'm the team leader for 

18 the Clothes Washers Team. Also on that team is Carl 

19 Adams, Qonnie Laughlin and Barry Berlin from the Office 

20 of Codes and Standards. 

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22 

We have Gene Margolis from General Counsel 

and Mark Fredricks from Off ice of Policy and 

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1 International Affairs, which I don't see here at this 

2 time. 

3 On behalf of the Department, again I'd like 

4 to thank you all for taking the time to participate in 

5 this third workshop under the new process improvement 

6 effort that was done on July 15th, 1996, the Process 

7 Rule. 

8 If you haven't got copies of the reports or 

9 the slides, you can see Brenda or Sandy over at the 

10 table. 

11 Anybody attending today's workshop, if you 

12 haven't been added onto the list, you will be after 

13 this mailing here -- onto the mailing list for future 

14 responses. 

15 Also, any comments received today and those 

16 already submitted during the written comment period 

17 will assist the Department in preparing the 

18 Supplemental Advanced Proposed Rulemaking planned for 

19 publication in May of 1998. 

20 The following are procedural items which you 

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22 

are aware of. I'll be presiding over the workshop. 

Doug Brookman will be facilitating and setting the 

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1 guidelines of conduct as far as the workshop and 

2 providing other information. 

3 In approximately two weeks, the transcript 

4 should be available in the Freedom of Information 

5 Reading Room, which is down the hall in 1E-90. So 

6 anybody wishing to see those or if you want to purchase 

7 those from the Court Reporter, please see him at the 

8 break. 

9 To provide the Department with as much 

10 pertinent information and as many views as reasonable, 

1 1 we want all people to express their views, and the 

12 workshop will be conducted with the following 

13 procedures. 

14 Again, the focus of this workshop is to 

15 listen to your comments pertaining to the assumptions 

16 utilized in the life cycle cost analysis, with 

17 preliminary results; also, shipments and inputs to the 

18 National Energy Savings Forecast and the approach being 

19 utilized for the Reverse Engineering Analysis; and also 

20 the report on the consumer survey research and possible 

21 future approaches . 

22 We've already done introductions. We'll then 

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1 go into, after this, the agenda review, which Doug 

2 Brookman will go over. 

3 DOE topics will remain on the agenda as the 

4 lead presentations in their respective areas. 

5 We will take a lunch break about noon today, 

6 which is on your own. There's a snack bar below us one 

7 floor. There's also a cafeteria over in the West 

8 Building on the second floor, and there's also 

9 restaurants up at L'Enfant Plaza. 

10 It will reduce interruptions if everybody 

11 that wants to speak be recognized by Doug, please. 

12 Remember to speak into the microphone, state your name 

13 and your company, please, for the Court Reporter. 

14 We ask that all side conversations be kept to 

15 a minimum. If you need to -- we're pretty crammed in 

16 here. If you either go to the corner or outside the 

17 room while the meeting is going on, we'd appreciate it. 

18 It may be necessary to cut some of the debate 

19 off to remain on schedule. We have a full schedule 

20 today, a lot of material to go over. I know some of it 

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is new. Some of it was on the Web site, so hopefully 

we can step through it so everybody can get a good feel 

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1 of what's being presented today. 

2 I encourage all persons to participate as 

3 much as possible so the Department may get a full 

4 spectrum of opinions on all topics. And as you all may 

5 know, opinions are like armpits. Everybody has one and 

6 most of them stink, so 

7 (Laughter.) 

8 So we do ask you to give your full opinions 

9 on that and we do accept those. 

10 This workshop is scheduled to go to 4:00 

11 today and we'll also start up again at 9:00 a.m . 

12 tomorrow and go until noon. If we finish early we 

13 may finish early tomorrow, but it looks like we do have 

14 a full agenda and discussions. If we do progress, 

15 obviously we'll go to the next agenda items. 

16 Again, the topics that have not been 

17 completely discussed can be addressed in additional 

18 written comments. Deadline for written comments and 

19 data submission following this workshop will be 

20 determined based on responses today. So if we feel 

21 that 30 days or 45 days is necessary, we can see how we 

22 progress within the workshop as far as the information 

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1 presented. 

2 All comments will be considered before the 

3 Department publishes the Supplemental Advanced 

4 Rulemaking. All written comments and data submitted 

5 will be available for public inspection, again, in the 

6 DOE Freedom of Information Room. 

7 The phone number, if anybody is interested, 

8 is 202-586-6020. If you need that, Sandy can give that 

9 to you. 

10 Written comments should be addressed to the 

11 Department of Energy, as addressed in the Federal 

12 Register notice of today's workshop, which would go to 

13 our office, attention Brenda Edward Jones. 

14 As far as data submittal, we request 10 

15 copies of comments and data. In addition, if you could 

16 put it electronically on WordPerfect, it would be 

17 appreciated. We can also handle Word and most any 

18 other software, but it would help us in our process if 

19 comments were submitted on disk. And we do not accept 

20 fax comments. 

21 Any person submitting information that they 

22 believe is confidential and exempt by public disclosure 

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1 should submit one complete copy and 10 copies with the 

2 information deleted that they feel is confidential. 

3 In accordance with procedures established in 

4 10 C.F.R. 1004.11, the Department of Energy shall make 

5 is own determination as to whether information shall be 

6 exempt from public disclosure. 

7 In keeping with the regulations of this 

8 building, it's non-smoking building. The restrooms are 

9 down the hall to the left and the right. Phones are 

10 also located in the main lobby area. 

1 1 And again, we appreciate the time and effort 

12 that everybody has taken here to come to this workshop 

13 and preparing for it, and we're pleased to receive your 

14 comments and opinions. 

15 At this time, I'd like to turn it back over 

16 to Doug Brookman to do the agenda review. 

17 Thank you. 

18 MR. BROOKMAN: I think all of you have an 

19 agenda before you, and Bryan has already covered the 

20 purpose of the workshop. And the outcome of the 

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workshop would be simply to receive comments from all 

of you in as much depth as possible that fits within 

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1 the time constraints we have here today. 

2 So in the first substantive segment of the 

3 morning, Michael McCabe and others are going to have 

4 opening remarks. That will be followed at 9:45 with an 

5 overview of the rulemaking schedule and the analytic 

6 framework. 

7 we'll take a break around about 10:15. After 

8 the break, we're going to have discussion of the 

9 preliminary results and analytic methods and tools used 

10 in the analysis. 

11 Following that, we'll have discussion -- a 

12 presentation followed by discussion and comment on 

13 engineering analysis and data collection. 

14 The next substantive topic in that block 

15 prior to lunch will be life cycle costs, and 

16 particularly the revised life cycle cost spreadsheet 

17 model. And that spreadsheet will include data from the 

18 engineering analysis that's been performed to date. 

19 And just prior to lunch there'll be a 

20 discussion about price, the assumptions related to 

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price and how the price figures that you see there got 

rolled together. 

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1 We're going to let you go off on your own for 

2 lunch. Try to be back by 1:00 so that we can commence 

3 on time. 

4 After lunch at 1:00, we'll continue the life 

5 cycle cost discussion. In the 2:00 to 3:00 time frame, 

6 talk about the National Energy Savings Forecasts and 

7 review that spreadsheet, and then talk about shipment 

8 forecasts. 

9 We'll take a break mid afternoon and then 

10 after the break we'll continue the discussion of 

11 National Energy Savings Forecasts. 

12 Tomorrow we'll start again at 9:00 and then 

13 talk first and foremost about the reverse engineering 

14 approach. In the reverse engineering approach they'll 

15 be talking about the methodology used to I guess 

16 reconstruct V-axis machines and the basis of costing. 

17 After the mid morning break, we'll move into 

18 consumer issues and the Department will present a 

19 report on the existing consumer survey research. 

20 We will end tomorrow round about noon. If we 

21 require a little more time to get done, we'll use it; 

22 take it. But that would be our hope and expectation. 

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1 And we'll end the session with a discussion about next 

2 steps and any other items thpt need to be taken up. 

3 Are there questions or comments about the 

4 agenda, as written? 

5 (No response.) 

6 Is there anything major that we've missed? 

7 (No response.) 

8 I don't see anybody that's got anything 

9 additional or significant at this point. 

10 If we uncover something that's missing, we'll 

1 1 take it up and try to stay within the time frame 

12 allotted. 

13 When we first started doing workshops like 

14 this, we started off with groundrules. And over time, 

15 they've generally gravitated towards norms. And I'm 

16 happy to say that these norms have worked, generally 

17 speaking, over the span of this time, especially 

18 recently. So I'm going to ask today that everybody 

19 adhere to the following norms. 

20 Speak one at a time. Please say your name 

21 for the record. And when you make your comments, it's 

22 especially helpful to the Department if you include how 

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1 to improve these draft products. Your comments about 

2 what's wrong with them, that's useful. It's especially 

3 useful if you'd say how it could be fixed. So if you 

4 could direct your comment that way, that will make it 

5 easier for them to interpret or do the fix that you 

6 might suggest. 

7 So I'm suggesting those simply as norms. 

8 Is there anything else to say at this point 

9 before I turn it over to Michael McCabe for opening 

10 remarks? 

1 1 (No response.) 

12 Thanks again for being here, all of you, and 

13 for allowing us to get off to a good fast start this 

14 morning. 

15 Michael. 

16 MR. McCABE: Good morning. If I don't 

17 recognize most of the faces, just continue the 

18 introduction. 

19 I'm Michael McCabe, Director of the 

20 Department's Office of Codes and Standards. I'd like 

21 to welcome everybody here. I'm not sure if I can follow 

22 up on Bryan's one-liner. I've been going for hears 

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1 with my standard line that -- talking about the 

2 legislation that establishes the program. The short 

3 title of the legislation is the Russ Sassnet and 

4 Michael McCabe Guaranteed Employment Act. People kind 

5 of have a nervous chuckle and say, "Well, I know Mike 

6 who Mike McCabe is. Who's this Russ Sassnet?" 

7 Russ is somebody who had worked in the 

8 program years ago and has since retired, so it's not a 

9 guaranteed employment act. 

10 We in fact would have liked to mention our 

11 accomplishments. In fact, this last year we have had 

12 some significant accomplishments with final rules 

13 issued for refrigerators and room air-conditioners. We 

14 have a comment period that's open where we have 

15 released analysis for kitchen ranges and ovens. We've 

16 indicated the expected outcome for that and have asked 

17 for comments. The comment period is about to close and 

18 we expect to issue that final rule very shortly. 

19 And we are embarking now on a number of 

20 priority rulemakings of which the proposed washer 

21 rulemaking is one. The Department is committed to 

22 conducting this rulemaking in a timely fashion and we 

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1 appreciate your input into this process. We are 

2 looking at final rules to be completed the target is 

3 to complete it by October of 1999. 

4 And this is proving to be a very challenging 

5 and exciting rulemaking because part of what we 

6 committed to in our process improvement, which Bryan 

7 alluded to, is to customize the rulemakings for those 

8 particular products. That's one of the reasons why 

9 also ARI is here, spec representatives from Gamma 

10 later, is that no longer can you expect that the 

11 rulemakings are going to be a cookie cutter approach; 

12 that there are going to be some differences. 

13 So that, for example, for this rulemaking, 

14 with the engineering analysis instead of taking the 

15 design approach which we've done in years past, we've 

16 taken it using the efficiency level approach; collected 

17 data from the industry for the engineering analysis. 

18 It's a very different approach and it's led to some 

19 head scratching on our part as far as how to interpret 

20 the information. 

21 

22 

Bryan will be talking about that because we 

have learned some things by looking at those data, 

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1 which were surprises because we thought we knew more 

2 than we did at the beginning. Bryan will be sharing 

3 some of that. 

4 We've also with this process, we're sharing 

5 information earlier. I'd like to make a point that we 

6 are sharing draft information. You're sharing 

7 information that our management is aware of but they've 

8 not had a detailed briefing. So that what we are 

9 presenting is I would call staff information. It has 

10 not been reviewed, concurred on by senior management, 

11 nor have they developed positions. So that you may 

12 look at the information and try to second guess what 

13 management would decide with respect to this, but 

14 management has not made any decisions yet. 

15 Management is waiting until we get the 

16 complete analysis before we will present -- make any 

17 recommendations to them. We will raise issues to them 

18 with respect to the analysis but not the result. 

19 I'm very excited about what will be presented 

20 later today, particularly with respect to life cycle 

21 

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costs and the National Energy Savings spreadsheet 

models that have come a long way from the average 

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1 calculations which we've done in the past. 

2 The crystal ball approach which has been used 

3 on the life cycle cost analysis and will be presented 

4 here, attempts to capture the range of variables in 

5 usage, electricity prices and other inputs to life 

6 cycle costs. There isn't an average consumer anywhere. 

7 There in fact are lots of consumers with different 

8 usage rates, different energy prices that they're 

9 experiencing. And we're trying to capture that and 

10 present this information. 

1 1 So that one of the benefits of presenting 

12 this information today is that we have -- I'll look at 

13 Jim McMahon now -- I think 36 slides of distribution 

14 for life cycle costs. That's a hell of a lot of 

15 information. We're trying to come up with a simple way 

16 of presenting it, something that captures the 

17 robustness of this analysis. 

18 So that if the presentations seem to drone on 

19 because we're on the 33rd slide of 36, by all means 

20 jump in and make some suggestions as to what is 

21 meaningful. Because we're trying to both present the 

22 information that we have as it exists right now, but 

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1 also, this is a learning experience for us in how to 

2 present the information to you and it will also be to 

3 our management on the results of this analysis so that 

4 there can be a better decision made with this. 

5 We do not want to swamp them with 

6 information. We don't want to swamp you, but rather 

7 provide you with the breadth of information we have and 

8 make this rulemaking a more productive viable 

9 rulemaking. 

10 We're committed to having frequent 

1 1 stakeholder involvement in this process and this is one 

12 example. 

13 Bryan had apologized to everybody about how 

14 crowded it is, and we're experimenting with formats. 

15 The "U" table is something that two years ago we would 

16 never have had. We had an approach which was more of a 

17 talking head. The DOE staff would be sitting at a 

18 front table and we'd ask individual speakers to come 

19 up, read form prepared statements, and then DOE would 

20 have some questions. 

21 

22 

Sometimes those questions seemed to be pretty 

inane and I'd say that some of them probably were 

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1 because we were looking to ask questions, we would 

2 misunderstand what was being said, and our questions 

3 coming back would reflect that. We want to try to come 

4 up with an approach that will facilitate an open 

5 dialogue. So even though Doug had presented the rules, 

6 we don't want those rules to stifle the discussion. So 

7 that if information is being presented on 

8 recommendations of a way to improve the life cycle cost 

9 analysis and somebody has an alternative or can expound 

10 on a point that's made, by all means, please do. 

1 1 Because the purpose of this rulemaking is to get the 

12 information out and to help us improve the methodology 

13 for what is going to be the proposed rule and, in turn, 

14 the final rule is going to rest on. 

15 Again, the life cycle costs, National Energy 

16 Savings spreadsheet models that are being presented are 

17 drafts. We have done much more in this life cycle cost 

18 analysis. What I thought we would have done -- if you 

19 had asked me July of '96 what is going to be the life 

20 cycle cost analysis that would accompany an ANOPR, at 

21 that time I had envisions what I will call a more 

22 simplified life cycle cost analysis, something that 

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1 would be more along the lines of the average, and that 

2 at this time we would be talking about the different 

3 sort of inputs we could use for the more robust life 

4 cycle cost analysis. 

5 So in fact, we're doing more earlier. I 

6 think all that it can do is benefit the rulemaking. 

7 Again, to talk about the commitment. The 

8 Department is committed to issuing the rule in a timely 

9 fashion. And part of that -- I think most everybody 

10 has heard this. The Secretary and Assistant Secretary 

11 Reiker have entered into a performance agreement where 

12 EERE, Energy Efficiency Renewal Energy, is committed to 

13 performing this rulemaking on the schedule that has 

14 been laid out, the resources that you see around the 

15 table and in the back. 

16 As far as the DOE staff, contractor staff, 

17 are here in order to hear what you say, in order to 

18 turn that around and include it, incorporate it into 

19 the analysis, so that we can get the proposed rule out 

20 timely. 

21 In terms of the final rule, the final rule --

22 again, to repeat what I've said before, the Department 

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1 is looking for the highest energy and water savings 

2 that is economically feasible and technologically 

3 justified. We are, however, recognizing that there 

4 could be tradeoffs. That you can accelerate the 

5 rulemaking and possibly lower the standard level or 

6 delay it, delay the effective date, with a more 

7 stringent standard. And the way that we are 

8 structuring the analysis, we will be able to capture 

9 that. 

10 We would encourage any thoughts that you may 

11 have as to what those factors could be, how the 

12 standards could be structured. 

13 Also, there's been an issue that's often 

14 raised as far as voluntary programs and the 

15 Department's commitment to them. You've seen an awful 

16 lot happening in the last year or so with respect to 

17 new, more efficient products entering into the 

18 marketplace. In the years past or in previous 

19 rulemakings, our baseline efficiency for analysis was 

20 typically something that was near what is the existing 

21 

22 

standards. With the energy star program that's in 

place, with manufacturers' actions, the average 

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1 efficiency today is higher than what it has been with 

2 out products in other rulemakings. 

3 Our base case analysis for energy savings 

4 calculations will capture that. We will include it, so 

5 that information that exists on not only what is the 

6 average efficiency of products sold today but what is 

7 the average of what likely will be sold in the future. 

8 It's information that will be captured and we look to 

9 have as much as we can to include in our energy savings 

10 estimates. 

11 Much of what is being presented with respect 

12 to the analysis, specifically the life cycle cost 

13 analysis and some of the energy savings forecast 

14 spreadsheets, have been presented before. This is the 

15 next step, how this involved. So some of it's going to 

16 be repetitive but I wish that you'd bear with us 

17 because it's the details now that we're getting caught 

18 up in. For some, it's very important, but for others 

19 it may not be quite as important. 

20 We've had over the last year and a half four 

21 significant exchanges with representatives of a variety 

22 of organizations in order to get where we are today and 

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1 we will have many more in the future, for this 

2 rulemaking and for others. And I appreciate your 

3 patience and your input because all it can do is help 

4 us improve the quality of the rulemaking. 

5 Thank you. 

6 MR. BERRINGER: As far as the agenda, you may 

7 have noticed -- you may have not we had originally, 

8 the first agenda that went out, was scheduled for 

9 another room tomorrow. We will be in this room, 1E10 245, tomorrow. So same place. 9:00 a.m. Just to let 

11 you know. 

12 The other thing. If you're following along 

13 as far as the slides, we're in the package here with 

14 this cover sheet. Michael just presented the 

15 information in slides two and three, and I will be 

16 talking a little bit about stakeholder involvement and 

17 just sort of a little background as far as where we've 

18 been. 

19 Can everybody see that? Follow along. It's 

20 slide number 4 in your package. 

21 

22 

As I said, this is basically the third 

workshop we've had since we've started the new process 

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1 improvement. One of the first workshops was back in 

2 November 15th of '96, and that's where we identified 

3 how new data would be collected and used throughout the 

4 process. 

5 In response to that, everybody kept on 

6 saying, "Well, how is the data going to be used and 

7 when is it going to be used?" So one of the outcomes 

8 of that was the development of the framework document. 

9 And then there was another workshop that covered all 

10 the appliances, which was the Manufacturing Impact 

11 Workshop that was held March 11th and 12th of '97, 

12 about this time last year. 

13 And basically, stakeholders felt that the 

14 rulemaking should be customized, that we should look at 

15 -- different appliances are treated differently, so we 

16 should sort of customize it to that. And really, the 

17 Clothes Washer has been the first rulemaking to go 

18 through all this process. So we are breaking new 

19 ground and trying new things. 

20 Then we had the Clothes Washer Workshop in 

21 

22 

July 23rd of last year. We presented more as far as 

the framework document. We also introduced the life 

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1 cycle cost spreadsheets and shipments and National 

2 Savings Forecasts. 

3 And basically today we're going to be going 

4 over that. There's revised data. The spreadsheets 

5 have been updated, more user friendly. And I'd like to 

6 thank LBL for their work as far as doing that. And we 

7 also have the data that was collected. And I'd also 

8 like to thank AHAM for their participation in that, as 

9 far as -- and the manufacturers -- for collecting that 

10 data and getting that information to us. 

11 And basically, again, the objective of the 

12 workshop is to discuss the revised analytical tools, 

13 the spreadsheets and so forth, and the assumptions that 

14 we're using for the life cycle cost analysis, with 

15 preliminary results. Also, discuss shipments as the 

16 input into the National Energy Savings Forecasts. The 

17 other thing is the approach being utilized for the 

18 reverse engineering analysis which will be discussed. 

19 And also, the report on consumer survey research and 

20 possible future approaches, if necessary. 

21 

22 

Today's workshop will focus on the analytical 

tools needed for the publication for Supplemental 

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1 Advanced Notice of Proposed Rulemaking. Again, where 

2 we're at today is looking at the frame. This is in the 

3 framework document. It should be in your package. 

4 Basically, what we're going through is we're 

5 stepping through the process. As you can see, there's 

6 a break in the line. The upper portion, the upper half 

7 of this graph or this roadmap, as we like to refer to 

8 it, we're looking at, first of all, the engineering 

9 analysis where it's sort of step 3, which is feeding 

10 into the life cycle costs. And one of the inputs to the 

1 1 life cycle cost is the price. 

12 There's a paper that we're going to discuss 

13 as far as the price as an input to life cycle cost. And 

14 then the other thing is we said we would have 

15 preliminary results for the national benefit as part of 

16 an input of shipments. So a lot of today's discussion 

17 is going to focus on the shipments. 

18 So that's where we're at, as far as up to the 

19 break point. And this, again, will be a Supplemental 

20 ANOPR, since there's been a previous one done. But 

21 

22 

obviously a lot of that work is being superseded with 

the new data and what we're doing today. 

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1 Just a summary of what we're doing for '98 

2 and '99. 

3 One of the first things is -- today we're 

4 discussing some of the preliminary results. Or later 

5 today, we'll be discussing that -- information prior to 

6 the Supplemental ANOPR. Also, we plan to publish the 

7 Supplemental ANOPR in May of this year. And then right 

8 now tentatively we scheduled you have a detailed 

9 schedule in your package. Also we're looking at doing 

10 a workshop in July. And that would also be to receive 

11 additional comments to the ANOPR and also to start to 

12 begin data collection as far as manufacturing impacting 

13 the analysis, introducing the approaches for the next 

14 phase of the analysis. 

15 Again, if you refer to your roadmap, you can 

16 see what's next as far as analysis and the process for 

17 the NOPR stage. 

18 The other thing is, starting in the August 

19 time frame, also on your detailed schedule, we'd start 

20 looking at doing information as far as manufacturing 

21 impact, collecting that data, and also do a follow-up 

22 maybe in December-November time frame, look at another 

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1 workshop to see the second phase, see what the results 

2 are looking at as far as the second phase of the 

3 analysis. So we'll work around that time. 

4 Basically, in 1999 we're planning -- January, 

5 start the year out right, we'll try to have published 

6 the notice of proposed rulemaking in the January time 

7 frame. Shortly in March, hold a public hearing, and 

8 then plan to finalize the final rule in October. 

9 Again, as Michael discussed, there might be 

10 times -- typically, it's three years after publication 

1 1 of a date. Obviously, through discussions and talks, 

12 negotiations, we can talk about the date and the impact 

13 on manufacturers, especially impacts such as the 

14 refrigerator rule coming into effect. So that's what 

15 our time frame looks like. 

16 Again in your package you can see the 

17 detailed schedule has a little bit more breakdown. 

18 It's a little bit busy to put on a slide. So you have 

19 it. So you can address it. And if you have comments 

20 or questions about this schedule, I guess that would be 

21 appropriate at this time . 

22 Is there any questions about what -- what do 

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1 you feel as far as the time frame. 

2 (No response.) 

3 Seeing none, obviously it's something we can 

4 bring up later. We are on a very aggressive time 

5 schedule. There's a lot of information in there to be 

6 analyzed and a lot of work to be done. 

7 MR. NADEL: Bryan, Steve Nadel. Just a quick 

8 reading because I just received this latest version of 

9 the schedule. 

10 My general sense is it's pretty compacted at 

1 1 the end. And I would encourage you to see if you could 

12 look to save a month or two, basically, between now and 

13 the NOPR in order to allow a little bit more time at 

14 the end. 

15 Possible ways that come to my mind is this 

16 one. We have the three workshops that are already in 

17 place, but I think we have at least four other 

18 workshops. You may be able to shorten the official 

19 comment period because by the time we get to these 

20 various ANOPRs and NOPRs, it's going to be stuff that 

21 people have seen three or four times . 

22 But I'd encourage you to look that way, 

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1 basically, to bring the NOPR into '98 and allow a 

2 little bit more time between NOPR and final rule. 

3 MR. SAMUELS: Chuck Samuels, AHAM. It's 

4 certainly up to you folks to decide how to use the 

5 schedule. My only comment would be that I would think 

6 we would be opposed to any shortening of comment 

7 periods. It's very important for both individual 

8 manufacturers to try to develop comments collectively, 

9 so however you organize yourself, please don't cut out 

10 the public's ability to comment. 

11 MR. BERRINGER: Thank you. 

12 Do we have any other comments on the 

13 schedule? 

14 (No response.) 

15 Okay. Thank you. 

16 Next I just wanted to discuss -- as far as we 

17 have, I introduced the OCS team earlier. On top of 

18 that, as part of the commitment, we've also talked 

19 about broadening our team focus and we also have a 

20 number of contractors that are here today that are on 

21 

22 

the team and we're functioning as a team. I, being the 

lead again on that as far as coordinating it. 

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1 We have A.D. Little, Lawrence Berkeley 

2 Laboratory, NREL, Energetics, and other experts that 

3 are helping us out as far as peer review and so forth. 

4 A.D. Little is performing the lead as far as 

5 the engineering and manufacturing impact analysis. 

6 They're also the lead as far as doing the work for the 

7 reverse engineering, which we'll discuss tomorrow. 

8 LBNL is obviously they're the lead doing 

9 the work with the LCC and the national benefits 

10 analysis and the work with the spreadsheets. 

1 1 We also are looking as far as having peer 

12 review, more stakeholder review, trying to get that out 

13 there so everybody can have it prior to workshops and 

14 meetings. So we're being as open as we can in this new 

15 process to give you that data and share that data as we 

16 get it. 

17 MR. SAMUELS: Bryan? 

18 MR. BERRINGER: Yes, Chuck. 

19 MR. SAMUELS: Chuck Samuels. 

20 Could you describe the role of NREL and 

21 Energetics? 

22 MR. BERRINGER: Energetics, we're just 

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1 looking at a system for the comments right now, comment 

2 summary. We're developing a database so we can put the 

3 forms -- electronically summarize them. So it's an 

4 easy -- it's sort of a new system, so they're helping 

5 us with that. 

6 NREL is -- we've been asking them for support 

7 as far as consumer and just general rulemaking support 

8 overall, as far as implementation of the process 

9 improvement, sort of helping us with papers and so 

10 forth to staff. So they've sort of done generic role, 

11 but they also helped us with support with A.D. Little 

12 also. 

13 MR. SAMUELS: Comment summary. Is that 

14 something that you could put on the public record or on 

15 the Web afterward or would that purely be for internal 

16 purposes? 

17 MR. BERRINGER: Typically, it's only been 

18 internal purposes. Obviously all the comments are on 

19 the public record for review. Now, in the past --

20 again, this is a new system. I mean, that may be --

21 

22 

MR. SAMUELS: That may be an interesting 

thing, Michael, to put up on the Web. I assume it's 

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1 just an objective summary of comments that they do. If 

2 it isn't a big problem or it isn't some legal problem -

3 - I can't imagine what it might be. It might be 

4 something that might be interesting to the public. 

5 MR. McCABE: Michael McCabe. We'll look into 

6 that. This effort would lead into the discussion of 

7 comment section that appear in the proposed rule and in 

8 turn also the final rule. So it's a strict reporting 

9 of what's been done in order to help facilitate the 

10 various documents as well as for management's review. 

1 1 We'll look at making that information available on the 

12 Web, as well. 

13 MR. BERRINGER: Okay. Are there any other 

14 questions then as far as the schedule or the framework 

15 as far as the roadmap and so forth? At this point, it 

16 looks like we're a little ahead of schedule, so we can 

17 either press on --

18 VOICE: Get out a little early. 

19 MR. BERRINGER: One of the things we've 

20 prepared as far as tools for this workshop that I 

21 

22 

brought with me, too, it's a -- I brought my Bible and 

my flack jacket. So I'm going to have to put my flack 

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1 jacket on now since we're getting into the meat of the 

2 discussion. 

3 Just the first part we're going to talk about 

4 is the data collection. And as part of the data 

5 collecting, the engineering analysis. And again, I'd 

6 like to thank AHAM for their role in that and the 

7 manufacturers, and also A.D. Little for assisting as 

8 far as the data collection for the engineering 

9 analysis. 

10 Basically, we received the data back in 

1 1 December, early December from AHAM as far as from the 

12 manufacturer data that was obtained. Basically, that 

13 was LBNL. And they incorporated that data into the 

14 spreadsheets which you'll see later today. So that has 

15 been incorporated in there. So that's something new 

16 since the last workshop. 

17 One of the things that is new here -- and I'm 

18 sure most of the manufacturers and AHAM, who was just 

19 talk about it this morning, more or less -- was based 

20 on preliminary result which we're going to discuss 

21 

22 

today, the Department would like to request additional 

information for V-axis machines at the 30, 35 and 40 

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1 percent level. 

2 Basically, we're seeing favorable good 

3 results at that level, or above 25 percent. 

4 Unfortunately, we don't have any data to say that 30 

5 percent is good. It's sort of like a no-man's land 

6 that we don't have information. 

7 One of the reasons we don't or we didn't 

8 request it originally is based on previous analysis 

9 where it only looked like the most possible level was 

10 at 20 percent. So, we're -- based on knowledge. 

1 1 As far as the other thing, test procedures 

12 weren't finalized. We just finalized the test 

13 procedures of August last year, so we're now just 

14 getting some sort of indication of what the MEF levels 

15 are on machines out there today. 

16 So there's new information and we didn't know 

17 how the test procedure would impact that. So we are 

18 seeing numbers that management would come up, or if we 

19 tried to present something to Dan Reicher to say, okay, 

20 25 percent looks really good but he asks us what about 

21 

22 

30 percent, we wouldn't have an answer. So that's one 

of the reasons we'd look for additional data. And 

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1 obviously, some manufacturers may not be able to 

2 achieve -- maybe 35 and 40. But we'd like to at least 

3 get an idea of what that would be, as far as the impact 

4 on the manufacturers. 

5 Also, just get a feel for what information is 

6 out there and the cost for that. 

7 I know this is something new, something 

8 that's just been brought up today. I know you have to 

9 think about it. 

10 The other thing is we'd like to also, if it's 

1 1 agreed up to do that, we'd like to have AHAM assist and 

12 do the data collection as we did previously with the 

13 original data. 

14 Is there any questions on that particular 

15 portion? I know that is new. It's something that we're 

16 looking for. 

17 (No response.) 

18 Okay. Seeing no discussion, I'm going to 

19 turn it over to Mike Rivest right now to get into a 

20 little bit more detail as far as the actual data 

21 

22 

collection and engineering analysis. 

Mike. 

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1 MR. RIVEST: Good morning. What I'd like to 

2 do, and I apologize for my throat. What I'd like to do 

3 is go over the process that was used for gathering data 

4 for the engineering analysis. And I'll look to Wayne 

5 Morris to correct me if I make any mistakes along the 

6 way. We worked closely together in combining the data 

7 that was supplied by the manufacturers. 

8 MR. MORRIS: I appreciate the compliment, 

9 Michael, but you're so far above me on this thing that 

10 I'm going to be struggling just to keep up. 

11 MR. RIVEST: I'm always cautioned when I hear 

12 someone downplaying their role. 

13 I'd like to talk a little bit about the data 

14 collection methodology. Because this is an entirely 

15 new way of doing things, I thought it might be 

16 worthwhile to spend a few minutes going over the 

17 concepts. It will help us understand, I think, the 

18 results a little better. 

19 I'll try to, in some cases, come up with 

20 simplified examples so people can become comfortable. 

21 We'll talk a little about uncertainty and variability, 

22 which really was the whole purpose. 

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1 At the workshop that was held in November 

2 '96, I believe, one of the as Mike McCabe mentioned, 

3 one of the key commitments to the new process was to 

4 reflect the wide range in various inputs. And one of 

5 the critical inputs is the range in manufacturing cost. 

6 So we tried to come up with a methodology that 

7 incorporated all that richness without going into 

8 problems in terms of divulging very sensitive 

9 information. 

10 The data that's been presented to DOE is 

1 1 representative of the entire industry cost 

12 distribution. We'll look at that. The output can be 

13 seen in a summary form on the cost efficiency graph. 

14 And finally, I'd like to just quickly show you the 

15 results of the AHAM data collection. I won't go 

16 through it in any detail. I just want to explain the 

17 format of the tables. 

18 The first step we had to deal with was the 

19 establishment of a baseline. We know that the test 

20 procedure changed and the change in description to EF 

21 to MEF. And that's not a simple change. There's no 

22 direct way of computing MEF from EF. There are 

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1 additional variables that need to be considered. And 

2 since people weren't designing around this new 

3 descriptor, there's also a wide range around the new 

4 MEF. So three machines with the same EF could have 

5 very different MEF values. 

6 And the process that was used to establish a 

7 baseline was to ask all manufacturers, all major 

8 manufacturers, to test some of their machines at the 

9 lower end of the EF value and give -- basically, give 

10 the MEF that was resulting from those tests. And AHAM 

11 created a mathematical average of those five data 

12 submittals. So there was no weighing. It was a strict 

13 mathematical averaging of those models. 

14 DOE, along with AHAM, had several 

15 conversations and meetings, making sure that we had a 

16 common understanding of what the definitions of the 

17 various cost components were. 

18 We then proceeded in collecting the data from 

19 manufacturers. And the data, what was new was instead 

20 of asking for a single estimate of their cost, we asked 

21 them to come up with an estimate of cost within a 

22 range. And we tried to describe that range to capture 

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1 the richness without going into too much detail. And 

2 the way we proposed was to come up with three values: a 

3 minimum value, a most likely value and a maximum value. 

4 While the data was being collected, I worked 

5 on creating a spreadsheet which could aggregate those 

6 various data submittals into an industry distribution, 

7 and I'll describe that a little more. 

8 So we're going to look at a raw data 

9 submittal from three manufacturers for a particular 

10 efficiency level. This is the type of data submittal 

1 1 you might see; a triangular distribution with a minimum 

12 point, a maximum point and a most likely. And 

13 depending on the expectations, it wasn't necessary that 

14 the mid point be the most likely. So you could 

15 represent, if you will, the risk in those cost 

16 estimates by changing the shape. So here would be, for 

17 the same level, three manufacturer submittals. 

18 The next step was to try and aggregate that 

19 into an industry distribution for that given level. And 

20 the process that was used was to first scale these 

21 

22 

triangles according to market share, and then sample 

them repeatedly to create a full distribution. 

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1 Finally, once we created that full 

2 distribution, we wanted to report it back. In some 

3 situations, if we would have reported back the 

4 distribution as aggregated, because there was no 

5 overlap in some situations, you could get into serious 

6 confidentiality issues. So, the interim solution we 

7 came up with was to give percentile values for the 

8 given data so we can describe roughly what the 

9 distribution of the costs were. And the data point 

10 percentile values we came up with were zero, 10, 25, 

11 50, 75, 90 and 100 percent. 

12 We also added an additional value which was 

13 the weighted average of the most likely. If you will, 

14 the tops of the triangles. And I'd like to talk for a 

15 minute about that a little later, what's the 

16 significance of that value and how it might be used and 

17 what's the value to having collected it. 

18 To translate the output of our data 

19 aggregation to the input of the life cycle cost 

20 spreadsheet, I created this very simple example. This 

21 

22 

would be the aggregation of data submittals or the 

industry distribution. If there were two manufacturers 

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1 with 50 percent market share each, this is what would 

2 have come out of our aggregation. 

3 And if you were to create an input 

4 distribution for the life cycle cost curve trough 

5 percentile values, what the program does is it scans 

6 from left to right. When it hits zero percent, it hits 

7 its first value, it keeps scanning until it hits 10 

8 percent of the surface area, and then it fills in that 

9 slot evenly for that interim. 

10 So, this area represents 10 percent of the 

1 1 total area here. But it just gives you a shape of 

12 how -- a sense of how even in an extreme case it does 

13 somewhat mask the distribution of costs. 

14 One convenient way of displaying all the 

15 information on a single graph consists in displaying 

16 the percentile values on an incremental cost versus 

17 efficiency level graph. And the next slide, you'll 

18 see, if you will, a snapshot summary of the entire data 

19 collection exercise, being these cost efficiency 

20 distributions. 

21 So, for instance, you'll see that there's 

22 relatively little cost in achieving five and 10 percent 

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1 efficiency improvements. As you increase the 

2 efficiency improvement you're increasing, if you will, 

3 the uncertainty or just the variability in the 

4 different manufacturers' costs of attaining these 

5 different levels. And by looking at the proximity of 

6 the data points, you'd get a sense of where there might 

7 be some clustering of costs. But the whole idea here 

8 is to carry the full range of costs throughout the 

9 analysis and never get rid of it. 

10 It was mentioned earlier, the concept of the 

1 1 average, the weighted average of the most likelies. 

12 And this is the first time we were doing this. We were 

13 comparing our 50th percentile to that value. And we 

14 didn't expect to get the same number but I tried here 

15 to explain what the value is of having both those 

16 concepts. 

17 For example, the crystal ball would, for this 

18 distribution of costs, come up with a 50 percentile 

19 value of $4.00. It just scans until it reaches 50 

20 percent and then it writes down $4.00 as the 50 

21 percentile. If you were to do the average of the most 

22 likelies, you would be averaging out the tops of these, 

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1 and you would obtain a different answer. You'd obtain 

2 $5.00. 

3 So the conclusion here is that if you were to 

4 use a single value to represent the average, you can 

5 only use the weighted average of the most likely 

6 because it's the only one that samples each of these. 

7 So using the 50 percentile value as representative of 

8 the industry is really an overstatement. So using the 

9 full distribution is best. That's what captures the 

10 full richness. And just -- that you shouldn't use the 

1 1 other percentile values as being reflective of the 

12 industry. Only as a whole. 

13 MR. ROSENSTOCK: Can I ask a quick question? 

14 Steve Rosenstock, Edison Electric Institute. 

15 As you were going through this, just out of 

16 curiosity, did you look at shipment weighted average 

17 versus shipment weighted median, just as kind of a 

18 statistical -- just to see if there was any big 

19 discrepant big different on that end? 

20 

21 mean? 

22 

MR. RIVEST: Shipment weighted median would 

MR. ROSENSTOCK: For this distribution it's 

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1 the same, but 

2 MR. RIVEST: If there was skewness in the 

3 triangles? No. We didn't look at that. 

4 MR. ROSENSTOCK: Okay. 

5 MR. RIVEST: I've been focusing strictly on 

6 cost, but also was collected, at each of the efficiency 

7 levels for each of these MEF values, was collected 

8 disaggregate energy consumption. 

9 It's significant because the MEF value 

10 doesn't give you the full picture. The MEF is a 

11 combination of water use, energy for water hearing, for 

12 motor, et cetera. So it's important to do our life 

13 cycle cost, then we have a disaggregation of the 

14 various components of energy use. Also see some 

15 product characteristics. 

16 The costs were collected separately for 

17 variable and fixed costs. And finally, the graph you 

18 saw earlier with the different percentile values is 

19 shown here tabulated with the exact values. 

20 Are there any questions on the data 

21 collection? 

22 Please use the microphone. 

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1 MR. WETHJE: Larry Wethje with ARI. 

2 Just for the record, Mike, could you tell us 

3 exactly who has access to the data that's submitted by 

4 the manufacturers? 

5 MR. MORRIS: This is Wayne Morris from AHAM. 

6 Yes. The data -- in fact, I was going to bring this up 

7 a little bit later because it was a question that was 

8 raised at a previous workshop about transparency in 

9 data collection and so forth. 

10 We made an arrangement with Arthur D. Little 

1 1 that both Michael Rivest and I would have access to the 

12 raw data in all forms. Michael was able to see it. He 

13 was able to work through all of the calculations with 

14 me so that there was a double checking of all 

15 aggregation and calculations that were doing 

16 calculating the shipment weighted averaging and all of 

17 the information. 

18 I was the only person that retained access of 

19 the proprietary manufacturers' data, but Michael worked 

20 with me on all of the calculations. He set up the 

21 

22 

aggregated spreadsheet but it appeared only with me . 

And I ran all the calculations under his review. 

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1 So there was a double check through the 

2 entire process but the final results of the aggregated 

3 crystal ball spreadsheet we then presented to DOE. 

4 MR. WETHJE: So does Mike know exactly which 

5 manufacturer is A, B, C and D? Nobody on DOE staff has 

6 access to that either? 

7 MR. MORRIS: No. 

8 MR. WETHJE: Thanks. 

9 MR. RIVEST: I saw the raw data and I was 

10 able to cross-reference, make sure my spreadsheet 

1 1 worked, basically. And the data has always stayed at 

12 AHAM. I never had it in my possession. 

13 MR. HAWKINS: Mike, could you give an 

14 interpretation of the percentiles again? 

15 My name is Larry Hawkins. I'm with General 

16 Electric. 

17 Could you give a clarifying interpretation of 

18 the percentiles? And if the shipment weighted average 

19 is a better number than the 50th percentile, how would 

20 you infer that relative to the 75th or the 25th as 

21 opposed to the 100th? 

22 MR. RIVEST: I just think that -- I just 

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1 caution using any of the percentile values as singular 

2 values. I think they only have value when used with 

3 all the others. So I'm not -- the 75th percentile 

4 value just means that of all the data submittals, of 

5 all those triangle, 75 percent of that total 

6 probability area ended at that point but it doesn't 

7 tell you that there was someone -- someone may have 

8 been very far down before you'd reach 100, so that 

9 person, his data, may not have been even considered. 

10 That's the point I was trying to make. 

11 If you're going to use a single number, that 

12 number has to have -- you know, all manufacturers 

13 should have contributed to that number. That's the 

14 point I was trying to make. 

15 MR. HAWKINS: Not to put words in your mouth, 

16 but are you saying then if you used a single number it 

17 should be the 100th percentile? 

18 MR. RIVEST: No. I'm saying you shouldn't 

19 use any of the percentile numbers as single numbers. 

20 You should use the shipment weight of most likely, if 

21 you were. And I think the whole here was to not reduce 

22 the data gathering to a single number. 

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1 MR. HAWKINS: Okay. Thank you. 

2 MR. BROOKMAN: Do you have a follow-up 

3 question? He looked like he wasn't --

4 MR. HAWKINS: No. 

5 MR. BROOKMAN: Are you satisfied with the 

6 answer? 

7 MR. HAWKINS: Yes. 

8 MR. BERRINGER: Okay. 

9 Steve? 

10 MR. NADEL: Yes. Steve Nadel, ACEEE. I have 

11 a couple of questions. 

12 As we discussed before in these workshops, 

13 with this type of data collection we're getting 

14 information from, in this case, five major 

15 manufacturers, all of whom have a strong interest in 

16 the outcome of the result, and all of whom recognize 

17 that the information that the information that they 

18 give could have a very significant impact on, 

19 effectively, what the final rule will be. 

20 To what extent did you review the individual 

21 assumptions for reasonableness? Do you feel 

22 comfortable that these values are reasonable estimates 

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1 the manufacturers have given or did you just record 

2 them, and to the extent manufacturers gamed the 

3 numbers, that just played through? 

4 MR. RIVEST: Steve, I did not review with 

5 that intent in mind and my general feeling is that the 

6 data made sense. And in fact, it's my understanding 

7 that the outlyers were outlyers you might have 

8 expected. I was not surprised in any way. But that 

9 wasn't my role. 

10 MR. NADEL: Okay. I'll ask the second 

1 1 question but it's --

12 MR. MORRIS: This is Wayne Morris. Can I 

13 just interject here to Steve's point? 

14 MR. NADEL: Yes. 

15 MR. MORRIS: One of the things that I did in 

16 terms of AHAM was to, as I've done in past data 

17 collections, is to look at each data submittal and try 

18 and look at it with respect to both the previous data 

19 submittal that was done two years ago and what changes, 

20 if any, may have been made in that situation. And also 

21 

22 

to look at it in light of other data submittal. 

In some cases, I did contact manufacturers 

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1 and ask them to review their data submittal to see if 

2 there was a mathematical error that might have been 

3 made, or how this may have related to a previous data 

4 submittal; what changed or what did not. 

5 I wouldn't exactly call it a reasonableness 

6 test but I tried to use every available piece of 

7 information in order to try and double check to make 

8 sure there were not errors being submitted and captured 

9 in this data submittal. 

10 I won't comment whether or not any 

11 manufacturers changed their submittal. I think that's 

12 private. But we did try and work on this as closely as 

13 possible to eliminate any errors that could have been 

14 made. 

15 MR. NADEL: I guess my second question -- I'm 

16 not sure who could respond, whether it's one or you or 

17 maybe it ultimately goes back to the Department. When 

18 I look at the data, I see -- if we take -- to mention 

19 one number just to illustrate the issue, look at the 

20 50th percentile. There's quite a jump between the 40 

21 

22 

percent and 50 percent . 

MR. BROOKMAN: Are you referring to the last 

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1 page, a matrix like page? 

2 MR. NADEL: I'm referring to page 8 at the 

3 moment. 

4 MR. RIVEST: It is the graph or --

5 MR. NADEL: The graph. It's also on one of 

6 the charts that you showed. There appears on the 50th 

7 percentile to be quite a jump in the incremental 

8 manufacture costs between the 40 percent and 50 percent 

9 number, a jump at at least -- there are products right 

10 in that range now. I don't see that there's a 

11 technical difference between products at the 40 percent 

12 or 45 percent. I'm wondering --

13 MR. RIVEST: The one thing I can say, Steve, 

14 is that it was apparent from the data when different 

15 manufacturer hit walls; tooling -- you know. You could 

16 get a sense of where their technology positions were, 

17 where their investments were currently, although a 

18 slight difference can have a huge change in cost just 

19 because of the assets they have and the assets they 

20 need. 

21 

22 

MR. MORRIS: This is Wayne Morris . 

Please keep in mind, Steve, this was a cost 

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1 to convert 100 percent production to these values. 

2 This was not a cost to do one particular model. 

3 MR. NADEL: Okay. I guess the point I'd make 

4 is that -- and this may well be for the Department. 

5 There may be a need to further look into this issue. 

6 That big jump I think could have a very telling effect 

7 on what level. I think the Department needs to satisfy 

8 themselves that that jump is in fact reasonable versus 

9 it may be something related to the data collection 

10 process. 

1 1 And I know we'll be talking about reverse 

12 engineering later. That will give us another take on 

13 these costs. But that did strike me as a bit of an 

14 anomaly in this data set. 

15 MR. RIVEST: I mean, you notice things do 

16 happen in discrete steps. There's no difference, for 

17 example, between 35 and 40. So I think you hit 

18 technology walls and 

19 MR. NADEL: But when I look at the products, 

20 I don't see that. Which is why I'm just saying it 

21 

22 

requires further looking into. I'm not concluding 

something. I'm just saying we shouldn't accept it at 

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1 face value. 

2 MR. BROOKMAN: Additional questions on the 

3 data? 

4 Steve. 

5 MR. ROSENSTOCK: Yes. Steve Rosenstock, 

6 Edison Electric Institute. 

7 On the first of the last three pages, the 

8 first page, product characteristics and energy use 

9 data. That page. The first one of the three charts. 

10 The AHAM Appendices. 

1 1 MR. BROOKMAN: Yes. 

12 MR. ROSENSTOCK: Just out of curiosity. 

13 That's the one. Just out of curiosity, under the 

14 energy use -- and again, I'm not totally familiar with 

15 the MEF calculation and test procedure. I'll say that 

16 right up front. 

17 Under energy use, under hot water it shows 

18 kilowatt hours per cycle. Do you have similar 

19 information for gas or oil water heaters? There may be 

20 differences in terms of -- you know, because there's 

21 

22 

different energy factors for different types of water 

heaters. 

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1 MR. RIVEST: I think maybe Peter -- Peter? 

2 MR. BIERMAYER: Yes. That column is just the 

3 energy contained in the water. So that, for example, 

4 would be equivalent say if you had an electric water 

5 heater and it was 100 percent efficient, that's the 

6 energy you would use. 

7 Now the test procedure -- that's the number 

8 that goes into the test procedures. If there's a gas 

9 water heater, it's assumed to be 75 percent efficient. 

10 You divide by 75 and it would be that much more energy 

11 efficient. 

12 MR. ROSENSTOCK: So you're using the recovery 

13 efficiency when you're doing it for different types of 

14 water heaters? 

15 MR. BIERMAYER: Right. Right. 

16 MR. ROSENSTOCK: Okay. I just -- you know --

17 was concerned. 

18 MR. BIERMAYER: That's just the energy to 

19 heat just a certain amount of water. 

20 

21 

22 

MR. ROSENSTOCK: You're just covering BTUs to 

kilowatt hours and then you're using a recovery 

MR. BIERMAYER: Right. 

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1 MR. ROSENSTOCK: Okay. I just wanted to know 

2 how you were -- okay. 

3 MR. BROOKMAN: David? 

4 MR. GOLDSTEIN: Yes. I had a question. This 

5 is a methodological question concerning the 

6 distribution function of costs. 

7 I'm emphasizing I don't see any problem with 

8 the data that you're getting from the method on this 

9 product. But the question is suppose one of the 

10 manufacturers was submitting false data in order to 

1 1 influence the result. They took some item that you 

12 would know as an engineering consultant ought to cost 

13 $25.00 and they're saying it costs $150.00. 

14 What way is there for DOE or for a commenter 

15 from the outside to point out that kind of a 

16 discrepancy? 

17 MR. RIVEST: I think you have to appreciate 

18 the complexity here because what we're asking the 

19 manufacturers is not to take one of their models and 

20 tweak that model. We're asking them to switch over 

21 

22 

their whole production. So unless you worked there, I 

don't think you'd need to do that. To say that they're 

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1 giving false information would be very presumptuous, I 

2 think. 

3 MR. GOLDSTEIN: No, I'm not. That's why I 

4 said this is a methodological question. I'm not 

5 assuming that anyone is doing that. I'm asking the 

6 question if hypothetically they were to do it, what 

7 ways are there within the process to discover that 

8 error and to correct it. 

9 MR. RIVEST: First of all, I'd say that 

10 having -- the results should not be surprising anyone. 

11 I don't think that they are within -- they're not out 

12 of the range of previous data submittals. They're not 

13 out of the range of observation either. 

14 MR. GOLDSTEIN: Yes, but you're 

15 misunderstanding my question. I'm not saying 

16 MR. RIVEST: Well, I can't answer your 

17 question. 

18 MR. GOLDSTEIN: -- something's wrong with the 

19 data. I'm asking because this is a method that's going 

20 to be used not only in this rulemaking but in other 

21 ones. I've had time to review these. From the 

22 preliminary review, I don't see anything wrong with 

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1 these numbers either. But suppose there was something 

2 wrong with these or with the next one or with the next 

3 one. 

4 Using the old methodology I could look at 

5 compressor efficiency -- they don't have compressors in 

6 this product -- going from 90 percent to 93 percent. 

7 And I could say, all right, how much should that cost? 

8 I could look in a catalogue. I could get a reality 

9 check. 

10 MR. RIVEST: I think that -- not to belabor 

11 this point, but different rules will have to have 

12 different safeguards. 

13 MR. McCABE: Let me interject. This is 

14 Michael McCabe. 

15 The engineering manufacturing of any of these 

16 products is rather complicated and it complicates the 

17 rulemaking, and it's one of the reasons why we're 

18 sharing the information as we are, as we do now, in 

19 order so that everybody has the benefit of the 

20 information that is going to be used for the 

21 rulemaking . 

22 We're spending time visiting with 

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1 manufacturers, getting an understanding of what their 

2 products are, in order to be able to appreciate these 

3 data. We'll also be talking about the reverse 

4 engineering analysis. We're trying to get a breadth of 

5 information to be able to understand what's happening 

6 within the industry and, with manufacturer impact 

7 analysis, within individual manufacturers. Because 

8 when you go out into the marketplace, you'll see a 

9 range of costs, a range of prices. And there are a 

10 variety of factors that are causing that to happen. 

11 In many cases you need to understand the 

12 specifics for that individual model or that individual 

13 manufacturers in cases to understand those prices. But 

14 we're trying to share this with everybody in order to 

15 be able to sort out some of this. 

16 I'd also ask if anybody has any suggestions 

17 as to ways that we can ferret out any issues such as 

18 that, they identify them. 

19 

20 

21 

22 

MR. BROOKMAN: Glenn? 

MR. SCHLEEDE: Glenn Schleede. 

I heard -- I thought I heard Michael say 

earlier that this market was changing fast. 

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1 MR. BROOKMAN: Is that mike on? Can you hear 

2 him? I can hardly hear you. Please see if it's on. 

3 (Pause.) 

4 Okay. Go ahead. 

5 MR. SAMUELS: I thought I understood Michael 

6 to say that the market is changing considerably. 

7 Question. Do these data change over time? And if so, 

8 are there provisions to update between now and the time 

9 of the rulemaking, which is a year and a half off, or 

10 the effective date, which is three or four years off? 

11 Or do these data tend to remain stable and have no 

12 impact on the analysis as the market changes? 

13 MR. RIVEST: I'll try to answer that. The 

14 data that was collected was collected with the 

15 understanding that there was a certain time schedule. 

16 So within the data collection and the costs that were 

17 provided, they understood that there was a presumed 

18 final rule in '99 and presumed effective rule in 2003. 

19 So I don't think we can go beyond that and 

20 get into this endless scenario. If there was reason to 

21 

22 

believe that those dates are way off, then that may be 

warranted. But at this time, it's factored in. 

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1 MR. BROOKMAN: What I heard you say there I 

2 think was that the time frame that was specified to the 

3 data submitters should account for this, at least in 

4 part. It's a part of their submittals. Okay. 

5 Charlie? 

6 MR. STEPHENS: Charlie Stephens, Oregon 

7 Energy Office. 

8 Mike, what's the source of the shipment 

9 weights and do they change? I mean, given the impact 

10 that prices and costs assumed can affect shipment 

11 weights? Are they static? 

12 MR. RIVEST: My understanding is they are 

13 static. And they were based on the data submittals. 

14 MR. BROOKMAN: I see Wayne sitting there 

15 nodding his head in agreement. 

16 MR. MORRIS: Wayne Morris. 

17 Yes. The data is static on shipment 

18 weighted. 

19 MR. SAMUELS: At what date? I mean, when do 

20 the shipment weights --

21 

22 

MR. MORRIS: It's based on -- I believe it 

was based on calendar year '96, calendar year '96 

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1 shipments date, as reported to AHAM . 

2 MR. BROOKMAN: Michael McCabe. 

3 MR. McCABE: Wayne, I think it might be 

4 useful to go into some of that to explain the weighting 

5 because the weighting was looking at manufacturers, 

6 when they were developing the data. It was what their 

7 shipments were for that period of time. In other 

8 words, the manufacturers were estimating what their 

9 costs would be to take that volume of shipments 

10 engineered to those efficiency levels. 

11 So it's not trying to represent the share of 

12 a particular model that exists in the marketplace today 

13 which may meet any one of those levels, but rather 

14 taking a manufacturer's shipments as they exist at a 

15 period of time and what it would cost for that 

16 manufacturer to go to the different efficiency levels. 

17 MR. MORRIS: Yes. That's correct. 

18 This is Wayne. That is correct. And it also 

19 anticipates that they would be changing all of their 

20 production to that minimum value, whatever that 

21 particular energy level was above the baseline . 

22 MR. BROOKMAN: Additional questions, 

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1 comments, on the data that Mike has reviewed? 

2 (No response.) 

3 I don't see any. 

4 We're at a natural break point, aren't we? 

5 I'd like to suggest we take a break. 

6 It's now 10:30. Thank you. We've got a real 

7 good start. Let's resume at 10:45. We'll start at 

8 10:45. 

9 Thank you. 

10 (Whereupon, a recess was taken.) 

11 MR. BROOKMAN: Thank you again for allowing 

12 us to stay on schedule, allowing us to start on time. 

13 The next segment is to talk about life cycle 

14 cost data. 

15 Bryan, are you ready? 

16 MR. BERRINGER: Okay. The next point on 

17 the -- can everybody hear me okay? I know some of the 

18 speakers are turned down and I'll try to speak more 

19 into the mike here. 

20 The next is the life cycle cost analysis that 

21 

22 

we're going to begin to talk about. This gets into 

some of the assumptions that we're making as far as 

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1 input into the analysis. And Jim McMahon will be 

2 getting into more detail as far as running the LCC and 

3 all that. 

4 I just wanted to point out some of the 

5 assumptions that we're using here. And these 

6 assumptions are considering using the crystal ball 

7 simulations. So basically we have the start year at 

8 2003, the purchase expense baseline retail price of 

9 $4.21 with tax. 

10 Mike Rivest is going to talk a little bit 

1 1 more about that as far as where those numbers came 

12 from, where it was derived. 

13 Lifetime. We're using a distribution for 

14 cycles per year. Also, a distribution off data. So 

15 we're trying to get away from using the average values 

16 in some cases. 

17 The energy price trend. We're looking at AEO 

18 '98 reference case. The energy fixed chart is -- we've 

19 done the analysis both with and without fixed cost and 

20 it shows a comparison. 

21 

22 

The water prices was a distribution. And at 

this point, the water price escalator, we've just 

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1 assumed it to be flat at zero, so we have not added any 

2 escalation into this analysis. 

3 And also, the discount rates as a 

4 distribution. 

5 MR. NADEL: Bryan? 

6 MR. BERRINGER: Yes. 

7 MR. NADEL: Steve Nadel. Since you quickly 

8 moved that chart off, I assume that those specific 

9 assumptions we'll discuss later when Jim gives us the 

10 presentation? 

11 MR. BERRINGER: Yes. 

12 MR. NADEL: Fine. 

13 MR. BERRINGER: Jim will get into more detail 

14 on the spreadsheet and stuff. 

15 MR. NADEL: I just wanted to know where to 

16 comment later. 

17 MR. BERRINGER: That's just to let you know 

18 where it's starting at and what assumptions were used 

19 in this analysis. 

20 Again, I don't really want to get into any 

21 

22 

detail with this. I'll give you an idea of what the 

preliminary results are. There's a number of graphs, 

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1 but this table sort of summarizes it, the findings with 

2 the runs, what it looks like. So again, this is some 

3 of the preliminary information. 

4 Again, we'll get into more detail with that 

5 when Jim is there and we'll have more discussion on 

6 these items. Just to give you an idea of what it's 

7 looking at, what the information is looking like to 

8 date. 

9 Yes, Steve? 

10 MR. ROSENSTOCK: Hi. Steve Rosenstock, 

11 Edison Electric Institute. 

12 Is that table in one of these handouts? 

13 MR. BERRINGER: Yes. It's way down. 

14 MR. ROSENSTOCK: Okay. Sorry about that. 

15 MR. BERRINGER: It's probably about the last 

16 package. It should be there. 

17 MR. ROSENSTOCK: Okay. 

18 MR. BERRINGER: But it has a little bit more 

19 detail as far as slides and stuff. 

20 

21 

22 

MR. ROSENSTOCK: Okay. I see. 

MR. BERRINGER: At this point I'm going to 

let Mike Rivest -- one of the inputs is price into the 

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1 LCC. So we'll have Mike talk about that and then we'll 

2 have Jim McMahon present and get into further 

3 discussion as far as the LCC analysis and so forth. 

4 Thank you. 

5 MR. RIVEST: You should have this in your 

6 package, maybe after Jim's slides. Just thought I 

7 would immediately talk about how we go from the data 

8 submittals for cost and try to come up with an input 

9 for the life cycle cost for price. And I thought I 

10 would do that before Jim starts into the life cycle 

11 cost. 

12 This is the last slide. I just want to make 

13 a quick intro. 

14 The costs that we've been obtaining from 

15 manufacturers are production costs. They deal with 

16 direct material, labor and overhead components. There 

17 are additional costs which are not captured within the 

18 data collection that deal with sales, general and 

19 administrative costs. And what we're trying to do for 

20 the life cycle cost is come up with an end user price. 

21 In coming up with this end user price to do 

22 the life cycle tradeoff between increases in price and 

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1 reductions in operating costs, we have to go from the 

2 data submittals into a net consumer price. And to sort 

3 of write that down into manageable parts, we've broken 

4 it down into three separate mark-ups. 

5 The first mark-up takes those production 

6 costs and adds a multiplier on it based on sales, 

7 general and administrative costs and you obtain 

8 manufacturer price. And we'll see. We have a couple 

9 of data sources for manufacturer price based on 

10 industry shipments, both in terms of units and in terms 

1 1 of dollar value. 

12 We go from the manufacturer price which is 

13 reported and we obtain a retail price. And there's 

14 this category here I've called retail mark-up, which 

15 essentially incorporates the difference in price 

16 between the manufacturer price reported and the price 

17 sold to the consumer. There may be some elements in 

18 there that are not strictly retail mark-up that may 

19 have to do with costs associated with shipping, with 

20 buying and with some logistical costs. But I've 

21 

22 

characterized that under the retail mark-up category . 

And finally, an increase in price will also 

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1 have an increase in price which will impact the 

2 consumer. 

3 What I'll do is I'm going to have a brief 

4 discussion first on the retail mark-up, then on the 

5 manufacturer mark-up. And here it won't be much of a 

6 discussion. Just to say that what we've done is we've 

7 taken the industry shipment by state and we've applied 

8 the state tax rate and obtained an average, a shipment 

9 weighted average, sales tax rate of 5.2 percent. 

10 In obtaining that first element of mark-up, 

1 1 which is the price between the retail price and the 

12 reported shipment value, we have a few data sources 

13 that can help us try and put a bound on that mark-up. 

14 For retail prices, we have information from the 

15 government, which is the Consumer Expenditure Surveys, 

16 and we have data 'for the years '96 to '94. That's an 

17 annual survey, a rolling survey of 5,000 families where 

18 they are reporting all their purchases within that 

19 year. And one of the discrete items is clothes washer. 

20 

21 

22 

A second survey, we have data for the years 

'98 to '95 from Dealerscope Merchandising annual 

survey. The survey methodology is different. It's not 

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1 based on talking directly to consumer. Instead, it's 

2 based on talking to industry participants and asking 

3 them to estimate not their own shipments but the 

4 shipments of their competitors, a totally different 

5 approach. 

6 And finally, we have a third survey which is 

7 the ELCAP survey data. And we have fairly update 

8 information on pricing which is obtained from a survey 

9 or participating retailers which are asked to give a 

10 detail of what clothes washers they sold and at what 

1 1 price. 

12 Now, the sample size here is significant but 

13 it does not include two of the major retailers, which 

14 are Sears and Circuit City. 

15 So all of those data sources come with some 

16 caveats. 

17 We have two sources of data for manufacturer 

18 prices. We have Current Industrial Reports and we also 

19 have the AHAM Fact Book. 

20 A little trend analysis on some of the prices 

21 

22 

we can observe. In terms of the retail price, we 

definitely see a clustering around the $400.00 point. 

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1 It's relatively flat as far as the consumer expenditure 

2 survey. Probably a slight downward decline. A more 

3 noticeable downward decline with the Dealerscope 

4 merchandising survey. And we have ELCAP data for the 

5 last couple of years. 

6 You see a definite clustering around the 

7 $400.00 mark. So this is not, quote, the baseline, 

8 necessarily. This is just the average sales price of 

9 all clothes washers surveyed. 

10 Manufacturer prices. We see a trend line 

1 1 here. Once again, I think we can observe a slight 

12 increase up to a certain time frame, then a flattening, 

13 maybe a reduction, depending on the data source. 

14 So the idea here is to obtain a mark-up from 

15 one price to the other. And the process we're going to 

16 use is quite simply to divide one by the other. 

17 Wayne? 

18 MR. MORRIS: Wayne Morris. Just a question 

19 for you, Michael. It states in here that you're using 

20 information from the AHAM Fact Book. Could you explain 

21 

22 

how you did that in terms of -- is that a 

mathematically defined kind of thing? 

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1 MR. RIVEST: Yes. It is a mathematically 

2 derived number looking for each year at the total value 

3 of shipments and the number of units shipped. 

4 MR. MORRIS: Okay. For purposes of the 

5 record, I'd like it made very clear that AHAM did not 

6 provide any pricing data to 

7 MR. RIVEST: No. 

8 MR. MORRIS: -- either Arthur D. Little or to 

9 DOE. We're not in the business of doing that. But I 

10 just didn't want anybody to think, looking at this 

1 1 graph and the next one, that AHAM has now provided 

12 pricing data. 

13 MR. TRICKET: Another question. Dave 

14 Tricket, NREL. 

15 Are these current dollars? What are these 

16 actually? In constant dollars? What year? 

17 MR. RIVEST: They're in the dollars of the 

18 time the survey was taken. 

19 

20 

21 

22 

MR. TRICKET: Okay. 

MR. RIVEST: It's a very good point. 

MR. ROSENSTOCK: Steven Rosenstock, Edison 

Electric Institute. Not adjusted at all for inflation 

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1 or anything else? 

2 MR. RIVEST: There are no adjustments. And 

3 since we're really getting at a ratio in a given year, 

4 I think that's self-correcting. 

5 Delving more into this than there is, just 

6 looked at all the combinations of dividing the retail 

7 price by the various -- the two sources of retail 

8 price, and looking at how that mark-up ratio varies. 

9 You can see definitely that there was a significant 

10 downward trend in the years 186 perhaps to the 

11 beginning of the '90s; a more blurred picture in the 

12 more recent years. Part of that has to do with the 

13 fact that our data, we have less richness of data. 

14 Our most solid year was the year 1994 where 

15 we had the most data sources. We were calculating the 

16 mark-up of 1.39 on average here. 

17 Now, one thing I do want to point out is each 

18 of these has pros -- each of these data sets has pros 

19 and cons and very different methodologies. The one 

20 data source which is, if you will, all government, is 

21 the Consumer Expenditure Survey and the Current 

22 Industrial Reports. 

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1 So analyzing this and not necessarily drawing 

2 to any single number, the Department proposes using a 

3 mark-up of 1.4. And I emphasize the 1.4. The zero 

4 there -- I think to go into a second significant digit 

5 is probably overemphasizing the accuracy that we can 

6 have here, but we feel that 1 .4 is a reasonable retail 

7 mark-up which considers 

8 Dan Barzel. 

9 MR. BARZEL: I'm dreaming about this number. 

10 (Laughter.) 

1 1 Does it matter -- I don't want to argue for 

12 the sake of argument. Is it important that the number 

13 be accurate in terms of the final result? Because I've 

14 got an idea of what our company and my competitors are 

15 realizing in terms of what they report. I don't know 

16 what they actually realize. I know what they report. 

17 And there isn't -- there really isn't a 

18 retailer out there, if you convert that to gross margin 

19 percentage as a percent of sales, I don't think there's 

20 a retailer out there who's realizing over 30 percent. 

21 

22 

And 1.4 would be in excess of 30 percent . 

MR. RIVEST: That's why I tried a little bit 

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1 to preface it. We looked at the 10-Ks of several 

2 retailers and we realize that a good gross margin is 

3 probably 25. I think I saw maybe 26. And that 

4 translates to a multiplier of 1.33, 1.35. 

5 But I'm not sure that since I'm dividing the 

6 retail price by this shipment number, I think there are 

7 other costs that are being encapsulated in this mark-up 

8 that are not --

9 MR. BARZEL: Service, distribution, returns, 

10 defective product --

1 1 MR. RIVEST: Correct. So probably the retail 

12 mark-up is a misnomer but we weren't -- when we looked 

13 at the 10-Ks, at least we were satisfied that we -- and 

14 there were footnotes in some of the 10-Ks that some of 

15 the purchase -- in the calculation of the gross margin 

16 there were some purchasing costs and inventory costs 

17 that weren't captured. 

18 MR. BARZEL: I would any -- the net price 

19 that the retailer ultimately pays is a valid -- to the 

20 selling price -- is a valid measure of gross margin and 

21 should be included in your number. Because those are 

22 costs that retailers have to spend to selling the 

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1 product. They have selling expense. And they have 

2 these other expenses, whether they be service or 

3 distribution or whatever. 

4 I just don't know -- I don't know how 

5 important it is to your calculation if the actual 

6 number is 25 percent or 23 percent gross margin. And 

7 that's 1.32 and you're using 1.4. Does that have a 

8 significant effect on your outcome? 

9 MR. RIVEST: It's probably within the range. 

10 Certainly less than the range of uncertainty of a lot 

1 1 of the other inputs. I wouldn't say it's unimportant. 

12 Terry? 

13 MR. THIELE: Terry Thiele of White 

14 Consolidated. 

15 As you mentioned earlier, your one set of 

16 data do not include Sears. 

17 MR. RIVEST: Yes. 

18 MR. BARZEL: Does Sears show up? Because 

19 they are such a very large player in this product line. 

20 Do they show up in any of this data on any of those? 

21 

22 

MR. RIVEST: Yes. They would show up on most 

of this data. They wouldn't show up on -- they would 

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1 show up certainly on the Consumer Expenditure Survey 

2 because you're calling in consumers who've just 

3 purchased a washer. So because of their market share, 

4 they would be in there. 

5 The Dealerscope? I believe -- I'm not sure 

6 about the exact participation in the Dealerscope survey 

7 and I know for a fact they're not in the ELCAP. And 

8 the significance of that is does Sears have such a 

9 large volume in purchasing that for any given price, 

10 market price, they can get a higher return. But that's 

1 1 speculating. I don't know for a fact. 

12 MR. BARZEL: Well, -- or that they can afford 

13 to live with a lower return. 

14 MR. RIVEST: I think as I understand it, they 

15 would base their pricing on their competitors and then 

16 they would make their profit on their market share. 

17 But I haven't talked to Sear. 

18 MR. THIELE: Yes. I mean, we're talking 

19 theory. I'm trying to ascertain whether we've got the 

20 fact. 

21 MR. RIVEST: I don't have any detailed 

22 information on retail mark-ups at Sears. 

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1 Yes, sir? 

2 MR. FLORA: Brad Flora with Whirlpool. 

3 I guess the only question that I've got, 

4 Mike, is I'm sure ELCAP data earlier than '94 is 

5 available. Is there a reason why we didn't try to get 

6 a little more data from ELCAP to get our average? 

7 MR. RIVEST: -- Ponday, who works with me, is 

8 shaking his head no. 

9 You called ELCAP and they told you that they 

10 didn't have that data. And I think the reason was 

1 1 because the survey had been sold to another firm called 

12 Intellect. There may have been an ELCAP survey but we 

13 can't get the data. 

14 MR. FLORA: Okay. How about CES data for 

15 after '94? 

16 MR. RIVEST: We have a request in right now 

17 to get that. 

18 MR. FLORA: Okay. I just think that would be 

19 helpful to get a better understanding. 

20 MR. RIVEST: Based on the data sources, we 

21 came up with an average retail cost price -- an average 

22 retail price before tax of approximately $400.00. And 

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1 adding the sales tax of 5.2 percent, we were obtaining 

2 a retail cost in the $420.00 range. 

3 I do want to say that as far as life cycle 

4 cost analysis is concerned, we're really only 

5 interested in incremental costs and incremental price. 

6 So where you fix that initial price is not going to 

7 impact the results in terms of payback or life cycle 

8 cost of the analysis that Jim will show. However, --

9 Wayne? 

10 MR. MORRIS: Wayne Morris. Just a question 

1 1 about -- I think at the last workshop we had raised a 

12 question of whether or not we were capturing the cost 

13 of installation. And for those manufacturers that 

14 either do include installation in their retail price or 

15 for those that charge a separate fee, I think there's 

16 some way of capturing that and knowing whether that is 

17 in this series or not. 

18 MR. RIVEST: The Consumer Expenditure Survey 

19 does that. It asks if there were installation costs. 

20 On average, it ends up being a small number because I 

21 guess not everyone pays that installation cost. But 

22 it's not something we captured here. And I think in 

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1 the back of our head for the LCC, the question would be 

2 would the technology change that installation cost. 

3 Would it make it more complex or more costly. And that 

4 would be a valid question to ask. 

5 MR. FOLEY: Just back on installation, unless 

6 somebody convinces me that it costs more money -- Gene 

7 Foley. I'm sorry. From the Alliance to Save 

8 Energy. costs more money to install a high 

9 efficiency washing machine compared to a low efficiency 

10 washing machine, wouldn't that number actually just 

1 1 wash out in the analysis? 

12 MR. RIVEST: Or shouldn't it? 

13 MR. FOLEY: Or shouldn't it. Shouldn't it 

14 end up becoming sort of a non-figure in the analysis? 

15 MR. BROOKMAN: Wash out? As if you just 

16 chose a metaphor. 

17 (Laughter.) 

18 MR. FOLEY: Just choosing a metaphor. Right. 

19 Exactly. 

20 MR. RIVEST: I think you're right. I don't 

21 have information that it costs more presently to have a 

22 more efficient model. I'd be interested if there 

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1 information. 

2 MR. BROOKMAN: Let me make a statement. 

3 Several people approached me at the break and they said 

4 that we're making good progress. And they also said 

5 that they were struck by the quality of what's being 

6 presented and asking if we can conclude this today. 

7 I thought I'd raise that with you at some 

8 point, not now. But we're going to continue to press 

9 on and I'm going to ask people to try and make their 

10 points concisely and on point and we're going to really 

1 1 see how much we can get done today and we'll take this 

12 up a little later on today. 

13 Okay, Mike. Press on. 

14 MR. RIVEST: Looking at the second component 

15 of mark-up, which is primarily the SG&A mark-up the 

16 manufacturer has to take on their production costs to 

17 be able to recover all their costs, we had as 

18 information sources three primary things. We had a 

19 report that was prepared in 1991 for AHAM. We had from 

20 the Bureau of Census, the Census of Manufacturers, 

21 

22 

which was dated I think '94. And we also had available 

10-Ks from publicly traded manufacturers of clothes 

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1 washers. 

2 Once again, none of those data sources is 

3 absolutely reflective of the cost structure of clothes 

4 washer manufacturing because I don't think the data is 

5 collected at that level. But based on our understanding 

6 of costs, we think that we have a fairly good 

7 understanding of what the sales, general and 

8 administrative costs would be within the total sales 

9 price of a manufacturer. 

10 We derived a manufacturer mark-up currently -

11 - not a profit, a total mark-up on those elementary 

12 material and labor costs, of 1.35, derived from a 

13 breakdown of the different cost components. 

14 So summarizing the current mark-up situation 

15 as we understand it on those basic manufacturing costs, 

16 we would have a mark-up of 1.35 for sales, general and 

17 administrative, and we're working back here from our 

18 price, retail price of $400.00, factoring in a retail 

19 mark-up of 1.4, a manufacturer price of $285.00, which 

20 is in good accordance to the data that we have, and a 

21 

22 

manufacturing mark-up of 1.35. We would work our way 

back to a manufacturing cost of approximately $211.00. 

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1 Now, what does that mean for our analysis? 

2 We've captured the incremental manufacturer costs that 

3 were submitted and we have to forecast a price. And one 

4 of the ways so far we've thought about doing this is 

5 there's always some uncertainty as to how much of those 

6 costs you'll be able to pass on to the consumer. There 

7 may be a squeeze on pricing. 

8 So we've tried to bound that uncertainty by 

9 having a lower end mark-up of 1, which means that 

10 you're not recouping any of your additional sales, 

11 general and administrative costs, and an upper bound of 

12 1.35, which means you're doing as well after the 

13 standard percentage wise as you were before the 

14 standard. And we're just proposing an equilateral 

15 triangle as a distribution at this time. 

16 Questions? 

17 (No response.) 

18 That completes that. 

19 Jim will continue on and look at all the 

20 other inputs that go within the spreadsheet. 

21 

22 

MR. MORRIS: Something just struck me. It's 

Wayne Morris. 

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1 On page 7, you show a calculation which 

2 arrives, through all of this, at an -- if you will 

3 an average. And especially in the pages even before 

4 that, a very laborious process of getting to this 1.35 

5 number. 

6 And then it seems that by looking at page 9, 

7 suddenly 1.35 didn't become the average. It became the 

8 upper bound. Did I miss something? 

9 MR. RIVEST: Yes. What happens, if we were 

10 to assume in the life cycle cost analysis or throughout 

11 the analysis, that you would be able to mark-up -- you 

12 would be able to pass through and mark-up to the same 

13 extent your additional costs as you are currently. But 

14 the final analysis, the manufacturer impact analysis 

15 would say that the more you push the standard level the 

16 more money you're going to make. 

17 So, -- and it's been the concern that as you 

18 increase those costs that you'll be able to appropriate 

19 less and less of those costs. So we tried to bound 

20 that problem. And as we move on in the analysis, and 

21 

22 

we do start making the trade between the manufacturing 

impact and the consumer life cycle, we have to maintain 

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1 a constant assumption about prices. 

2 MR. BROOKMAN: Additional questions on Mike's 

3 presentation before we move on to Jim McMahon? 

4 (No response.) 

5 Okay, Jim. Jim is going to be referring to 

6 this packet, Life Cycle Cost Analysis: Clothes Washers. 

7 And it's got the heavy black line that then leads to 

8 the schematic, the Berkeley National Laboratory. 

9 MR. McMAHON: No. It's now the advanced 

10 light source. 

1 1 (Laughter.) 

12 The ALS. If you're ever in Berkeley, you'll 

13 see this building up on the hill. It's kind of a 

14 trademark thing. They gutted the entire interior. But 

15 since it's such a famous structure with historical 

16 significance for the physics community, they kept the 

17 exterior and they put a brand new x-ray machine on the 

18 inside. So it's the Advanced Light Source. It's 

19 national resource. Anyone here can use it. Just got 

20 to sign up as a user. 

21 

22 

(Laughter.) 

MR. BROOKMAN: And if you want to sign up as 

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1 a user, how long do you need to wait in line? 

2 MR. McMAHON: I don't have the answer to that 

3 question. 

4 Okay. I'm going to be referring to this 

5 handout and one other, which is the one on the inputs, 

6 and it's called "Quantities and Current Assumptions for 

7 Calculating Life Cycle Costs of Clothes Washers." I'd 

8 be happy to take questions at any time. 

9 The major discussion topics are these: What's 

10 changed since the workshop of July last year; the major 

11 input assumptions; how we are handling uncertainty and 

12 variability; some sample outputs; and what are the 

13 sensitivity of these preliminary results to the major 

14 inputs. 

15 On recent developments, I'm going to start 

16 the talk in July of 1997. We gave a demonstration at 

17 that time of the first draft life cycle cost 

18 spreadsheet. There have since then been informal 

19 demonstrations of revisions and a pilot training for a 

20 handful of people at that time of two spreadsheets, one 

21 

22 

of which was the simple life cycle cost calculation and 

the second was the population distribution that uses 

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1 the crystal ball add on to EXCEL . 

2 What we have done since then is merge those 

3 two spreadsheets into one so that there's no confusion 

4 about what we are using. If you wanted a simple life 

5 cycle cost, you can do it on that spreadsheet. If you 

6 have crystal ball attached to EXCEL, you can go into 

7 the probability distributions. 

8 And that brings us to today. 

9 The major changes in the calculation itself 

10 are primarily data inputs. The engineering analysis 

1 1 has just been described. We've taken the numbers as 

12 given by Arthur D. Little. The energy prices I'll 

13 discuss in detail. Water and sewage costs are in here 

14 in much greater detail than previously, and we have a 

15 significant treatment of uncertainty and variability. 

16 The engineering analysis contrasting the old, 

17 defined as July last year, with the new today. The old 

18 analysis used design options. We're now using 

19 efficiency levels as has just been described. And 

20 where we used to use a single value for average 

21 manufacturing cost, there is now a distribution . 

22 Normally, we use the distribution, the 

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1 shipment weighted average, with the full distribution 

2 as supplied by the industry. However, you have the 

3 opportunity in the spreadsheet to select one of the 

4 percentiles. 

5 I will repeat that Mike Rivest recommends 

6 that's not a good idea, but we're providing tools with 

7 capabilities in case you want to use them. 

8 Now, this is a rehash of things you've just 

9 seen from Mike, so I will not spend a lot of time on 

10 it. 

1 1 The engineering analysis provides 

12 manufacturing cost for nine efficiency levels as 

13 incrementals compared to the baseline, and this is that 

14 same data. 

15 The purchase price is calculated as Mike has 

16 just indicated. The baseline price is $400.00 plus tax 

17 and the incremental price includes the mark-ups that 

18 have just been described and the sales tax. 

19 We haven't quite settled on our terminology 

20 here, so what I'm calling the purchase price is what 

21 Mike just called the consumer price. It's the same 

22 thing. So it's retail price plus tax. 

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1 The graph shows you the variability. As you 

2 go out to higher MEF you get a wider range because of 

3 the variability in the manufacturing cost submittals 

4 and the range of mark-ups that are being assumed. 

5 MR. SCHLEEDE: Glenn Schleede. I'll ask 

6 three questions and you can cover them whenever it's 

7 appropriate in your presentation. 

8 Do maintenance and repair costs enter into 

9 your life cycle costs at any point? 

10 Second, does anyone have data on the extent 

11 to which consumers purchase maintenance contracts? Are 

12 they a significant factor or not? 

13 And third, are the costs of the maintenance 

14 contracts taken into account any place in the life 

15 cycle cost? 

16 So it's just whenever it's appropriate, if 

17 you would. 

18 MR. McMAHON: The answers are no; I don't 

19 know; and no. 

20 

21 

22 

MR. SCHLEEDE: Does that mean that they're 

not -- the assumption is that none of those costs are 

important? 

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1 MR. McMAHON: At this time we have not 

2 attempted to account for maintenance costs. I have no 

3 data on that right now. 

4 MR. SCHLEEDE: Does that reflect a conclusion 

5 that it's not significant or just not doable or --

6 MR. McMAHON: So far, no one has offered 

7 evidence that the maintenance costs will change as a 

8 function of efficiency. 

9 MR. SCHLEEDE: Is there any evidence on that? 

10 Any data on that? 

11 MR. McMAHON: I have not seen any data on 

12 that at all. No. 

13 MR. SCHLEEDE: Okay. I must be buying the 

14 wrong appliances because my repair costs keep going up. 

15 MR. BROOKMAN: So, Glenn, if you had data 

16 like that, I'm sure the Department would like to see 

17 it. 

18 MR. RIVEST: Jim, Mike Rivest. I just wanted 

19 -- you mentioned my name and I didn't hear what you 

20 said. What is it you just said about what I said? 

21 

22 

I just want to reiterate the question about 

using singular percentile values to be conducting 

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1 analyses. What I said is that if you're going to using 

2 a singular point, you should use the shipment weighted 

3 average. 

4 MR. McMAHON: Right. 

5 MR. RIVEST: But what we really were trying 

6 to do here is to not pick any point and use the full 

7 distribution. 

8 MR. McMAHON: Right. Let me clarify. 

9 MR. RIVEST: I'm -- be sure I'm clear about 

10 that. 

1 1 MR. McMAHON: Let me clarify. 

12 In the spreadsheet the user has the option of 

13 selecting one of the percentiles. I didn't want to 

14 lose any of the information. So we present in this 

15 spreadsheet the information just as you presented it 

16 with the different percentiles. The default value in 

17 this spreadsheet is to use the shipment weighted 

18 average in the simple calculation and to use the full 

19 distribution when you do the crystal ball calculation. 

20 That's the default. But it is possible for the user to 

21 

22 

select one of the percentiles and use that . 

So I'm telling you the capability of the 

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1 model is all the information is in there, such as you 

2 presented it, so it's fully disclosed. You know what's 

3 there. You have the option of picking a percentile. 

4 I support your recommendation that you don't 

5 do that. The best representation of the data is to use 

6 the shipment weighted average, and that is the default 

7 unless you change it. 

8 MR. RIVEST: My recommendation is use that if 

9 the single value is used. My recommendation is to use 

10 the full distribution. 

1 1 MR. McMAHON: Right. 

12 MR. BROOKMAN: Thanks for the clarification. 

13 Yes, Bryan? 

14 MR. BERRINGER: Bryan Berringer. 

15 Just to interrupt a second. We had a 

16 question by Glenn Schleede. Do manufacturers have any 

17 information or are there any other sources that anybody 

18 knows of where we can obtain any maintenance contract 

19 information or maintenance costs and what does it 

20 range? Would it range due to efficiency costs and 

21 pricing achieved? 

22 MR. JONES: Earl Jones here from GE. 

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1 Yes. We believe that data is available and 

2 we will make it available to you. 

3 MR. BERRINGER: Thank you. 

4 MR. BROOKMAN: Dan, did you have an 

5 additional comment? 

6 MR. HAWKINS: I have one follow-up comment to 

7 the discussion between Michael and Jim. 

8 MR. BROOKMAN: Just a second, because this 

9 follows on, Dan, an additional on maintenance. 

10 MR. HAWKINS: Sorry. 

11 MR. BARZEL: The maintenance contract is 

12 really a separate issue, I think. It's basically an 

13 insurance policy. So I'm not sure it's fair to include 

14 it in the cost of operating the product. I think the 

15 cost of the product and the cost to fix the product are 

16 fair costs. But since the maintenance contract is 

17 almost like an insurance policy, it's an optional 

18 thing. You don't have to have it to own the product. 

19 I think if you limit your look at what it 

20 actually costs to fix it, that's the issue. 

21 

22 

MR. BROOKMAN: Larry? 

MR. HAWKINS: Yes. I just wanted to clarify. 

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1 I'm still just a little bit confused. Is the 

2 recommendation that we should not be using a singular 

3 value, be it the shipment weighted average or any 

4 percentile? But is the recommendation that we should 

5 be using the 100th percentile, the whole distribution, 

6 in the analysis? 

7 MR. McMAHON: The recommendation is that you 

8 use the full distribution. You use crystal ball and do 

9 the full distribution. 

10 MR. HAWKINS: Thank you. 

1 1 MR. BROOKMAN: Yes, Terry? 

12 MR. THIELE: Terry, WCI. 

13 I think we may be getting confused when we're 

14 talking about maintenance contracts. And perhaps the 

15 issue that's being raised, which may be valid, is 

16 warranty costs. 

17 Purchasing a maintenance contract is a 

18 discretionary act of the consumers, but that's separate 

19 and apart from the issue of product warranty. Most 

20 products are under warranty for some prescribed period 

21 

22 

of time and there may be some relationship not between 

energy efficiency necessarily and warranty costs but 

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1 product complexity and warranty cost. And the more 

2 complex your product is, or if it has new features or 

3 design options that have not been time tested, you are 

4 likely to see in the introduction of that product an 

5 increase in your warranty costs. Because you have to 

6 then go out and fix the mistakes that you didn't catch 

7 in the product design or manufacture. 

8 MR. BROOKMAN: Thank you. 

9 MR. JONES: Just a further comment on that. 

10 That would be certainly a true observation. And of 

1 1 course, as applied in the context of this rulemaking, 

12 then, one could correlate those increased costs to 

13 changes made to comply with the standard. 

14 MR. BROOKMAN: That was Earl Jones. 

15 David Goldstein? 

16 MR. GOLDSTEIN: Well, there are some 

17 maintenance costs associated with the use of washing 

18 machines, the biggest of which is the detergent that 

19 goes into it. We've consistently recommended that 

20 since you can use less detergent in the higher MEF 

21 

22 

close washers that the cost reductions to the consumer 

from using less detergent should be included in the 

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1 analysis. 

2 I would also assume that if a more efficient 

3 washer results in less use of your water heater and 

4 less use of your clothes dryer that your maintenance 

5 costs for those two appliances would go do or the 

6 lifetimes go up. It's probably not a big effect but 

7 it's there. 

8 MR. JONES: Earl Jones here again. I just 

9 can't -- and I've heard this comment on detergents so 

10 frequently it's just got to be responded to. 

1 1 I think the Department is taking the right 

12 position at this point in not assuming any reduction 

13 because of the alleged reduction in soap costs. 

14 Indeed, no manufacturer suggests that less soap be 

15 used. And indeed, the latest consumer report says that 

16 the costs of those detergents are more expensive. 

17 So we want to talk about the record, let's 

18 look at the full record. Let's not talk about 

19 assertions. Let's talk about what the facts show. And 

20 that is what the facts show. 

21 

22 

MR. BROOKMAN: Let's confine our comments to 

the issue here at hand. I'd like to press on. I think 

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1 that's relevant but we're not here to discuss 

2 detergents at this moment, I don't think. 

3 MR. NADEL: Will we get to that later, or is 

4 this the time to --

5 MR. McMAHON: At this time, detergents are 

6 not included in operating costs. I'm about to discuss 

7 operating costs. 

8 MR. NADEL: We had a workshop, small 

9 workshop. I believe one of the decisions at that 

10 workshop is we were going to add the capability to add 

11 detergent cost savings so that those who believe that a 

12 change in detergent cost is zero can include that. 

13 People could input their assumptions. What is the 

14 status of that? 

15 MR. McMAHON: LBL stated that it was capable 

16 of putting that capability in. 

17 (Laughter.) 

18 We haven't been instructed to do so. And 

19 there are comments on the record from the soap 

20 manufacturers stating that the costs will not decline. 

21 

22 

Independent of whether the formulation or the quantity 

of detergent changes as more efficient products come on 

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1 the market, they're on the record as saying that the 

2 costs will not decline. And as recently as last week I 

3 checked with one of those manufacturers and they still 

4 stand by that statement. 

5 So we have not yet been told by the 

6 Department that his is a factor that we need to 

7 include. 

8 MR. NADEL: So, I'll turn to the Department. 

9 MR. BERRINGER: I think there's a 

10 representative from Chlorox here or some of the other 

1 1 detergent manufacturers. If they have any -- did he 

12 leave the room? 

13 MR. NADEL: Excuse me. We've had the 

14 discussion before about will there or will there not. 

15 I'm not trying to repeat that discussion. We have 

16 differing points of view. The question is whether the 

17 analysis module permits different assumptions to be 

18 entered rather than just to assume that one point of 

19 view prevails. 

20 MR. BERRINGER: Right. As you said, we 

21 discussed that. To try and do that for LBL, with the 

22 time constraints trying to get ready for the workshop 

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1 and the many revisions that they did to revise this, 

2 there was a time factor. So it is appropriate to 

3 discuss if that's an option that should be added to the 

4 spreadsheet. 

5 MR. JONES: What does that mean, Michael? 

6 Earl Jones. 

7 MR. BROOKMAN: Well, the one question I have 

8 is whether now is the appropriate time to discuss this, 

9 because I'm not clear myself. 

10 MR. LINARD: Jack Linard, Unilever HPC-USA. 

1 1 I've given many presentations over the years 

12 on the effect of detergents on performance, certainly 

13 with higher efficiency machines. One of the comments -

14 - first of all, when we give a dose of detergent, it's 

15 purely a recommended dose which we provide for optimum 

16 cleaning results. With today's detergents, we don't 

17 tell you you have to use a certain amount and then come 

18 out and check to make sure you're doing that. We don't 

19 have detergent police running around. 

20 If we today cut the dose in half today or 

21 

22 

double it, we are recommending an optimum level. And 

that's exactly what we do for high efficiency machines. 

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1 We recommend an optimum level for the best performance. 

2 If the consumer wants to cut it in half, 

3 they're going to suffer in performance. That's up to 

4 them. We will just give what we consider the 

5 recommended. 

6 In terms of costs of detergents, yes, they 

7 are more expensive. We sell a product now which is 

8 twice as expensive as a normal product per use. Half 

9 of that, I think, is due to shipment. We sell it by 

10 mail. The other one that is on retail is about 20 

11 percent mark-up roughly. 

12 So I don't think that the cost of the 

13 detergent is necessarily more expensive. It may be 

14 just the fact that the volume of sales is so low at the 

15 moment that it's hard to recoup the cost of actually 

16 selling it. Certainly the intention is to sell it for 

17 basically the same price as any other detergent per 

18 use. 

19 MR. BROOKMAN: Bryan, what I interpreted from 

20 some of the earlier questions was about the process 

21 

22 

that DOE's pursuing at this point. What Jim 

represented a moment ago, I believe -- correct me if 

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1 I'm wrong, Jim was that LBL had the capability of 

2 including this in their analysis and he also said the 

3 Department had not yet instructed them to include that 

4 capability in what they're doing. 

5 Is that a fair characterization? 

6 MR. BERRINGER: Yes. That's correct. 

7 MR. BROOKMAN: So then I guess the question 

8 would then be, based on the earlier questions, the 

9 thrust of what I heard was maybe it should be included. 

10 MR. JONES: The thrust from whom did you hear 

1 1 that? 

12 MR. BROOKMAN: Maybe I heard it wrong. 

13 (Laughter.) 

14 MR. JONES: I guess I'd put the question this 

15 way. If the Department is going to give instructions 

16 about designing a model based upon what people feel, 

17 then I think we have a lot more feelings we could put 

18 on the table and put into the model. 

19 It would seem to me that at minimum you have 

20 to have some evidence in the record which would support 

21 

22 

that change in the model. At this point in time there 

is no such information in the record. 

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1 To change the model for that purpose would 

2 really undermine the credibility of the model and this 

3 whole rulemaking in my opinion. But if you want to do 

4 that, then I think you ought to have another workshop 

5 in which we invite the public and anybody else in with 

6 any ideas, crackpot or otherwise, who might want to 

7 suggest a change in the model. 

8 I'm sure Jim is quite capable, as he said, of 

9 putting them all in. 

10 MR. BROOKMAN: I know we have one other 

1 1 person who wishes to comment and then maybe we're ready 

12 to move back to the presentation. 

13 MS. LAUGHLIN: I just have a question on the 

14 issue. It seems like there are varying views around 

15 the table on whether or not the detergent costs will go 

16 up or down, and I wonder if anyone has any data in 

17 terms of what people are actually doing with these 

18 detergents and the higher efficiency machines. And if 

19 that's something that's been thought about looking at 

20 in terms of making a decision one way or the other to 

21 

22 

include it or not in the life cycle costs analysis. 

MR. BROOKMAN: So the question is, is there 

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1 any data 

2 MS. LAUGHLIN: Do we know what consumers are 

3 doing? 

4 MR. BROOKMAN: Gene, you have --

5 MR. FOLEY: May question is -- I realize this 

6 gets a lot further into the presentation, but did the 

7 Bern model and the research that was done wherever it 

8 was in the Midwest look at detergent use? 

9 MR. BROOKMAN: Let's answer the first 

10 question first. 

1 1 Does anybody have any data? And then Gene 

12 asked a second question about Bern. 

13 MR. FOLEY: Well, Bern is data. 

14 MR. BROOKMAN: I know it. I know. 

15 MR. JONES: But it seems to me, again, that 

16 the question is does anybody have data on consumers' 

17 use of detergents period. As the representative from 

18 Level said, consumers are always free to disregard, 

19 whether up or down, or follow a manufacturer's 

20 recommendation. 

21 

22 

MR. FOLEY: Well, --

MR. JONES: Let me finished. 

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1 MR. FOLEY: I asked my question and you 

2 interrupted it before it was answered, so 

3 (Crosstalk.) 

4 MR. JONES: And I just simply amended your 

5 question to say is there data period. 

6 MR. BROOKMAN: So these questions are 

7 consonant. 

8 Does anybody have an answer to the question? 

9 Yes. Steve Rosenstock, it seems, perhaps 

10 may. 

11 MR. ROSENSTOCK: Well, just for the second 

12 question. Oak Ridge National Labs was doing the study 

13 on Bern, Kansas. If anyone would have data, it would 

14 be Oak Ridge National Labs. 

15 MR. BROOKMAN: Peter, did you have something 

16 to contribute? 

17 Peter has suggested there may be data. 

18 Do you have data? And would you introduce 

19 yourself, please? 

20 

21 

22 

MS. CASENTINI: Laurie Casentini with Pacific 

Gas and Electric Company. I have a copy of the Bern 

study here and I can look through it and report back a 

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1 little bit later on in the day. It looks like there is 

2 something in here. 

3 MR. BROOKMAN: I'll make a note. Your name 

4 is Laurie? 

5 MS. CASENTINI: Lauren Casentini, Pacific Gas 

6 and Electric. 

7 MR. BROOKMAN: Thank you. We'll call you 

8 later on. 

9 MR. FOLEY: So for my purposes, there seems 

10 to be some sort of data available which would then 

1 1 indicate that we probably ought to put it in the model. 

12 MR. BROOKMAN: Steve? 

13 MR. NADEL: Since a lot of the people were 

14 not in the smaller workshop, one of the questions that 

15 came up is how do we get into changes in cleaning 

16 ability. Many independent studies have found that the 

17 higher efficiency washers have high cleaning ability. 

18 And one of the place holders we came up with that's 

19 useful as part of the sensitivity analysis is to say if 

20 a high efficiency washer with the same amount of 

21 

22 

detergent gets clothes cleaner that provides higher 

utility, if you will, that one way to get at the value 

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1 of that utility is to assume to estimate how much 

2 less detergent you would use to get the same cleaning 

3 ability as you have for the current washer. 

4 It's not saying that this is the only factor 

5 that will be used but it was discussed how this would 

6 be an important input. And hence, that's why we 

7 discussed including this value. And to attempt to say, 

8 no, we do not even want anybody to look at that I think 

9 is making it very difficult to let this rulemaking 

10 proceeding consider all the useful facts. 

11 MR. BROOKMAN: I think it's fair to say that 

12 there's enough difference of opinion in the room at the 

13 moment about it. I don't think we're going to leap to 

14 any conclusions today. So, let's then proceed with 

15 what we have and we'll call on Lauren later to give us 

16 a brief interpretation of what's in the data. 

17 MR. JONES: How about the facts. 

18 MR. BROOKMAN: What's in the data. Yes. 

19 Thank you. 

20 MR. McMAHON: Returning to the simple 

21 economic analysis --

22 (Laughter.) 

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1 What is currently in the model for operating 

2 costs includes energy and water usage. This graph 

3 shows on the left axis at the red bars, energy 

4 consumption, total hours per cycle. This is assuming 

5 an electric water heater and an electric dryer. The 

6 model does go through the population and adjust 

7 according to the fuel types for water heaters and 

8 dryers for different combinations. And the water 

9 consumption, gallons per cycle, is on the right axis 

10 here. It's total water, including hot and cold, 

11 expressed here as gallons per cycle. 

12 The next input, energy prices. Previously we 

13 used the U.S. average price, including fixed cost. It 

14 has gotten much more complex. To account for the 

15 variability in energy prices, the fact that not 

16 everyone in the U.S. faces the same price, we have gone 

17 to a sample from the 1993 residential energy 

18 consumption survey and I have the prop here. 

19 For those of you who are interested in the 

20 report, this is a DOE Energy Information Administration 

21 report that's available in this building . 

22 We've taken the data from that survey, which 

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1 is the most recent available. Footnote: There is a 

2 1996 survey but the data tape from that is not expected 

3 to be available until early next year, so we're using 

4 the most currently available. 

5 We took 4,350 households from this survey. 

6 This is all the households that have clothes washers 

7 and clothes dryers. They have different fuel types of 

8 water heaters. There are three fuel types of water 

9 heaters: electric, gas and oil. There are two fuel 

10 types of clothes dryers: electric and gas. 

1 1 The energy prices are reported for each of 

12 the households. The energy prices are for a typical 

13 consumption for the utility in which this house 

14 resides. So they are not truly household specific. 

15 They are specific to utility companies. 

16 There are 201 electric companies and I don't 

17 remember the number, but several hundred gas companies 

18 included. So that's the range of prices that we 

19 include. 

20 Finally, each household reports the number of 

21 persons per household and we use that information to 

22 determine how many cycles per year of laundry is going 

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1 to be washed for that house. 

2 MR. BROOKMAN: Terry, and then Steve. 

3 MR. THIELE: Terry Thiele, WCI. 

4 Is that '93 data or is that the year the data 

5 survey was published? 

6 MR. McMAHON: The survey was done in 1993. 

7 It's data for the year 1993. 

8 MR. THIELE: But it's '93 data, not '90 data 

9 done in '93. 

10 MR. McMAHON: It's 1993 data. That is 

1 1 correct. 

12 MR. BROOKMAN: Steve? 

13 MR. ROSENSTOCK: Hi. Steve Rosenstock, 

14 Edison Electric Institute. 

15 In our subcommittees and everything, we 

16 talked about -- we've been discussing this at length 

17 for the Industry Advisory Committee. Of the 201 

18 electric companies, did it seem like the distribution 

19 was pretty close to the national, like 75 percent 

20 investor owned versus 25 percent? 

21 

22 

MR. McMAHON: I actually have not looked at 

that. But what we did look -- if you refer to this 

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1 "Quantities and Current Assumptions" page numbers 

2 pages 6 through 8, page 7 has the range of residential 

3 electric prices. 

4 And what we did here is take the distribution 

5 in 1993 from the survey and then scale the 1993 average 

6 up to 1997. 

7 Moving into the next page of this, which is 

8 how do you account for the prime trend, you see a range 

9 from 2 cents to 17 cents a kilowatt hour, which is 

10 consistent with what we've seen in the full treatment 

11 of utilities in the country. I haven't actually 

12 compared the shape of this curve to another one, but we 

13 could do that. At first glance it appears to be 

14 representative and it certainly captures variability. 

15 MR. BROOKMAN: That detail, again, Jim, it's 

16 in "Quantities and Current Assumptions." It's in your 

17 packet. And you're referring to page --

18 

19 

20 

21 

22 

MR. McMAHON: Page 7. 

MR. BROOKMAN: Thank you. 

MR. McMAHON: Figure 3. 

Okay. So the point of this, summarizing in a 

sentence, is previously we used something like 8 cents 

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1 per kilowatt hour for the electric price for the U.S., 

2 just an average number. Now we are using this 

3 distribution, which ranges from 2 to 17 cents per 

4 kilowatt hour. And there's a number that is tied to 

5 each house. 

6 Similarly, we've done that for gas prices and 

7 for oil prices. 

8 The next issue in energy prices is fixed 

9 charges. Previously, the price included revenues 

10 received by the utility from residential customers 

1 1 divided by the kilowatt hour of sales to residential 

12 customers, so there were fixed charges in there. When 

13 the energy efficiency improves for whatever reason, the 

14 savings that appear on the bill are not those but 

15 rather they depend upon the rate that the consumer is 

16 paying. 

17 The RECS Survey that we're using now uses the 

18 rate, the cost of a thousand kilowatt hours, but it 

19 also includes the fixed charges. So we don't have 

20 specific information in that survey about what the 

21 

22 

fixed charge is that's paid by each of those houses. 

So what we did was take the national average fixed 

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1 charge, 7.5 percent for electric, 12 percent for gas 

2 and subtract that for every household. So this is an 

3 approximation but it does serve as the first 

4 approximation to removing the fixed charge. 

5 The numbers, the 7.5 percent, came from a 

6 survey of utilities done by Edison Electric Institute. 

7 The 12 percent came from a survey done by the American 

8 Gas Association. 

9 MR. BROOKMAN: Steve? 

10 MR. ROSENSTOCK: Steve Rosenstock, Edison 

11 Electric Institute. 

12 Just as a clarifying point, for the electric 

13 ones, pretty much they were based on like '95 or '96 

14 data. I was trying to match the data that I had based 

15 on the actual rates, some rate information that I was 

16 able to gather from utilities. 

17 The second thing I'd like to discuss -- and 

18 not to throw a wrench into the process, but this kind 

19 of gets involved with the Industry Advisory Committee 

20 and the Economic Analysis Subcommittee, which there are 

21 several people here on those . 

22 In December there were four recommendations 

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1 to the Department of Energy that were voted on by the 

2 Industry Advisory Committee, and two of them really 

3 dealt directly with energy prices. 

4 A letter was supposed to go out. It did not 

5 go out. That's another issue that I'd rather not 

6 discuss for time purposes. But basically, the Industry 

7 Advisory Committee voted literally pretty much by 

8 consensus on issues dealing with energy prices. And I 

9 was just wondering, I guess, from the Department of 

10 Energy -- obviously Jim McMahon has incorporated some 

1 1 of these recommendations from the committee but we 

12 haven't necessarily received anything. The Industry 

13 Advisory Committee hasn't received anything formal from 

14 DOE to say, yes, we are going to do this from now on. 

15 So I just wanted to kind of know. I'm in 

16 favor of this. Obviously, I was looking especially 

17 more in the future for marginal energy prices. But I'm 

18 just saying, because it will come up in national energy 

19 savings as well, is the Department basically giving its 

20 blessing to the recommendations that were provided by 

21 the Industry Advisory Committee. Because I think it's 

22 kind of a key point right here. It's all related to 

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1 the analysis. 

2 MR. McCABE: This is Michael McCAbe. The 

3 staff is recommending that we go ahead with those 

4 recommendations. And in order to fully appreciate what 

5 is the effect of those is one reason why we gave Jim 

6 the direction to look at both with the fixed charges 

7 included and, as we've done in the past, everything 

8 removed, so that we could get a sense as to what the 

9 differences, what the effect was going to be. 

10 MR. ROSENSTOCK: Okay. 

1 1 MR. BROOKMAN: Additional questions before 

12 Jim -- yes, Steve? 

13 MR. NADEL: I had a question regarding the 

14 EIA price forecast. 

15 Jim, perhaps you can answer or maybe someone 

16 else can. I had occasion to look at this recently in 

17 depth for the first time. And the way it was explained 

18 to me by one person is that EIA is not really trying 

19 to forecast prices but they looked at cost to 

20 generators and then assumed, based on the reduction in 

21 cost, assumed that those cost savings as a result of 

22 restructuring would be spread evenly across all the 

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1 customer classes. So they assumed effectively the 

2 exact same price reductions on a percentage basis for 

3 the residential sector as say for the industrial 

4 sector. 

5 First, can you comment on -- is that your 

6 understanding on how the EIA forecast is raised? 

7 MR. McMAHON: The answer is I don't know if 

8 that's true, but I have the report here. We could 

9 figure it out. 

10 MR. NADEL: I did do the math and within a 

11 percentage point it does work out that way. 

12 MR. McMAHON: Okay. 

13 MR. NADEL: The question is is that an 

14 appropriate set of prices to use? At least all the 

15 stuff that I've seen indicates that most predictions 

16 are that the industrial customers will see more 

17 significant discounts. 

18 MR. BROOKMAN: Would you suggest a different 

19 approach or a different data source? 

20 

21 

22 

MR. NADEL: I haven't fully looked into all 

of the different forecasts out there. I was asking 

Jim, or maybe there's someone else. But based on what 

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1 I've seen, I would say maybe for residential the EIA 

2 high growth forecast, even though we're not talking 

3 about high growth. But I think that may better mimic -

4 - what I'm hearing is likely to be the reductions in 

5 the residential sector as opposed to the industrial 

6 sector. 

7 MR. McMAHON: If you'll go ahead two slides, 

8 you'll see the forecast that Steve is referring to. 

9 The top left is the electricity price. Now, I've 

10 subtracted out the fixed costs here. 

1 1 MR. NADEL: For all of them? 

12 MR. McMAHON: Right. So this is 7.5 percent 

13 lower than what you will see in the AEO report. But 

14 you can see the time trends there. 

15 And the top, the green line, is the AEO high 

16 growth scenario. This is the low growth scenario. The 

17 red dots are their reference case. And the additional 

18 line in here is a GRI 1998 baseline projection. 

19 So all of those are available in the current 

20 spreadsheet. You can run on any one of those. But I 

21 

22 

understand you're making a recommendation that the 

higher one is more appropriate? 

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1 MR. NADEL: I'm making the recommendation, 

2 first, that someone should look into this issue 

3 further. I'm not claiming to be an expert on these. 

4 But I'm saying, when Doug pushed me, if based on what I 

5 know now what would I say, I'd say probably the high. 

6 But again, it needs further investigation. 

7 MR. BROOKMAN: You note a limitation on the 

8 data. 

9 Other questions, comments? 

10 Earl? 

11 MR. JONES: Yes . 

12 Jim, if you could, please -- Jim, I can't see 

13 the colors there. Can you tell us in terms of the 

14 position on here which one is which? 

15 VOICE: We've got black, black, black and 

16 black. 

17 MR. JONES: Right. 

18 MR. McMAHON: The order in the legend is 

19 correct. So high growth is the top line, AEO -- well, 

20 it's hard. The second line at year 2030 is the GRI 

21 1998 . 

22 MR. JONES: That's the lighter dotted line? 

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1 MR. McMAHON: Yes. The second line down . 

2 And the third line down is the AEO reference case. The 

3 bottom case is the AEO low growth case. 

4 I apologize. The black and white did not 

5 come out. 

6 MR. JONES: Could you do the same thing on 

7 the others? 

8 MR. McMAHON: On gas, high growth, this one 

9 is the GRI. 

10 MR. JONES: The middle one? 

1 1 MR. McMAHON: If you go back to the year 

12 2000, the top one is GRI, the solid line. The one with 

13 the dots on it is the AEO reference case and the bottom 

14 curve is the AEO low growth. 

15 And for oil prices, the top line is the high 

16 growth, the second line is the AEO reference case, AEO 

17 '98. The third line in the year 2010 is the low growth 

18 AEO and the bottom line, very flat, is the GRI case. 

19 MR. JONES: Thanks. 

20 MR. McMAHON: All of these figures are 

21 available on DOE's Web site and you can catch them in 

22 color there. 

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1 MR. BROOKMAN: Glenn? 

2 MR. SCHLEEDE: Glenn Schleede. I just wanted 

3 to comment briefly on the point that Mr. Nadel raised. 

4 EIA does distinguish between residential, commercial 

5 and industrial rates in their forecasts and they do 

6 have them coming down at different rates. Residential 

7 coming down .9 percent per year; commercial is 1 

8 percent a year; and industrial 1.1 percent per year. 

9 However, more significant than that, if you 

10 look at what's actually happening compared to what EIA 

11 forecast only two months ago, you will find that rates 

12 are -- even for residential, are coming down twice as 

13 fast as EIA just forecast in December. Commercial are 

14 coming down about three times as fast and industrial 

15 about four times as fast. 

16 So Steve is correct that there's a difference 

17 in the rates. But the underlying point is they're all 

18 coming down faster than what EIA forecast. 

19 

20 

21 

22 

MR. BROOKMAN: Thank you, Glenn. 

Bryan? 

MR. BERRINGER: I'm sorry. Most of the 

slides have been put on the Web page, so they're 

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1 downloadable and we'll make sure they're accessible . 

2 And these are all in Power Point. 

3 MR. BROOKMAN: Yes, Bill? 

4 AUDIENCE QUESTION: Just a quick -- Bill 

5 Bandy from NREL. A quick follow-up question about 

6 prices going down faster than EIA projected. 

7 Is that in the states where deregulation is 

8 occurring or nationally? 

9 MR. SCHLEEDE: The numbers I used are 

10 national average numbers. I have not yet looked at the 

1 1 state by state numbers. 

12 MR. BROOKMAN: Okay. Thank you. 

13 MR. McMAHON: Okay. I'm going to back up one 

14 page. We skipped ahead to the time trend, so let me 

15 rehash. 

16 To deal with energy prices, we dealt with 

17 three separable issues. The first was variability, 

18 which we dealt with by taking a sample of households. 

19 the second was fixed costs. We subtracted the national 

20 average fixed costs for electricity and gas. And the 

21 third is what do we do about the future . 

22 For the time trend, the current model has 

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1 four scenarios that you can select from. They are the 

2 four that I showed on the graph and they're also shown 

3 on this page. Three cases from AEO, a high, reference 

4 and low case and one case from GRI. 

5 At the current time the default assumption 

6 that the Department is using the AEO reference case. 

7 The next input has to do with water and waste 

8 water or sewage costs. Previously 

9 MR. MORRIS: Jim, this is Wayne Morris. Can 

10 I ask a question first? 

1 1 MR. McMAHON: Certainly. 

12 MR. MORRIS: This just shows my ignorance in 

13 not understanding this, but let me ask it. In terms of 

14 reaching this beginning point on the energy prices at 

15 1995, which is roughly 8 cents per kilowatt hour, that 

16 data -- I mean, all of the lines coincide at that point 

17 or begin at that point in terms of divergence. That 

18 data is from what? Is that a combination of all of 

19 their data agree that that was the beginning point? 

20 

21 

22 

MR. McMAHON: That's right. 

MR. MORRIS: Okay. And where does that 

dovetail then with the RECS data of surveys of 

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1 households? That is exactly the same? 

2 MR. McMAHON: The most recent RECS data that 

3 is public is 1993. 

4 MR. MORRIS: Right. 

5 MR. McMAHON: So I can't answer that. The 

6 '96 data will become available early next year and then 

7 we can --

8 MR. MORRIS: Was the model then updated to 

9 this beginning point of the 8 cents even though you 

10 were using the RECS data for survey? 

11 MR. McMAHON: Yes. Let me explain how we 

12 deal with the time. 

13 The initial data set from RECS is 1993. It 

14 gives us a distribution of prices. We take that 

15 distribution. And as we move on to the future, we 

16 scale all of those by the percent change that's 

17 reflected in these forecasts. 

18 So if, for example, AEO says that over some 

19 time period prices go down 10 percent, we will take all 

20 the households and move their price down 10 percent for 

21 

22 

that year. And we do that every year in the forecast . 

So as you do the life cycle cost, the prices are 

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1 constantly adjusting. 

2 So the point of these slides is to give you 

3 the trend in relative price and that trend is applied 

4 to the full set of households. 

5 MR. MORRIS: That's what I thought but I just 

6 wanted to make sure. 

7 Thanks. 

8 MR. McMAHON: Okay. Water costs. 

9 As with energy, water costs previously were 

10 assumed to be a single value at a U.S. average, based 

11 upon a 1994 survey. We have not been able to get a 

12 more recent survey but we have used the full 

13 distribution of costs that were available from the 1994 

14 survey. 

15 I should also note -- I didn't put it on the 

16 slide -- that the numbers that we are using are rates. 

17 That is, the fixed charges have been taken out. The 

18 fixed charges are very large for water. A numerical 

19 example for 1994. The U.S. average, including fixed 

20 charges, would be about $4.00 for a thousand gallons. 

21 Taking the fixed charge out you get $2.84. So it's a 

22 very large change. We're using the $2.84 number. 

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1 The default escalation rate. The current 

2 assumption is water prices and waste water prices will 

3 never change. This is an area, I think, of some 

4 controversy, and we are hoping for additional input 

5 about this. I've listed this as more research needed 

6 Rather than make an arbitrary assumption about an 

7 escalation rate, we chose zero percent for today's 

8 preliminary results and we hope to get further input 

9 about what that escalation rate ought to be. 

10 MR. BROOKMAN: Steve? 

11 MR. ROSENSTOCK: Hi. Steve Rosenstock, 

12 Edison Electric Institute. 

13 The water charges, per your distribution in 

14 your "Quantities" handout on page 14, this 

15 distribution is based on the -- it wasn't like RECS. 

16 It was more of a -- the trade association you got it 

17 from and just the actual rates rather than a 

18 population. 

19 MR. McMAHON: Yes. There is a national 

20 survey done by Ernst & Young. That was in process by 

21 

22 

someone at Seattle Power, I believe. I can look up the 

specific reference. I imagine that memo can be made 

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1 available. 

2 What he did was apply population weights and 

3 take out the fixed charges and turn this into a much 

4 more representative national sample than the raw survey 

5 data. 

6 MR. JONES: Yes. I was going to point out, 

7 in terms of the more research needed, that the Ernst & 

8 Young survey has continued on a regular basis. I 

9 understand Ernst & Young did it for a number of years, 

10 and then one of the partners there, a fellow named 

1 1 Raftelis started his own firm. Has continued that. 

12 I just gave Jim some data that goes through 

13 '96. I hear the '97 survey should be out shortly. And 

14 you can use that to -- at least the report I gave Jim 

15 shows 10 years of data. You can use that to show what 

16 the historic escalation rates have been over the past 

17 decade. 

18 The other thing I'd point out is in that same 

19 report, not from the Ernst & Young but from EPA 

20 sources, it indicates what the likely and investment 

21 

22 

needs are for water and waste water system over the 

next 20 years. The figures are pretty staggering. I 

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1 know. I've done a little bit of analysis putting those 

2 into a spreadsheet and saying what does that mean for 

3 future costs. 

4 And at least my preliminary analysis 

5 indicates that the historic rate of increase may be a 

6 little low. And conceivably, the rate of increase 

7 could be slightly higher in the future. 

8 But, Jim, I gave you all of that information. 

9 MR. McMAHON: I presume you'll submit those 

10 to the record for the Department? 

1 1 MR. NADEL: Yes, I will. 

12 MR. BROOKMAN: Earl? 

13 MR. McMAHON: Yes. Just curious. What was 

14 the reference that Steve just made that you submitted? 

15 What was the data? 

16 MR. NADEL: The data I've submitted is both a 

17 time series in terms of the Ernst & Young and Raftelis 

18 data, and also data I think from the Environmental 

19 Protection Agency on drinking water and clean water 

20 infrastructure needs. 

21 

22 Raftelis? 

MR. BROOKMAN: Steve, will you spell 

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1 MR. NADEL: R-A-F-T-E-L-I-S . 

2 MR. BROOKMAN: Thank you. 

3 MR. MORRIS: A question, Jim. To what extend 

4 did this data capture households that are not on 

5 municipal water system? 

6 MR. McMAHON: It does not. 

7 MR. MORRIS: Is there any way to estimate the 

8 percentage of population and what the costs would be 

9 for those populations for water? I mean, there is some 

10 cost even if you have a well. But is there a way to 

1 1 get at that situation? 

12 MR. McMAHON: I'll take that as a suggestion 

13 that we look into it. I don't have the answer to that 

14 right now. 

15 MR. BROOKMAN: David? 

16 MR. GOLDSTEIN: David Goldstein. Just to 

17 comment on that, it's my impression from talking with 

18 some people who have looked at this that when there is 

19 city water and sewage available, people use it. So a 

20 good assumption is that the cost of septic systems and 

21 wells is higher than the corresponding public system . 

22 Otherwise you'd see much more competition between them. 

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1 MR. McMAHON: Okay. The next issue is fuel 

2 types. Previously we had six combinations. The fuel 

3 on the left in these is the water heater fuel and on 

4 the right is the clothes dryer fuel. So there are 

5 three water heater fuels, electric, gas and oil; two 

6 dryer fuels, electric and gas. And we do all of those 

7 combinations. 

8 Currently the model allows you to pick each 

9 of those individually, and the model will pick only 

10 those households that have that combination, or you can 

1 1 select U.S. mix and it will sample from the entire 

12 population. Obviously the U.S. mix is the full sample 

13 of the country. 

14 Okay. Now, this is an example of 

15 intermediate output, the annual operating expense in 

16 dollars, one year, assume the year 2003, as a function 

17 of what those fuel types are. So the bar on the left 

18 is electric water heater/electric dryer. The yellow 

19 line, the bottom part of the bar, is the price paid for 

20 electricity. And the top, the green, is the water 

21 

22 

expense. So approximately $80.00 for electricity and 

another $40.00 for water. 

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1 Now, the difference across these depends not 

2 only on the fuels but on the difference among the 

3 characteristics of the households. The households that 

4 have gas/gas as opposed to those that have 

5 electric/electric may have different numbers of people 

6 in them. That's all accounted for by sampling only 

7 those households. So these numbers reflect those 

8 differences between households. 

9 The other advantage of using the survey data 

10 is that correlations, for example, between those homes 

1 1 that have an electric water heater but a gas dryer, 

12 they may face different gas prices than those people 

13 that have gas water heaters. And that's also accounted 

14 for because we're directly sampling the correct set of 

15 households. 

16 The result of that in terms of annual 

17 operating expense hypothetically for the different 

18 efficiency levels are done here. There are two bars. 

19 The electric water heater plus electric clothes dryer 

20 is the left bar, yellow on the screen. The right bar 

21 

22 

is gas water heater and gas dryer . 

MR. BERRINGER: Jim, Wayne Morris. Can you 

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1 back up one second to the slide on page 15? I'm just 

2 curious. The expenditure portion accorded to water is 

3 different in the different bars or else I've got an 

4 optical illusion. Is there a reason? 

5 MR. McMAHON: No, it's not. But the cycles -

6 - let's see. Annual operating expense includes the 

7 cycles per year. And since the family sizes are 

8 different, they do use a different number of cycles per 

9 year. So it's not the water expense that's changing. 

10 It's how many cycles they run. 

1 1 Okay. Now the next few slides -- for those 

12 of you who are familiar with life cycle costing, these 

13 will be repetitive and unnecessary, but let me run 

14 through very quickly, just so that you understand what 

15 the calculation involves. 

16 I'm going to first talk about cumulative cash 

17 flow instead of life cycle cost. Cumulative cash flow 

18 is very simple. You start in year zero with the 

19 purchase price, which is the retail price plus tax. In 

20 the baseline unit it's about $400.00, $421 .00 with tax. 

21 

22 

And then you go over the life of the washer one year in 

time. 

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1 The horizontal axis here is years since 

2 purchase going out from 1 to 14. And the slope of each 

3 of these lines is the annual operating cost for one 

4 year tacked onto whatever you've spent so far. So you 

5 initially have a purchase price. Then you have one 

6 year operating cost in year one. The second year of 

7 operating cost in year two. So the line goes on into 

8 the future. 

9 There are four lines here representing four 

10 different efficiency levels; baseline unit, 20 percent, 

1 1 35 percent and 50 percent improvement. 

12 MR. ROSENSTOCK: A quick question. The 

13 operating expense and the cumulative cash flow are 

14 based -- when you go back to the annual operating 

15 expense -- based on those houses in that subgroup that 

16 you're talking about there, that particular number of 

17 cycles, that particular energy. Well, especially I'll 

18 say cycles per year based on the -- so when you go down 

19 to the cumulative cash flow, let's say whether 

20 electric/electric versus electric and gas or whatever, 

21 

22 

that one might 400 cycles per year and the other one 

might have 300 cycles per year. But it's based on the 

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1 statistical -- the number that you were able to gather 

2 from the study. 

3 MR. McMAHON: That's correct. 

4 MR. ROSENSTOCK: Okay. Good. That obviously 

5 could be a key parameter for -- since it's the number 

6 of cycles, that might also have a big -- obviously has 

7 a big impact. 

8 MR. McMAHON: That's right. 

9 MR. ROSENSTOCK: Okay. Thank you. 

10 MR. McMAHON: All right. So we account for 

1 1 the difference between the households about what their 

12 consumption is. 

13 Moving on to the next one. Here is how we 

14 get from cumulative cash flow to life cycle cost. The 

15 only difference is --

16 Question? 

17 MR. JONES: Yes. Jim, what were the discount 

18 rate assumptions in that first graph? 

19 MR. McMAHON: In the first graph, the beauty 

20 of it, Earl, is that there is no discount rate 

21 assumption. This is straight cash flow. The next 

22 thing you bring in is the discount rate, and that gets 

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1 you to life cycle cost. 

2 MR. JONES: Okay. So, seque to the next 

3 slide. Here's cumulative cash flow on the top line; 

4 life cycle cost with a 6 percent discount rate is the 

5 lower line. And what you see is you're discounting 

6 values into the future. The farther into the future 

7 you go, the bigger the discount is. 

8 So the life cycle cost in the year -- for a 

9 14 year life of a clothes washer is the last point of 

10 the lower line. Here, approximately $1600.00. 

1 1 Now, if we go through and do the simple life 

12 cycle cost just using the average value for all these 

13 distributions, assuming an electric water heater and an 

14 electric dryer, that population, and doing it for each 

15 of the efficiency levels --

16 MR. MORRIS: Excuse me, Jim. At what 

17 standard level was this number 18? 

18 MR. McMAHON: Each of those bars represents 

19 an efficiency level. The first bar on the left, .82 

20 MEF, is the baseline. 

21 

22 one slide. 

MR. MORRIS: I'm going back to page 18. Back 

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1 MR. McMAHON: Oh, I'm sorry. Page 18? 

2 That's a baseline. There's no efficiency levels in 

3 there. 

4 MR. MORRIS: That's baseline only. Okay. 

5 MR. McMAHON: That's just baseline. Okay. 

6 So moving from the baseline, which is the 

7 first bar on the left here, the .82 MEF, each of the 

8 bars across is the next efficiency level. So the .86 

9 corresponds to a 5 percent energy reduction. The .91 

10 is a 10 percent energy reduction, and so on through the 

1 1 list. 

12 The one at the far right is a 50 percent 

13 energy reduction. The bottom bar here is the purchase 

14 price and the top bar is the operating cost over the 

15 lifetime, discounted at 6 percent. 

16 So in some sense this corresponds to the 

17 information that we used to provide in life cycle cost 

18 curves, and we're doing only average values for 

19 everything. 

20 And this is the same calculation but we've 

21 

22 

moved from electric water heater and electric dryer to 

a different population, those with gas water heaters 

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1 and gas dryers. It's on the same scale, so you can see 

2 that these have lower costs. The life cycle cost for 

3 the baseline unit is on the order of $1100.00. In the 

4 previous slide it was nearly $1600.00. 

5 MR. ROSENSTOCK: Sorry. Steven Rosenstock, 

6 Edison Electric Institute. 

7 But there could be fewer cycles in this one, 

8 as well? 

9 MR. McMAHON: There could. Yes. 

10 MR. ROSENSTOCK: Based on the graph before? 

11 MR. McMAHON: That's correct. 

12 MR. ROSENSTOCK: Okay. 

13 MR. McMAHON: So how have we dealt with the 

14 issues of uncertainty and variability? First of all, 

15 we've identified the key uncertainties and 

16 variabilities. I want to step aside to give you my 

17 definitions for these two terms so they're not 

18 confused. 

19 I distinguish between uncertainty, meaning 

20 incomplete information, and variability, meaning a 

21 

22 

range of values. So an example of uncertainty would be 

we don't know exactly what the manufacturing cost will 

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1 be in the future. We have this range that's provided 

2 by the submittals, so we use that range. 

3 An example of variability is each household 

4 paying a different energy price. It's not that we 

5 don't know what that price is. It's just that they are 

6 different from house to house. 

7 Is there a question? 

8 MR. JONES: Yes. I just decided it was too 

9 big to ask. 

10 (Laughter.) 

11 MR. BROOKMAN: Since we're moving on towards 

12 lunch, we appreciate any intermission. 

13 (Laughter.) 

14 We'll pick it up later. 

15 MR. McMAHON: Okay. To deal with uncertainty 

16 and variability we now provide ranges rather than point 

17 values. We conduct the scenarios, what if analysis. 

18 If you use a different energy price trend, and so 

19 forth. 

20 

21 

22 

We do a simulation over input ranges. And 

simulation just means you step through a whole bunch of 

different households and add up the results. I'll show 

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1 you in a moment. We express the result as ranges, one 

2 example being what percent of consumers have lower life 

3 cycle costs in this scenario. 

4 And I'm just going to go through to -- Doug, 

5 if it's okay -- the next couple of slides just to get 

6 to the sample output, and then that might be a good 

7 time to take a break. 

8 So summarizing it all on one page, if you had 

9 to pull one page out of this whole presentation about 

10 how this is done, I would take this one, comparing the 

1 1 old with the new, and distinguish between scenarios and 

12 simulations. 

13 Scenario is you make a pick. So, for 

14 example, what's the start date for the standard. It's 

15 either 2003 or it's 2004. You don't simulate some 

16 range of start dates. You pick a start date. Same 

17 thing for a standard level. You pick a standard level. 

18 So these are scenarios that you select and then you do 

19 your calculations based upon that scenario. It's a 

20 what if calculation. 

21 

22 

The simulations are those things where the 

distribution is embedded in the calculation. The range 

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1 of mark-ups is given in the calculation and the 

2 computer model is going to sample across that range and 

3 take care of that. 

4 If you agree with the range that's been put 

5 in, you no longer have to do anything. It's taken care 

6 of internally. So, that's the distinction here. 

7 So the big changes here are that scenarios 

8 that were not there before are there now. They are the 

9 energy fixed charges and the water price trend. And 

10 simulations, discount rate has been moved from a 

1 1 scenario where you'll pick a single value to a 

12 distribution. And I expect that we'll have that 

13 discussion this afternoon about that distribution. 

14 Manufacturing cost is now a distribution. 

15 The set of households is now this sample of 4,000 

16 households instead of an average house. And the energy 

17 and water prices are the distributions that I've shown 

18 you. 

19 I'm going to go ahead, because I've just 

20 explained that. 

21 

22 

Here's how the model works. When you do a 

simulation, when you run crystal ball, the model 

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1 selects one household from the sample of 4,350 that are 

2 in there. Now, these are each weighted so they 

3 represent the right number of households in the 

4 country, so they add up to the U.S. population. You are 

5 selecting proportional to those weights. 

6 For that house, you look up what fuel type do 

7 they have for their water heater, what fuel type do 

8 they have for clothes dryers, what is their price of 

9 energy for each of those fuels, and how many people are 

10 there in the house. We convert that into cycles per 

1 1 year . 

12 Next we need to adjust the price of energy 

13 two ways. First, we need to subtract the fixed charges 

14 to get back to the rate. That's done for all the 

15 households. And next you apply a time trend. If we're 

16 talking about a future year, we go to the time trends 

17 that I hosed you. In this case, AEO '98 reference case 

18 for the year 2003, find out the relative change in 

19 price for each of the fuels and apply that to what the 

20 prices used to be so we get a future price. 

21 

22 

Now you go into each of those variables for 

which we have a range and, using a random sample, you 

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1 pick a value. So we don't know what the manufacturing 

2 cost is going to be. It's somewhere in that 

3 distribution. You pick a value. Same thing for mark4 up, water and sewage rates, lifetime discount rate. 

5 You pick from the distribution. 

6 Typically now we are running 10,000 samples, 

7 so it's 10,000 households. And when you do 10,000, you 

8 capture the full range of variability in all of these 

9 variables. And you can run more or less. Once you run 

10 a large number, it converges and you're not getting any 

11 more information by doing any more. That is, doing a 

12 million will not teach you much more than doing 10,000. 

13 Here's a sample output. This is the LCC 

14 difference, the change in life cycle cost in going from 

15 a baseline unit to, in this case, a 20 percent energy 

16 reduction. We've done 10,000 samples. And so what you 

17 get is a different answer for each of the 10,000. And 

18 these are summarized here. 

19 Instead of a number, what's the change in 

20 life cycle cost, we get a different number for each 

21 

22 

house. And this is summarizing that information from 

that population of houses. The things you can see on 

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1 this graph, not very clearly on the screen but they are 

2 given there in text. The mean impact is $57.00 saving, 

3 a reduction in life cycle cost of $57.00. 

4 The range is at the extreme. There's one 

5 point that you can't see because it's only one house 

6 out here at $358.00 savings. That's probably someone 

7 that had a lot of cycles per year and very expensive 

8 energy. And there's someone over here that actually 

9 has an increase in cost in life cycle terms of $125.00. 

10 They probably were in the opposite situation with a low 

1 1 number of cycles and a low cost of energy or they paid 

12 a very high price for their washer. In between is the 

13 whole group. 

14 Now, the shading you can see in color pretty 

15 well. You can't see in the black and white. The zero 

16 point is where this little triangle is. So even in the 

17 black and white, if you look for this marker, this 

18 tells you the zero point. So anyone on the left is 

19 saving less on costs. They've reduced loss on cost by 

20 reducing their energy consumption 20 percent. Anyone 

21 

22 

on the right has an increase in life cycle cost. They 

have no recovered the increased cost. 

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1 The percentages are 86 percent on the left 

2 and 14 percent on the right in this example. 

3 Now are there any questions about that 

4 representation because it's a new representation of the 

5 data. 

6 MR. ROSENSTOCK: Steve Rosenstock, Edison 

7 Electric Institute. Some people might -- you know, you 

8 can do the median as well just as easily; right? That 

9 software? 

10 MR. McMAHON: Yes. 

1 1 MR. ROSENSTOCK: The second thing also I 

12 think one of the powerful things is that if you wanted 

13 to, with this tool -- again, I'm really not that 

14 familiar -- you could just do it just for one of the 

15 input variables and freeze everything else. Just, for 

16 example, you wanted to see what would be the impact of 

17 just only doing the range of manufacturing costs and 

18 then freeze energy prices, discount rates, everything, 

19 all the other 

20 

21 

22 

MR. McMAHON: That's correct. 

MR. ROSENSTOCK: Just to see what would 

happen. Just if you had just the one variable impact 

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1 versus multi-variable impact. You could do that to if 

2 you wanted? 

3 MR. McMAHON: Yes. 

4 MR. ROSENSTOCK: Okay. 

5 MR. McMAHON: This software is available. 

6 MR. ROSENSTOCK: Yes. I know. I haven't had 

7 a chance to play around with it, unfortunately. I'm 

8 just saying that if for particular people you just want 

9 to see just the impact of one variable in particular 

10 and run all the trials, you can do that, too, and try 

1 1 to freeze everything else . 

12 MR. SCHLEEDE: Glenn Schleede again. A 

13 question. I thought I understood but I want to 

14 clarify. 

15 When you pick an energy price like for 2003, 

16 is that price frozen for the rest of the life of the 

17 appliance? 

18 MR. McMAHON: No. 

19 MR. SCHLEEDE: You take whatever trend you're 

20 on and apply that trend? 

21 

22 

MR. McMAHON: It uses the trend and applies 

it every year through the life. 

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1 MR. SCHLEEDE: Thank you . 

2 MR. BROOKMAN: Additional questions? 

3 Bryan? 

4 MR. BERRINGER: I just want to clarify. This 

5 is without fixed costs. Is that correct? This 

6 scenario? 

7 MR. McMAHON: This is without fixed costs. 

8 Yes. That's correct. And I want to point out that you 

9 have another package here called preliminary results of 

10 life cycle costs that has a lot more information. 

1 1 You'll find the numbers in there are slightly different 

12 than these. The numbers in here are the current set. 

13 This is just an illustrative example. It's close but 

14 it's not exactly the same number. 

15 And let me explain the bottom graph and then 

16 that will conclude my presentation. 

17 The bottom graph is the same information 

18 presented a different way. It's the cumulative 

19 probability distribution. What you do is just start at 

20 the left and stack these bars on top of each other 

21 until you get up to 100 percent. It's the same 

22 information. It's another way of looking at it. 

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1 MR. BROOKMAN: I think we have one or two 

2 more questions. But let me ask. 

3 Lauren, if you were give a presentation on 

4 the data, how long would it take you? 

5 MS. CASENTINI: Why don't we do it right 

6 after lunch. And probably, a few minutes. 

7 MR. BROOKMAN: Okay. We'll wait until after 

8 lunch. 

9 Dave, you had a question? 

10 MR. MODTLAND: Yes. Dave Modtland. 

11 I just have this question. What's the 

12 relationship between the households and the number of 

13 cycles? You'd indicated that the cycles per year were 

14 based on 

15 MR. McMAHON: Yes. That's explained in the 

16 "Quantities" handout. We had information from Proctor 

17 and Gambel that related the number of cycles to the 

18 number of persons in the house. It's page 4 of the 

19 "Quantities and Current Assumptions." For one person, 

20 RECS says 200 cycles per year. We've scaled these up 

21 

22 

slightly because there was a little difference between 

this and the test procedures. So we're using 210 

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1 cycles per year for a one-person household. For a two2 person household, 321; three or four people it's 469 

3 cycles per year; and five or more people is 645 cycles 

4 per year. 

5 MR. MODTLAND: So this is based on P&G's 

6 survey data? 

7 MR. McMAHON: That's correct. 

8 MR. BROOKMAN: Yes, sir? 

9 MR. FLORA: Brad Flora from Whirlpool. 

10 Jim, how did you handle inflation for the 

1 1 energy and the water costs that are projected out in 

12 the future? 

13 MR. McMAHON: There's no inflation. These 

14 are all real prices. 

15 MR. FLORA: So those are real expected prices 

16 in those years? 

17 MR. McMAHON: That's correct. No assumption 

18 about inflation. 

19 MR. BROOKMAN: Additional questions about 

20 Jim's presentation and all these methodologies? 

21 

22 

Yes. Larry? 

MR. HAWKINS: If I followed you, you said you 

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1 used the P&G data, then scale it based on the number of 

2 people and cycles. Did you compare back to how that 

3 compared to the RECS data? Didn't you have family size 

4 and cycles per year? 

5 MR. McMAHON: Well, the RECS data 

6 actually, you're right. The RECS data does have their 

7 own question about how many cycles per year but it it's 

8 in different blocks. So they ask did you use one to 

9 five loads a week or six to 10 or whatever. 

10 We have compared them. The RECS number comes 

11 out slightly lower on average. Let me see if I can 

12 recall the numbers. 

13 The test procedure number is 392 cycles per 

14 year. The RECS done this way using Proctor and Gambel 

15 data gives you 379 cycles per year. That's pretty 

16 close. 

17 Let me explain where those numbers actually 

18 come from. When the question is asked of consumers, he 

19 question is: How many loads of laundry do you do in a 

20 week. And that number is multiplied times 52 to get 

21 the cycles per year. So the difference between 7.3 and 

22 7 loads a week is not significant. 

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1 The RECS number itself using.their numbers, 

2 if we used the mid point of the ranges that they asked 

3 the question, is slightly lower. It's -- I don't think 

4 I can tell you the exact number but it's below 379. 

5 MR. HAWKINS: Okay. Thank you. 

6 MR. McMAHON: I can look that up for you, 

7 Larry. 

8 MR. BROOKMAN: Additional questions for Jim 

9 on the presentation? 

10 (No response.) 

11 Let me ask you collectively about the time 

12 frame for the day. I think we're slightly ahead of 

13 schedule. There are several important issues yet to be 

14 discussed in the afternoon. Several people have asked 

15 if it would be possible to work hard and get through 

16 what was originally scheduled for tomorrow today and I 

17 want to ask your sense of it. 

18 I asked if it was possible for the Court 

19 Reporter and others, a few others, to hang around until 

20 5:00, work today until 5:00 if that gets us done. That 

21 strikes me as being one alternative. I raise that as 

22 an issue. I see some of you nodding your heads up and 

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1 down, yes. 

2 Does that work for most of you? Does that 

3 cause a significant problem for anybody? 

4 (No response.) 

5 I don't see that it cause a significant 

6 problem for anybody. I'm not saying we'll succeed but 

7 if we can strive to get done today by 5:00 and even 

8 before, if we're very efficient. 

9 Is that okay with everybody? That's the 

10 current plan. 

1 1 It's now 12:25~ 

12 Gene? 

13 MR. FOLEY: Can we do a working lunch? 

14 MR. BROOKMAN: I find that that usually 

15 doesn't work, unfortunately. And sometimes people wish 

16 to confer over lunch. 

17 It's now 12:25. Can we start at 1:15? 1:15 

18 we'll start. 

19 Let me acquaint you, for those that aren't 

20 familiar with this building, again where you can eat. 

21 There is a snack bar that has coldcuts and soups and 

22 things directly one floor below on the opposite side of 

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1 the corridor. If you go down one floor to the ground 

2 floor and walk across the hallway there's a cafeteria 

3 two flights up the escalator. A rather large cafeteria 

4 that has most everything that you could want. And I 

5 understand there's a new cafeteria vendor. Is that 

6 correct? 

7 MR. BERRINGER: New management. 

8 MR. BROOKMAN: New management in the 

9 cafeteria. I'm not sure what that means. 

10 We're going to start -- we will start at 

1 1 1:15. And thanks to all the presenters for a good job 

12 this morning. 

13 (Whereupon, the luncheon recess was taken at 

14 12:25 p.m.) 

15 

16 

17 

18 

19 

20 

21 

22 

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1 AFTERNOON SESSION 

2 1 :25 p.m. 

3 MR. BROOKMAN: Okay. Let's begin. 

4 Thank you for making it through lunch quickly 

5 and allowing us to begin almost on time. I greatly 

6 appreciate it. We're almost there. 

7 Lauren. 

8 MS. CASENTINI: From what read here over 

9 lunch, I think John Tomlinson is going to be here 

10 tomorrow if we need tomorrow, so he'd be available to 

11 answer more questions. And I'd be glad to pass this 

12 around if anyone would like to take a look at it. 

13 But the bottom line is -- now, the 

14 participants were given switching detergent or using 

15 the specialty detergent. And the specially formulated 

16 detergent was given to them at no cost. They did have 

17 to continue to use their own detergent. 

18 Seventy-seven percent of them chose to take 

19 the free re-formulated detergent, so 23 percent chose 

20 to continue using their regular detergent. 

21 And the change in use was about a third less 

22 detergent. That is in cups per pound, about a third 

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1 less. It went from .06-.08 cups down to .04 to .06 . 

2 That's kind of the bottom line. 

3 And again, I'd be happy to let anyone take a 

4 look at this if they'd like to see it. 

5 MR. BROOKMAN: And maybe there are other 

6 sources of data on this. 

7 [Microphone malfunction.] 

8 If you know of anybody who's not here who 

9 intends to attend tomorrow, we need to figure out 

10 something to do about that. Some plan. 

1 1 One simple way to address that would be to 

12 give those name to Sandy and Brenda and maybe we could 

13 call them or find some way to do that. And that 

14 presuming we do get done. There's a lot yet to cover 

15 today. 

16 So, let's go right back into it, then. 

17 Anything else to be said before we return to 

18 Jim McMahon for questions on his earlier presentation, 

19 and then following on with the agenda as listed. 

20 Nothing else to be said at this point? 

21 (No response.) 

22 Okay. So, Bryan, would you wish to --

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1 MR. BERRINGER: Why don't we continue then 

2 with -- if there's any further questions on the LCC 

3 presentation? I know we sort of cut it off at lunch. 

4 I want to make sure that if you have opinions -- I know 

5 this is a lot of material that we're kind of throwing 

6 at you and going over and I hope we're having a good 

7 discussion as far as what's going on. But we want to 

8 make sure that people agree. 

9 Let us know if you agree or disagree, one way 

10 or the other. If you concur, please let us know also. 

1 1 That's been a concern in the past where we go along and 

12 we don't have any comments. 

13 MR. BROOKMAN: Jim, maybe you could just say, 

14 so people can locate it in their packets. You gave 

15 kind of a slim presentation, compared all the data and 

16 material that's here. 

17 MR. McMAHON: Yes. The presentation that I 

18 gave followed this handout, the life cycle costs, and 

19 also for clothes washers. You have two other packages 

20 that are relevant. One, I've referred to: "Quantities 

21 and Current Assumptions." It contained more 

22 information about each of the inputs. And then there's 

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1 "Preliminary Results." That's the first draft of what 

2 some of the outputs look like that you can get out of 

3 crystal ball. 

4 MR. ROSENSTOCK: Steve Rosenstock. Just one 

5 quick one. Maybe a lunchtime inspiration. I don't 

6 know. 

7 In terms of the analysis, again, hopefully 

8 there's data on it. There might be some from the Bern, 

9 Kansas study of percentage of cycles per year versus 

10 warm versus hot. Again, I have no idea what the trends 

11 are or what most people are washing. You know, the 

12 warm setting on a washing machine versus a hot versus 

13 the cold. Obviously that's going to make a difference, 

14 if there's data out there, what percentage of people 

15 always wash in cold water. When you extrapolate that, 

16 if there's data out there, I think hopefully that could 

17 be used as one of the inputs for this, when you refine 

18 your analysis a little bit. 

19 MR. McMAHON: My understanding is that that 

20 information has been used in the test procedure. 

21 

22 

MR. ROSENSTOCK: Oh, okay. Okay . 

MR. JONES: I did have one other questions. 

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1 Earl Jones here. 

2 I actually was rather struck by the fact that 

3 I thought that the analysis was actually pretty 

4 thorough. It looks like it's headed in the right 

5 direction. But I did have one question on one of the 

6 assumptions and wanted to know what the source of it 

7 was. And that was the application of the same 14 year 

8 life cycle to these two horizontal axis products. 

9 What's the basis of the assumption that is true for 

10 these products? 

1 1 MR. McMAHON: I have no information that 

12 distinguishes between the vertical and horizontal axis. 

13 I'd be happy to receive that information if it's 

14 available. 

15 MR. JONES: Okay. So then it's simply 

16 because washers which have currently been in production 

17 for -- I guess the dominant product has been in 

18 production for 50 or so years. And since it's average 

19 life these days is 14 years, the assumption has been 

20 that there's no distinction between that product and 

21 

22 

this one as it relates to product life . 

MR. McMAHON: Let me expand on my answer. 

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1 The lifetimes that we're using are based upon an 

2 analysis of historical shipments and sales of all 

3 washers. Since that dominated by vertical axis 

4 machines that's where the lifetime is coming from. 

5 We don't have any independent information 

6 about horizontal axis. We're working on a statistical 

7 basis. 

8 MR. JONES: I'm not sure if dominate would be 

9 quite the accurate term there though, Jim, since it's 

10 about 99 percentage to 1. But I get your point. The 

1 1 answer is there's no data to support that assumption. 

12 MR. McMAHON: Hard to refute it. 

13 MR. JONES: I'm sorry? 

14 MR. McMAHON: Hard to refute it at this 

15 point. 

16 MR. JONES: Well, --

17 (Laughter.) 

18 MR. BROOKMAN: And before we go to Gene, I 

19 guess now would be the appropriate time to entertain 

20 any questions, not only to Jim's presentation but from 

21 his supporting materials, as well . 

22 Gene? 

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1 MR. FOLEY: This question goes to Earl's 

2 point, just in terms of a random source for data. 

3 Whereas, you lasted his 99 to 1. In other countries, 

4 including in Europe, that ratio would not be the same. 

5 MR. McMAHON: Right. 

6 MR. FOLEY: Maybe it would be the other way 

7 around. In looking for data on life cycles it might be 

8 worth looking at European models and what their 

9 expected life the life expectancies of those 

10 products might in fact be. 

11 MR. JONES: Yes. That was in part my 

12 question, whether or not Jim or the DOE has that 

13 information. And then the second question would be 

14 what is the impact of the Americanization of such 

15 products as we now see in terms of capacity, size, 

16 weight, grow weight, physics, et cetera. But we'll get 

17 more into that later, I suspect. 

18 MR. BROOKMAN: Okay. Thank you. 

19 Additional questions for Jim on all the 

20 materials that are in your packet? 

21 

22 

Yes. Wayne? 

MR. MORRIS: Wayne Morris. Just to -- maybe 

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1 an observation or whatever. And Jim knows. We've 

2 talked privately about it. But I think for other 

3 people the difference between the RECS survey and the 

4 shipments of areas such as gas versus electric, water 

5 heaters and gas versus electric clothes dryers, there 

6 is a difference between those two pieces of 

7 information. I won't say whether it's significant or 

8 what it does to the analysis, but the RECS survey 

9 does makes assumptions about the differences and the 

10 overall population of the surveyed homes of electric 

1 1 versus gas water heaters. 

12 It seems to be different from the 

13 extrapolated information of say the last 10 or 15 years 

14 of shipping data on water heaters and on dryers. I 

15 don't know which one's right, which one's wrong. I 

16 don't know that we could ever get to that. But it is 

17 different. 

18 I wonder if there's a way to resolve that, to 

19 get closer to whatever the U.S. population is. I mean, 

20 one would assume, I guess, that the shipment data is in 

21 

22 

fact representative of the entire U.S., whereas RECS is 

a function of just those households. 

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1 It does begin to ask the question of whether 

2 or not the RECS is representative of the entire U.S. 

3 households. Maybe it's more representative. I don't 

4 know. But it's a question and an observation that I 

5 seem to see when I look at this. 

6 MR. McMAHON: Let me respond. Jim McMahon. 

7 We're aware of this difference. The 

8 difference that Wayne is referring to is that the share 

9 of electric water heaters in shipments is higher than 

10 it is in stocks and that's been true for some time. 

1 1 And we don't really understand why that is. 

12 We're speculating that there maybe 

13 speculation there may be something different about the 

14 conditions under which these water heaters operate. 

15 For example, if the electric water heaters are in areas 

16 which harder water, lower water quality, that may be an 

17 explanation for this difference. And we're looking 

18 into that. I appreciate the question. 

19 

20 

21 

22 

MR. BROOKMAN: Did you have a follow-up? 

MR. NADEL: I have a follow-up to that. 

I was also curious about this issue so I 

looked in the January 1998 "Appliance Magazine," where 

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1 they give recent shipments and their own projections of 

2 shipments based on a variety of data they have 

3 available. 

4 And from that I projected out what the stocks 

5 would likely be in 2010, given the DOE estimates of --

6 you're shaking your head like mayb~ you've done this, 

7 too. 

8 What I found is it's very minor changes 

9 compared to the RECS. What it means is you have a 

10 couple of percent increase in the gas water heater 

1 1 share, but also a percentage increase in the electric 

12 dryer share. At least my analysis shows the 

13 differences are likely to be just in the noise. 

14 MR. BROOKMAN: Glenn? 

15 MR. SCHLEEDE: A question for Jim McMahon. 

16 In the refrigerator analysis you had assumed 

17 that the electricity used for refrigerators costs 6 

18 percent more than electricity -- than the average price 

19 of electricity. If you used that same methodology in 

20 the case of washers, I remember back some of the 

21 

22 

papers, you would adjust it downward. You'd discount 

it rather than inflate the price. 

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1 Have you dropped that concept totally from 

2 this analysis now? 

3 MR. McMAHON: Yes, we have. 

4 MR. SCHLEEDE: Well, it was okay to inflate 

5 prices when you did the cost on refrigerators. It's no 

6 longer appropriate to make these --

7 MR. McMAHON: It's an entirely different 

8 methodology. The reason for doing that before was 

9 because we were trying to account for regional 

10 differences and rate structure differences for 

1 1 different end uses. 

12 So, for example, electric space heating and 

13 water heating tends to occur in regions with lower 

14 electricity prices, and therefore the average price for 

15 those end uses is lower. Whereas, the other 

16 appliances, since they are the residual, are higher. 

17 And now we're using a full distribution of 

18 prices for the different households so we're already 

19 accounting for the regional rate structure differences 

20 so we don't need to use that simple approximation. 

21 

22 

MR. BROOKMAN: Additional questions for Jim 

before we proceed with the other presentations? 

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1 I heard Bryan ask a moment ago, and aside 

2 from hearing from Earl, I didn't hear from anybody else 

3 how you generally view the analysis in these 

4 presentations, whether the fit with what you would 

5 expect and other comments on what's being -- the 

6 methodology and I guess the results as well. 

7 Comments on what you see here? 

8 MR. ROSENSTOCK: Steve Rosenstock, EI. I 

9 think it's a very good first step. I was able to 

10 download the spreadsheets. I'm still having a little 

11 bit of problems with it. It's just more of a software 

12 issue. Kind of personally speaking, it's that if the 

13 Department is going to do spreadsheets for downloading, 

14 right now it's only in EXCEL and there are some of us 

15 holdouts out there who have LOTUS or QUATRO PRO. 

16 It might be nice. If it costs to much money, 

17 slap me down. But it might be nice if you did it for 

18 multiple softwares. 

19 Unfortunately, one of the problems we're 

20 having is like EXCEL 97 doesn't seem to recognize INTEL 

21 7 when you're doing one of the spreadsheets. I don't 

22 know why. Maybe the mighty beings in Seattle could 

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1 tell us why. But just a thought. I think it's a 

2 really good first step. 

3 MR. BROOKMAN: Bryan? 

4 MR. BERRINGER: Just a point of information. 

5 We do have some disks that we've copied with the LCC 

6 and the NES. It's on the Web page. But the most 

7 current version, we do have some disks if you're having 

8 trouble with downloading it from the Web. If you want 

9 to see Sandy or Brenda, you can get a copy of those. 

10 MR. BROOKMAN: Any additional comments pro or 

11 con on what's been done so far here? 

12 (No response.) 

13 I see not. Okay. 

14 So then, Jim, are you the one who proceeds 

15 with the next segment? 

16 MR. McMAHON: We're on energy savings and 

17 shipments? Yes. 

18 MR. BROOKMAN: Yes. Jim, if you could go 

19 ahead and proceed. 

20 

21 

22 

MR. McMAHON: I'll be speaking from this 

handout, Base Case Future Shipments: Clothes Washers, 

Discussion Topics: The issue is how do we 

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1 project in the base case clothes washer shipments out 

2 to the year 2030. Some of the important topics are 

3 what fraction of homes will have clothes washers; how 

4 many houses will there be; what's the life of clothes 

5 washers. I'll comment on the difference between 

6 wringer and automatic washers because that influences 

7 some of the statistics. Several models of future 

8 shipments and a brief comment at the end of that, the 

9 impact of standards. 

10 Current surveys. This is RECS survey. 

11 Seventy-seven percent of U.S. households have clothes 

12 washers. It differs according to the house type. 

13 Those of you who attended the workshop last July will 

14 recall that we presented a preliminary spreadsheet at 

15 that time and there was some controversy about the 

16 saturations in multi-family homes which seemed to have 

17 increased all of a sudden from 30 or 40 percent to 70 

18 percent. They went back and looked and there was an 

19 error in one of the surveys, and the number is closer 

20 to 40 percent. 

21 

22 

So these numbers are -- the numbers you see 

on the screen and in your handout are corrected. That 

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1 increase that we had shown in July wasn't there. 

2 Didn't really happen. 

3 So single family homes, existing homes, have 

4 about -- 93 percent of them have clothes washers. New 

5 construction, approximately 95 percent have clothes 

6 washers. The existing fraction was 86 percent in 1981. 

7 That's just to give you an idea of the growth in 

8 saturations over time. 

9 For mobile homes they're a little bit lower. 

10 Eighty-four percent now. About the same in new homes. 

11 So maybe those have stabilized at that level. The 

12 existing saturation was 66 percent in 1981. 

13 Multi-family existing homes, currently 31 

14 percent. New homes, 39. So maybe there's some more 

15 growth there. Existing homes was 28 percent in 1981. 

16 Now without speculating about how those 

17 saturations will change in the future, let's just 

18 assume for the moment that the saturations stay the 

19 same. And we have the growth in households projects by 

20 DRI and by the Annual Energy Outlook in 1998. And this 

21 

22 

graph shows you what will happen . 

Because of the growth in households there 

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1 will be 30-35 million more washers in place than there 

2 are now by the year 2030. So our shipments forecasts 

3 need to account for where those are going to come from. 

4 The top line here is the number of households 

5 and I say AHAM, and I should be fully disclosing and 

6 say that's derived from the AHAM Fact Book by taking 

7 the number of washers reported in place divided by the 

8 saturation. Page 21 of the 1997 AHAM Fact Book. 

9 The dashed line shows the number of 

10 households according to the Annual Energy Outlook 1998. 

11 The number of washers is from the AHAM Fact Book and 

12 the 1990 number I think is high. We had a conversation 

13 privately, Wayne and I, about this. 

14 The survey number that was reported there 

15 appears to be a single family percentage, not all 

16 households, so I think they overestimated the number of 

17 washers in place. So I'm using the lower number 

18 corresponding to 77 percent of all households having 

19 washers where the number in the Fact Book is about 95 

20 percent. That's a single family number. 

21 

22 

Okay. So the major reason for expecting that 

shipments will increase is because there will be more 

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1 houses and we expect people will have at least the same 

2 percentage of washers as they do today. 

3 Looking back on 1980 to 1986, the annual rate 

4 of growth in domestic shipments, excluding exports, 

5 average about 2.3 percent. If we simply maintain 

6 current saturations there will be an annual growth in 

7 shipments of approximately .9 percent, just under 1 

8 percent. 

9 In context, there were 6.2 million domestic 

10 shipments in 1996, so this would be an increase on the 

1 1 order of 50,000 or 60,000 additional shipments each 

12 year on top of that. If you take that out to the year 

13 2030, that's a projection of 8.5 million shipped per 

14 year. 

15 A number of factors could alter this. If 

16 those houses are not built obviously the number will be 

17 different. If the percent of households having washers 

18 changes, it will change. The washer lifetimes could 

19 change. Washer prices and operating expenses may have 

20 some bearing on how many people own them. And there 

21 

22 

could be differences in consumer decisions to repair 

rather than replace in the future. 

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1 Graphically reinforcing the point about 

2 increases in sales, this figure shows at the top 

3 clothes washer sales historically, including exports. 

4 And below that, the lower line, domestic clothes washer 

5 sales. We don't worry about the exports at this point. 

6 And the two lines that say "Appliance 

7 Magazine," are a projection in January this year in 

8 "Appliance Magazine" of what the projected clothes 

9 washer sales will be for the next five years. They 

10 seem to follow the trend pretty nicely. 

11 The wiggly line that goes on out to the year 

12 2030 is a projection based upon a spreadsheet assuming 

13 frozen saturations, a 14-year clothes washer lifetime. 

14 And this has the 1997 housing stock forecast. We will 

15 update that to 1998 but it's not very different. 

16 The waves in that have to do with replacement 

17 cycles and I'll discuss that a little bit more in a 

18 moment. 

19 Now, since July we've looked at five 

20 different statistical models to check this very simple, 

21 

22 

almost linear extrapolation from the simple saturation . 

The five model types are listed here, and I'll go into 

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1 each of them a little bit. I'll tell you the pros and 

2 cons of each of the models. I want to tell that each 

3 of the models builds on the previous one. 

4 The next page is a table showing some of the 

5 factors that are accounted for by the models. And 

6 start from the top on the left, the ARIMA model. 

7 In July we presented a simple linear fit of 

8 historical shipments, and there was a comment that we 

9 should use the ARIMA. The ARIMA is a moving average so 

10 it uses the historical data but uses the moving average 

1 1 to go on off into the future. So the only information 

12 that's used in the ARIMA model is washer sales. 

13 The Multivariate time series, simply put, 

14 brings in the number of households. So it's not just 

15 the historical time series of washers that tells us how 

16 many will be built in the future, but also the number 

17 of households. 

18 Saturation/life 1 brings in information about 

19 what percent of households will own washers and the 

20 washer lifetime. Saturation/2 is a variant of that. 

21 

22 

I'll explain the difference. And the Accounting model 

takes into account all of those effects and potentially 

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1 can take account of economics; that is, the effect of 

2 price and operating expenses on the sales. 

3 Now there are two pages on each of the 

4 models, and those of you who have the hard copies, you 

5 can open them this way and see the two pages together 

6 and show you a text slide and a graphic slide. On the 

7 screen, I'm just showing you one at a time. 

8 The ARIMA model. The good news is it only 

9 requires time series data. It's very simple. The bad 

10 news is historical trends may not be a good guide to 

1 1 the future. 

12 Wringer washers are an important part of the 

13 early story of clothes washers. We have data back to 

14 1957 that we're using. And obviously we don't want to 

15 extrapolate based upon wringer washers, so that's a 

16 concern. 

17 If you exclude the wringer washers you 

18 shorten your time series, which means you have less 

19 years from which to forecast. It makes the statistics 

20 very bad. 

21 The equation shown at the bottom of the page 

22 and the note here is that the model cannot account for 

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1 changes in the number of households. They're just 

2 extrapolating from past trend. What percent of houses 

3 will own the washers, the prices or operating expenses. 

4 The graph shows you the fit from the ARIMA 

5 model. It doesn't show you the uncertainty, and I 

6 should tell you what that looks like. 

7 Let me express it in terms of the change in 

8 shipments from year to year. The "Appliance Magazine" 

9 forecast, consistent with recent history, says that 

10 shipments will increase about 100,000 each year. So 

11 from 6.2 million in 1996, add 100,000 each year . 

12 If you do the statistical uncertainty on this 

13 you find a low bound that says they could decline by 

14 20,000 a year, so it could be going down, or on the 

15 other hand they could be increasing by 200,000 a year. 

16 So it's basically plus or minus 100 percent on the 

17 increase. 

18 So because we have only so many datapoints 

19 and because it's only doing a moving average and 

20 doesn't have any other information about the future, 

21 like how many houses here will be, there's nothing to 

22 hold this forecast down and make it stabilize at any 

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1 particular value. So this looks really clean but 

2 you've got a huge amount of uncertainty in that. 

3 Going to the next one, the Multi-Variant. 

4 The advantages are two time series data. We've taken a 

5 time series on washer shipments and adding in a time 

6 series of how many households. And then it's just 

7 forecasting based upon how those have changed over 

8 time. 

9 Basically, the same set of criticisms here. 

10 I'll show you the picture. 

1 1 It gives you a better fit of the historical 

12 data, which tells us that in fact the number of houses 

13 does matter. That's goods news. But there's no 

14 explicit accounting for replacement sales, house 

15 saturations change or the economic factors. 

16 The third model is a Saturation Lifetime 

17 model. This is the first time that we're bringing the 

18 washer lifetime into account. The other models just 

19 assume that you have a historical trend and it will go 

20 on into the future. 

21 

22 

We bring in a retirement function. We still 

base the housing and saturation stocks on time series 

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1 data. The third note under "Pros" is you could create 

2 a model of different assumptions about future housing 

3 and saturation. Let me restate that. 

4 Because you are looking at housing and 

5 saturation of washers as independent time series, you 

6 can use those to get a very good fit of the historical 

7 data. However, in the future, you're dependent upon 

8 the assumptions about lifetimes and you still can't 

9 account for any of the economic factors as they affect 

10 the stocks. 

1 1 Is that clear? 

12 Now, the fits look a little bit scary. The 

13 historical time series -- there are times when these 

14 models don't fit the historical data very well. They 

15 tend to be very sensitive to the assumptions and so 

16 they skip around a little bit. 

17 The problem here is that the saturations are 

18 a measure of what percent of households own washers. 

19 From year to year that doesn't change very much. It's 

20 got a lot of inertia. There's not all of a sudden 10 

21 million people who suddenly today decide to go out and 

22 buy a washer nor that many that suddenly dump them. On 

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1 the other hand, the actual sales from year to year are 

2 very dependent upon short-term business cycles; 

3 people's incomes, how the job market is going and so 

4 forth. And so the model, in attempting to fit those 

5 swings has a little bit of a hard time. 

6 But these are the two Sat/Life 1 and Sat/Life 

7 2, the two models. 

8 The other difference between these two is the 

9 line at the top with the big waves on it has a fairly 

10 narrow band of lifetimes and so your replacement cycles 

11 tend to repeat off into the future. This large swing 

12 in sales that happened in the last 1980s tend to lead 

13 to a replacement, and then those get replaced, and you 

14 get these bumps. 

15 The other way to do it is to say the 

16 lifetimes are very broad, a range of 7 years to 30 

17 years instead of 12 to 17. In which case you smooth 

18 those out and you get a much straighter line. 

19 The last model is the Accounting model. It's 

20 relatively simple. It accounts for washers separately 

21 

22 

in new homes and replacements. I think those are very 

different markets and I think it's important to treat 

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1 those separately. 

2 The price and operating cost dependencies can 

3 be incorporated. We haven't done it yet. That's the 

4 next step. But that's important if we're going to look 

5 at a standard scenario. You want to be able to see the 

6 effect of price and operating cost. 

7 The "con" side. Any model you deal with is 

8 going to have to involve some assumptions about the 

9 future. You're going to have to forecast the 

10 saturations. I think that's good news and bad news. 

11 We want to forecast the saturations so that we have the 

12 responsiveness to price, but that means you have to do 

13 it. 

14 The housing starts must be forecasted. 

15 That's true for all of the models. And the removals 

16 are based upon; your assumption about lifetimes. And 

17 we've had a question earlier about whether the 

18 lifetimes will hold up over time. That gives you this 

19 forecast. 

20 

21 

22 

I'll comment about the fit here. You'll 

notice it fits pretty well up until 1990, early '90s, 

and then the actual sales have been better than this 

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1 model says. I think there are a couple of things going 

2 on there. 

3 The economy has been better than expected. 

4 The model is not very sensitive to short-term business 

5 cycles. It tends to do long-term. And I think that 

6 reality is going to meet up with the model again fairly 

7 shortly. 

8 So the fact that there's some discrepancy in 

9 recent years, although is a concern, I don't think is 

10 something that kills this approach. 

1 1 Now we put them all together. Those of you 

12 who are interested in uncertainty, you can take this as 

13 your band or at least part of the band of the 

14 uncertainty about the future. In the worst case, sales 

15 could be lower or flat for the foreseeable 10 years and 

16 then going on out. In the best case, they'll be 

17 increasing at a much higher rate. 

18 But all the models show that in the long19 term, if you start looking out 30 years, you have to 

20 account for increases in shipments. 

21 My suggestions for how to use this are in the 

22 simple spreadsheet that you already have from last 

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1 July. You could take anything in this band and plug it 

2 in to reflect your best judgment about what the future 

3 will be like. 

4 All the models forecast an increase in 

5 shipments either because of the time trend. 

6 Historically they've been increasing; because the 

7 saturations are increasing; or because there's more 

8 households in the world. 

9 Of the five models, only the last one, the 

10 Accounting model, could be adapted to account for 

11 economic factors, and therefore, I think that's the one 

12 to focus on as we move into not just a base case 

13 forecast but also a standards based forecast. 

14 Thank you. 

1 5 MR. BROOKMAN: Quite a lot of material there. 

16 Questions or comments? 

17 Steve? 

18 MR. ROSENSTOCK: Steve Rosenstock, EI. 

19 Just a quick one. Just looking at kind of 

20 all five, kind of there, it just struck me that it 

21 seemed like none of the models showed -- well, only one 

22 really shows a drop in sales at some point. The 

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1 humpiest one. I'll say that one . 

2 (Laughter.) 

3 That's the only one that shows like a real 

4 drop. And it does look like, like you were saying, 

5 with business cycles it does seem to be a significant 

6 drop at some point in the future. It's more of a 

7 it's a very hilly route and smooth curve. That's my 

8 best guess that the hill part is probably the better 

9 one, might be the most kind of -- when you look at it, 

10 that might be the most -- it's just linear upwards it 

1 1 seems like. 

12 MR. McMAHON: You think the replacement 

13 cycles have some merit? 

14 MR. ROSENSTOCK: Yes. 

15 MR. BROOKMAN: Would you comment on the band 

16 width? 

17 MR. ROSENSTOCK: No. 

18 (Laughter.) 

19 MR. BROOKMAN: Other questions or comments on 

20 all these models? 

21 

22 

MR. ROSENSTOCK: Well, is that the only part 

of this national energy savings spreadsheet you were 

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1 going to discuss or is the future counted -- just an 

2 overall -- what kind of numbers you got? 

3 MR. McMAHON: That's the basic presentation. 

4 I could show you a look at the NES spreadsheet. 

5 Well, are there any other questions on this 

6 before we go to that? 

7 MR. BROOKMAN: Dave, do you have a question? 

8 MR. MODTLAND: Yes. Dave Modtland. Just a 

9 comment, I guess. 

10 From the information that was shown earlier, 

1 1 it indicated that the price was fairly constant 

12 throughout that period and really this model doesn't 

13 take into account what retail price does on volume. I 

14 don't have any suggestions for how to do that, but just 

15 a comment. 

16 MR. McMAHON: You're right. That's a problem 

17 because the historical prices have been stable. And 

18 from an analysis point of view, that doesn't give us 

19 situations to analyze where the price suddenly went up. 

20 If that's what's going to happen with 

21 

22 

standards, that standards are going to drive prices up, 

we don't have very much by way of a historical analog 

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1 to look at and say what's the response going to be. So 

2 that is a problem and I agree with you. 

3 MR. BROOKMAN: Do you have any additional? 

4 (No response.) 

5 MR. McMAHON: Okay. Let me turn to the 

6 National Energy Savings Spreadsheet. This is what it 

7 looks like. You can download this spreadsheet from the 

8 DOE Web site. It will also be up on the LBL Web site 

9 shortly. 

10 There's no handout on this. If you're looking 

1 1 for a handout, there is no handout on this. We can 

12 make copies of this available. 

13 This is basically the summary results page 

14 sheet of the spreadsheet and it shows a table of energy 

15 savings for the different fuels from the time period 

16 start of standards to 2010, 2020 and 2030. It shows 

17 electric, gas and oil and the total, and also shows 

18 water savings. 

19 The chart shows billions of dollars change 

20 going from the base case to the standards case. We 

21 

22 

took a 20 percent improvement, 20 percent energy 

reduction, for this example. The lines below the zero 

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1 are price changes, so you have a price increase which 

2 is printed here as a negative value. and energy and 

3 water savings, which are positives. And the red line 

4 shows the net effect of that. 

5 So in this scenario, after about three years, 

6 the country breaks even, and after that it's making 

7 money. 

8 Over here, discounted at 7 percent, is the 

9 net present value of the energy and water savings, $4.8 

10 billion. Equipment cost, $1 .5 [billion]. So a net of 

11 $3 billion. A benefit cost ratio of 3. 

12 To operate this you simply go to list inputs 

13 and you will get a screen that looks like that. Main 

14 menu. Because of the resolution of this projector it's 

15 hard to see, so we'll have to make hard copies 

16 available. But it lists the user menus that you have 

17 available. 

18 Energy price, the year to start the standard, 

19 the discount rate and the year to which you're going to 

20 discount, the standards case you want to run, the 

21 manufacturer costs. We're using the shipment weighted 

22 average. And the water cost escalation. 

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1 Up in the top left you can change the fixed 

2 charge if you want to deal with the fixed charge issue 

3 on the energy crisis. 

4 MR. BROOKMAN: And again, Jim, where is this 

5 available? 

6 MR. McMAHON: DOE Web site. 

7 MR. BROOKMAN: And this is called 

8 MR. McMAHON: NESCW. 

9 MR. BERRINGER: Sandy has the disk. It's a 

10 separate disk that she has here available. 

11 MR. NADEL: That's the life cycle cost 

12 spreadsheet? 

13 MR. BERRINGER: No. The National Energy 

14 Savings Spreadsheet. 

15 MR. McMAHON: NES. National Energy Savings. 

16 MR. ROSENSTOCK: A quick one. Steve 

17 Rosenstock, EI. 

18 When I downloaded it off the Web site, the 

19 DOE Web site, with the announcement about the workshop, 

20 I tried printing up some pages. I don't remember 

21 seeing --

22 MR. McMAHON: You have an older version. 

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1 MR. NADEL: I downloaded it -- well, two 

2 weeks ago. I'm sorry. 

3 MR. McMAHON: Two weeks ago. The 

4 calculations and the user interface has been made much 

5 friendlier, comparable to the life cycle cost 

6 spreadsheet. 

7 MR. NADEL: I wish I'd known that. Okay. 

8 MR. McMAHON: I'm sorry. 

9 MR. BROOKMAN: Is that now available on 

10 the --

1 1 MR. McMAHON: That's what you get for being 

12 ahead of the curve, Steve. 

13 MR. NADEL: Sorry. 

14 MR. McMAHON: Yes. It's now available on the 

15 Web site. 

16 MR. BROOKMAN: On the DOE Web site. Under 

17 the announcement? 

18 MR. BERRINGER: We'll make sure that 

19 everything is updated to include all the slides and so 

20 forth for the data. We had a lot of that on there. 

21 

22 

This is a newer version than what you had downloaded, 

Steve. 

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1 MR. BROOKMAN: Wayne? 

2 MR. MORRIS: This one's got the correction? 

3 MR. McMAHON: You can change the inputs and 

4 it will recalculate, we hope. Yes. 

5 Those of you who have been involved in pre6 tests of all these things, I apologize for the 

7 technical difficulties. We've learned that Microsoft 

8 versions of EXCEL are not upwardly compatible and 

9 things that we created in EXCEL 7 for WINDOW 95 don't 

10 work in EXCEL for WINDOWS 97 and so forth. So we've 

1 1 had to go back several times and as different systems 

12 pick up the spreadsheet and try and use it and fail, 

13 we've had to go back and reprogram to make it work for 

14 different applications. 

15 So I apologize for the problems. It works 

16 fine on ours. And if you use EXCEL version 7 for 

17 WINDOWS 95, I expect it will work just fine. If you 

18 use something else, try it out and tell us if it 

19 doesn't work and we'll figure out what the problem is. 

20 We've talked to Microsoft and they have 

21 

22 

admitted that there are difficulties and they're 

working on a patch. 

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1 (Laughter.) 

2 MR. ROSENSTOCK: On the inputs, there's a 

3 conversion factor in there? 

4 MR. McMAHON: Yes. 

5 MR. ROSENSTOCK: BTU's per kilowatt, heat 

6 rate conversion on the 

7 MR. McMAHON: Yes. The current conversion 

8 for heat rate is taken from AEO 98. That's the most 

9 current thing that we have. And in terms of numbers, 

10 it starts at about 10,700 BTUs per kilowatt hour and 

1 1 goes down to somewhere in the 9,000's by the year 2020. 

12 The specific numbers are in the spreadsheet. 

13 If you go to the tab that says "elect conversion." 

14 MR. ROSENSTOCK: The latest version though. 

15 MR. McMAHON: Yes. 

16 MR. ROSENSTOCK: Okay. I don't need to see 

17 it. 

18 MR. McMAHON: Okay. So the operation of the 

19 spreadsheet is you go through to each of these menu 

20 items. You pick your scenario and hit the button that 

21 

22 

says calculate down at the bottom and it will show you 

that results screen that I just showed you. And we're 

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1 happy to take comments about any other developments 

2 that you would like to see. 

3 That's all I have on that. 

4 MR. BROOKMAN: Additional questions or 

5 comments? 

6 Yes, Steven? 

7 MR. GOLDSTEIN: Question. This may be 

8 farther than you've gotten. National Energy Savings 

9 are compared to some base case and what are the 

10 assumptions concerning the saturation of efficient 

1 1 products in the base case. 

12 MR. McMAHON: You're right. It's a little 

13 farther than we've gotten. There is a spreadsheet --

14 there is one of the sheets. I don't know if you can 

15 see these tabs down here. This one says base case. 

16 And if you go there, it will show you the time series 

17 of energy consumption per unit, consumption per cycle, 

18 which is taken out of the engineering data. 

19 So what we have in here is the set of 

20 efficiency levels that are were described earlier from 

21 the AHAM data. We have a base case forecast that has 

22 an assumption about what fraction of those will be 

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1 horizontal axis and that's all. So we're not 

2 forecasting a full distribution of efficiencies at this 

3 point. 

4 The standards case is then compared against 

5 whatever that base trend is. But you can find all of 

6 the details in the sheet. 

7 MR. BROOKMAN: Additional questions? Are we 

8 ready to move on? 

9 (No response.) 

10 I think we are. Okay. 

11 MR. BERRINGER: If you go back to your 

12 package, your original package, we're starting at slide 

13 15 right now on reverse engineering. The packet we 

14 started with this morning. Clothes Washers Standards 

15 Workshop, today's date. The one that begins with this 

16 slide, slide 15 of this package here. 

17 (Pause.) 

18 I told you one of the tools I needed today 

19 was my Bible, so I brought my Bible for this session 

20 here. 

21 One of the stars as part of this rulemaking 

22 has been Whirlpool, as far as their prototype design. 

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1 And one of the reasons we're doing reverse engineering 

2 is to derive a third party estimate of the cost of the 

3 prototype in comparison with the V- and H-axis machines 

4 in the data supplied by the manufacturers and to 

5 evaluate whether or not it falls within the range of 

6 existing data. 

7 So the approach was basically to do -- we 

8 actually do the baseline V-axis models, two top selling 

9 V-axis models. Also, we're looking at two commercially 

10 available H-axis models and the Whirlpool prototype. 

11 And I'd like to thank Whirlpool for --

12 they've been very cooperative in their assistance 

13 throughout this whole process as far as allowing Arthur 

14 D. Little and myself to come out there and witness 

15 testing of the machine and really open up their books 

16 and let Arthur D. Little evaluate the prototype. 

17 Status to date. Arthur D. Little has -- and 

18 Steve Mariano will get into a little bit more detail as 

19 far as what they've done. They've torn down two of the 

20 V-axis machines. Also in your package is a preliminary 

21 

22 

report dated February 24th of '98. And to date, 

they've also begun tear-down of the prototype. So 

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1 they've been out to Whirlpool to look at the machine. 

2 One of the things we want to do, and the 

3 purpose of this is to make sure that the approaches 

4 that Arthur D. Little has done to date with the 

5 baseline units is acceptable, some of the assumptions 

6 they've used, and come up with -- obviously it's not 

7 going to represent any one particular manufacturer, but 

8 what we're going to do is present their approach for 

9 their tear-down. 

10 Basically we're looking for your input as far 

1 1 as if these assumptions make sense. And again, we 

12 weren't trying to focus on one particular manufacturer 

13 but a greenfield type study. And after that, we still 

14 have to proceed -- they still have to proceed and 

15 they're going to tear down two H-axis machines 

16 basically to see where that falls, if it falls within 

17 the range of existing data. 

18 So we're trying a -- Steve Nadel, you'd asked 

19 about some of the verification, so some of the work in 

20 doing this -- this is something new we haven't done 

21 

22 

before. So this gives us an idea, too, as far as 

whether numbers are realistic or even sort of -- we're 

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1 doing a bottoms up and a top down sort of analysis 

2 here, so we're trying to be as thorough as possible. 

3 There's been a number of questions in past 

4 workshops questioning the Whirlpool prototype, whether 

5 it cleans clothes or not. And Whirlpool was gracious 

6 enough to have us come out there and witness the 

7 testing. 

8 I personally witnessed the testing, saw the 

9 results. We basically ran -- they ran a top selling V10 axis machine and top selling H-axis machine and the 

11 prototype. They actually ran the test twice. 

12 Basically, we looked at soil and stain 

13 removal. Again, they ran the test twice for each 

14 machine. They used basically an ASTM-D4265 standard as 

15 far as evaluating the stain and soil removal. So they 

16 used nine different stain swatches, six samples of it. 

17 We ran the test twice. 

18 We also used the material, the cloth called 

19 out in the AHAM test method. Also various other 

20 cloths. Stained cloth were used, but a total of nine. 

21 

22 

Also there was a gentleness test performed on 

there and also a rinsing test. And basically, all the 

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1 results that we saw fell within the range. I could 

2 visually see the difference in all the materials. We 

3 laid out the vertical axis, the H-axis and the 

4 prototype, and all the results fell within the range. 

5 Acceptability between those three models. 

6 The prototype fell in between that as far s results. 

7 So that's sort of the question that's come up in the 

8 past as far as the performance issue. 

9 Does anybody have any questions as far as 

10 that's concerned? 

1 1 Larry? 

12 MR. HAWKINS: I'm sorry if I missed it but 

13 what load size did you say was tested? 

14 MR. BERRINGER: Basically, what's called out 

15 in the AHAM test procedure used various shirts, sheets, 

16 towels. 

17 MR. HAWKINS: Yes. The AHAM test procedure 

18 has articles for different load weight sizes. My 

19 question was what load size weight was tested. 

20 MR. BERRINGER: Off the top of my head, I 

21 don't recall what load size was used . 

22 Oh, we have a seven pound test load. 

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1 Thank you, Curt. 

2 MR. HAWKINS: Thanks. 

3 MR. BERRINGER: Are there any other questions 

4 about any of this testing? 

5 (No response.) 

6 Okay. Seeing none, I'll go into a little bit 

7 of background on the reverse engineering. 

8 I thought I had some slides on that. This 

9 time I'll let Steve Mariano come and present from 

10 Arthur D. Little. 

1 1 MR. MARIANO: Thanks, Bryan. 

12 Good afternoon. As Bryan has said, as part 

13 of a reverse engineering -- I'm going to use that term 

14 a little loosely. In the classic sense, reverse 

15 engineering is sort of the build a better mousetrap. 

16 Tear somebody else's product apart and make it better. 

17 That's not really what we're doing here. Our 

18 approach here is to assess the costs. Primarily it was 

19 to assess the cost of the prototype, the Whirlpool 

20 prototype. But to step back from that, we said what's 

21 important is that we convey the methodology to the 

22 stakeholders so that everybody understands how we 

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1 arrived at that cost, because obviously revealing 

2 specific data about the cost of that product would be 

3 beyond the realm of confidentiality. 

4 So, that initiated this program an that's 

5 what we're calling our Phase I. Phase I was really to 

6 do a vertical access machine, current state-of-the-art, 

7 and demonstrate the methodology, show you the results, 

8 and then move forward onto Phase II, which would be the 

9 prototype. 

10 And as part of Phase II we were also going to 

1 1 do the H-axis, which is again a higher efficiency 

12 concept. 

13 One of the important things that I want to 

14 point out, one of our objectives here and what I'd like 

15 to see from the stakeholders as input as to our 

16 methodology. That's a major objective of Phase I is to 

17 get input. So besides me getting out of here alive, 

18 I'd like some feedback on what you guys think of our 

19 methodology and the analysis and whether you think 

20 there are certain issues like variability and 

21 

22 

uncertainty in the analysis we should focus our 

attention. 

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1 Bryan has already told you a bit about our 

2 status, where we are today. Just to give you a bit of 

3 a chart to show you sort of what we've been doing. 

4 We're nearly complete with our Phase I 

5 analysis. We've been refining that. 

6 You've really got two documents. The report 

7 that you received on February 24 was preliminary. We 

8 have actually updated some of that analysis. And in 

9 the handout package that you have, that incorporates 

10 some more information, primarily through more visits 

11 and discussions with the manufacturers of clothes 

12 washers, as well as material, component and equipment 

13 suppliers. We've been having discussions with them as 

14 well. We're feeding that information into our 

15 analysis. 

16 We've also actually already begun, thanks to 

17 Whirlpool, analysis on the prototype. We've actually 

18 had a visit with them and are collecting the data and 

19 have now begun our analysis on the prototype, as well. 

20 

21 

22 

MR. NADEL: Given this schedule, am I correct 

in assuming that this analysis will be completed around 

the same time as the NOPR so the data won't be in the 

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1 ANOPR but may be available around the same schedule? 

2 MR. MARIANO: I think Bryan made a case of 

3 that better. That's our intention. I think 

4 information is available as we proceed, but maybe we 

5 won't be finalizing it until sooner than the May time 

6 frame. 

7 MR. BERRINGER: It is around the same time 

8 frame. If we can accelerate it, we will have the 

9 information available, but we still have time after the 

10 ANOPR to discuss it and if we have a workshop in July, 

1 1 to further --

12 MR. NADEL: That makes sense. And I'd 

13 encourage you not to hold up the ANOPR for this. 

14 MR. BERRINGER: No. We do not plan on 

15 holding up the ANOPR. 

16 MR. MARIANO: I'd like to talk a little bit 

17 about methodology. What we refer to as technical cost 

18 modeling is really building up costs but using a 

19 spreadsheet to model those costs. It provides us a 

20 great deal of flexibility in the analysis. Changing 

21 input parameters to the model to look at the effects of 

22 various equipment, process, cycle time and et cetera on 

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1 the cost. And so we can readily adapt it if 

2. information becomes available that would lead us to 

3 believe that our initial assumptions were maybe 

4 incorrect. 

5 Really, what we have here is separate 

6 databases in the spreadsheet. One is driven by product 

7 specifications. And this actually applies to a lot of 

8 products that we work on. But obviously here, the 

9 clothes washer and the information. And I'll go 

10 through the assumptions we've used on our baseline 

11 vertical axis machine there. 

12 Material and component databases which 

13 primarily gives you pricing of materials and the 

14 components, major components, purchased components in 

15 the machine. 

16 The process database is focused on 

17 manufacturing processes. Just to give you some 

18 examples here, pricing, injection molding, et cetera. 

19 In that kind of a database, information on equipment, 

20 typical process cycle times for various sizes of 

21 equipment. And that's all drawn into the manufacturing 

22 cost estimate, as well, from that database. 

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1 And then finally, obviously, sort of the 

2 financial exogenous factors associated with the plant 

3 size, output, capacity, machine up time, et cetera. 

4 Those are all sort of factory information that's 

5 important in the analysis. 

6 These are all fed in. This information is 

7 all fed into the costing part of it, which is what I've 

8 shown you. It's components. And it's by a component 

9 basis. And the component would draw off of the 

10 appropriate manufacturing processes or materials that 

1 1 are associated with that to calculate the cost. 

12 And we've basically summarized this data 

13 according to what you've already seen. On full 

14 production costs, we've broken it into materials, 

15 direct labor and overhead, as in factory overhead. 

16 Just to give you a little glimpse of sort of 

17 what that looks like -- and some of you may be familiar 

18 with sort of this kind of a -- it's really a structured 

19 bill of materials for a product listing parts. We 

20 identify them by number. We actually have the 

21 

22 

description of the part and all pertinent information, 

as in sizes, weights. We take information like 

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1 projected area of a plastic component to size, 

2 injection molding equipment. That type of thing. And 

3 this will drive our actual material cost. 

4 Also this is structured according to assembly 

5 so that what we're doing is here is actually laying out 

6 how the thing, this product, might go together and how 

7 the clothes washer goes together, so the steps that are 

8 taken in that. And that will generate our assembly 

9 times as well and associated labor. 

10 To generate equipment costs and equipment 

1 1 utilization, in other words, how many presses or how 

12 large a paint facility would be necessary to do these 

13 productions, we've attached to this bill of materials a 

14 process sheet. And what that does is identify cycle 

15 times per part for specific manufacturing processes. 

16 So, in other words, if a particular component 

17 needs injection molding, there would be a cycle time in 

18 that cell according to that particular component size. 

19 That would obviously generate, based on the number of 

20 components that needed to be made in a year, how much 

21 

22 

equipment would be necessary given certain financial 

assumptions such as up time and die change. And we 

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1 have that incorporated in here, as well. 

2 Now all of this has been summarized and 

3 placed into cells that tell you the total amount of 

4 time that this equipment would be necessary. And then, 

5 given certain equipment availability, it would tell you 

6 how much equipment I'm going to need. Do I need 10 

7 injection molders? Do I need 2? It would generate 

8 that type of information. 

9 So from that kind of information we can 

10 generate a total equipment investment associated with 

1 1 building these particular units at a given volume. 

12 If there's any questions on the methodology, 

13 I'd be certainly welcome to answer those now. But I'll 

14 go into some of the assumptions that we've assumed in 

15 our Phase I analysis for the clothes washer. 

16 First of all, as Bryan has mentioned, we took 

17 two vertical axis currently available on the market 

18 machines. Purchased those. This is a general 

19 description of what those machines looked like. They 

20 were high volume, relatively common models that were 

21 

22 

out there. And based on certain information about 

which models would be representative of baseline from 

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1 the standpoint of the wash and rinse temperature 

2 settings, whether it had a heated rinse or not, an 

3 unheated rinse in this case, washer spins speeds. 

4 These are two models that we chose to 

5 actually dow a tear down of. 

6 Those of you who might not be familiar with a 

7 tear down, basically what we've done is take the 

8 machine apart to the very screws and washers and nuts 

9 and bolts that are there. And that's how we 

10 characterized that. And that's what made up in the 

1 1 bill of materials, the actual components and pieces 

12 that actually go into this machine. So it's a very 

13 detailed tear down analysis. 

14 We've also made some assumptions about the 

15 manufacturing facility. We haven't tried to model the 

16 particular manufacturer's plant to make this particular 

17 machine. What we've tried to do is take and aggregate 

18 the two designs to get a general overall aggregated 

19 cost and also created what we're calling a typical 

20 practices plant. 

21 

22 

I don't want to use the best practices 

because we don't want to make any judgment about whose 

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1 plant is better than the next guy. Our assessment is 

2 to say what would be typical of the industry, what's 

3 currently done out there from the standpoint of 

4 manufacturing. And we've actually talked to 

5 manufacturers to confirm our assumptions about whether 

6 these things were processes that were typical or common 

7 in their plants. 

8 Often decisions about what process might be 

9 used isn't all that difficult. Obviously certain 

10 plastic components are injection molded. There isn't a 

1 1 lot of other methods that are commonly used in the 

12 industry. But again, we have talked to the 

13 manufacturers to make sure that we're representing a 

14 plant that would be representative of the industry. 

15 And some of the assumptions that we've made 

16 at this time. One, we've assumed 1.5 million units a 

17 year as a baseline capacity. And really what that is 

18 going to do is drive our investment; how much equipment 

19 are we going to need to produce that many machines. 

20 Also, we've looked at we've considered 100 

21 percent capacity. In other words, the plant is 

22 building 1.5 million units, not somewhat less than 

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1 designed for. Also, we have assumed that none of the 

2 equipment is dedicated. Now, that may not be typically 

3 the case, but that would be very much related to a 

4 specific manufacturer. And again, we didn't want to 

5 get into that realm of who does this represent; which 

6 manufacturer might have more or less dedicated 

7 equipment. So we've taken sort of a theoretical 

8 viewpoint in this sense and said that right now none of 

9 our fabrication processes is dedicated to any 

10 particular components. 

1 1 And what that says is that for say a 

12 particular piece of stamping equipment to make a 

13 certain component in the machine, may only have 20 

14 ·percent utilization. Well, that means that that piece 

15 of equipment is available for 80 percent of the time 

16 and it can make other parts. And that's what our 

17 assumption has been at this stage. 

18 We've also assumed a greenfield investment. 

19 In other words, a brand new plant. There's no 

20 refitting or retrofitting or changing of a current 

21 

22 

facility. We haven't said that a certain manufacturer 

would recuperate some of this investment because they 

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1 already had equipment or that they would potentially 

2 lose investment in the assets that they already had 

3 that were no longer useful. We've assumed that this 

4 plant is greenfield and start from fresh. 

5 So in other words, as we sometimes jokingly 

6 said, Arthur D. Little is going into the clothes washer 

7 business. 

8 And again, some of the assumptions we've made 

9 about automation. Typically in the industry there is a 

10 lot of automation and supporting fabrication processes 

1 1 but that assembled operations are primarily manual. 

12 And what I mean by that is there are some powered 

13 handheld tools but they are pretty much driven by a 

14 line assembly with workers on the line. There isn't a 

15 lot of robotics doing assembly. And that's typical of 

16 the industry. 

17 And again, for equipment costs, cycle times, 

18 we've assumed what's both typical for the industry but 

19 also typical for equipment suppliers and the equipment 

20 that's available in the industry today. 

21 

22 

You've already seen this chart here in the 

presentations earlier today but I just wanted to 

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1 emphasize again that what we're doing is building up a 

2 full production cost, direct materials and again direct 

3 labor, and then what's considered factory overhead, 

4 which is -- we've included in that the indirect labor 

5 and indirect materials, maintenance costs associated 

6 with equipment, utility costs. Also in that would be 

7 taxes, insurance and depreciation of the equipment. We 

8 have not included any cost of capital associated with 

9 an equipment investment. That would fall under the 

10 nonproduction costs, at least in this analysis. 

11 In your packet we have some baseline 

12 assumptions that we made and certain financial factors. 

13 I won't go through all these in detail but certainly 

14 can answer any questions. 

15 We've again taken information that we feel is 

16 typical of the industry but often this was an area 

17 where we see variability and uncertainties and that's 

18 where we focus a lot of our attention in the analysis, 

19 which I'll show you in a few minutes. 

20 This is our most recent analysis that we've 

21 

22 

completed as of Monday. These numbers don't quite 

agree with our early February numbers, or I should say 

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1 late February numbers. And that's based primarily on 

2 more information that we've collected since that time. 

3 What we've done is tried to break down costs 

4 per major subassembly. And the reason we've done that 

5 is to primarily give you an ability to evaluate the 

6 analysis without actually spelling out specific details 

7 on components. We've tried to reserve some 

8 confidentiality in our analysis but this gives you at 

9 least a little bit of an indication of component wise 

10 or subassembly wise what the costs are. And that would 

1 1 allow you to evaluate whether you felt this analysis 

12 was representative of the industry. 

13 Just to summarize the numbers here, we've 

14 calculated a total material cost in this aggregated 

15 vertical axis machine is $126.00. Direct labor, 

16 $31.00. The overhead, factory overhead at $45.00 for a 

17 total of $203.00. 

18 MR. KESSLER: Do you want us to break in here 

19 with some comments where it's appropriate? 

20 

21 

22 

MR. MARIANO: Any time. 

MR. KESSLER: Alan Kessler, from Amana . 

Because I'd like to go back and comment on a couple of 

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1 things, starting on page 9. One hundred present 

2 capacity utilization is an admirable goal but I don't 

3 know of any manufacturers that are able to achieve 

4 that. 

5 We've got cyclical seasonal business that we 

6 have to move up and down, so I would say that while 

7 we'd like to be there part of the year, we may average 

8 more like 90 percent or in the high 80s. 

9 The work shift days, I think most of them 

10 probably running 230 to 235 rather than 240. You look 

11 at your down time where your vacations, your holidays 

12 and that sort of thing. Most of our operations I would 

13 say are probably not running more than two shifts in 

14 assembly. 

15 MR. MARIANO: What we tried to do is we 

16 looked at fabrication, which would be more running on 

17 three shifts and assembly on two. And we tried to 

18 create some sort of an average. But certainly any 

19 indications that you might have as an industry of 

20 what's more typical, you can certainly adjust the 

21 analysis to represent that . 

22 MR. KESSLER: Right. Equipment depreciation. 

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1 If I thought I could get 14 years, that would be a hell 

2 of a deal. 

3 MR. BROOKMAN: You'd be drooling like Mr. 

4 Barzel. 

5 MR. KESSLER: Yes. That's probably more like 

6 five to seven for most of us. 

7 MR. MARIANO: Okay. I appreciate those 

8 comments. Actually, one of the things that we've done 

9 is -- later on I'll show you some of the sensitivity. 

10 We tried to look at, well, what if one of those 

11 theories we realize that capacity utilization 100 

12 percent is a dream, not realistic. What would be the 

13 impact on those utilizations. 

14 I think the inputs that you give are very 

15 useful in helping us to find what is the actual 

16 baseline and we can run variations on that rather than 

17 using this as baseline. 

18 We've also provided you with a breakdown of 

19 our overhead cost categories since some of these issues 

20 might be of interest to you in that where is indirect 

21 

22 

labor, indirect materials. Certainly depreciation is a 

question you might want to consider. And these are all 

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1 per unit basis, so this would be the dollars per unit. 

2 Taxes and insurance are more driven from, as 

3 Mike showed earlier, an industry structure analysis. 

4 Obviously that's going to vary and it's pretty hard to 

5 assign that to a particular product. But we have tried 

6 to put some numbers in there that are representative of 

7 the overall industry average and to try to assess that 

8 and make sure that that's included in the cost as well. 

9 These vary considerably from our initial 

10 assessment. These are our estimates on a greenfield 

11 site equipment investment. We've broken that down into 

12 equipment, tooling and incorporated some estimate for 

13 installation of that equipment, and then also put in an 

14 estimate for the building itself and conveyors 

15 associated with that. we tried to incorporate that as 

16 well to come up with a total investment. 

17 I'm sure this is probably a number that there 

18 will be a lot of discussion over as to where this 

19 eventually leads. And that's another thing that we've 

20 done some sensitivity analysis on. 

21 

22 

Again, I can reiterate that our analysis has 

been based on a particular component and processes, 

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1 some processes associated with that component, and what 

2 would be estimated as necessary to manufacture that 

3 component. And so that's how we built up our costs. 

4 There may be equipment particular to a 

5 manufacturer that in a sense we've said they're all 

6 non-dedicated that they are dedicated, and that would 

7 increase this number, I believe, but to the extent that 

8 we haven't tried to delve into how much that would be 

9 yet. But this is our estimates of baseline, $10.5 

10 million a year facility to build an aggregated or 

11 typical v-axis machine. 

12 I might also note that we have not 

13 incorporated the fact that there are multiple products 

14 built in a facility. This is just to build this one 

15 particular machine in at a million and a half a year. 

16 MR. BROOKMAN: If we could just pause for a 

17 moment here. It seems likely one comment -- the 

18 Department would like to hear comment on both 

19 methodology and the results as listed here. 

20 Please state your name for the record. 

21 

22 

MR. ESSMA: Eric Essma, Chlorox Company . 

I have a question. Back on your chart on 

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1 page 5, you're accounting for parts down to pennies and 

2 you account for a bleach tool. And the two most common 

3 accessories on a machine are fabric softener dispenser 

4 and a bleach dispenser. And the reservoir for the 

5 fabric dispenser is, as you noted, on the upper 

6 agitator assembly usually, but the bleach dispenser 

7 reservoir is on the tub inside the extra lid of the 

8 machine. 

9 And there's an expense involved in cutting 

10 that whole and putting that reservoir in there and 

1 1 attaching the tube to it and I don't see that accounted 

12 for in here anywhere. And unless you have it back in 

13 here in the cabinet costs or something like that, there 

14 is no bleach dispenser on this machine. And I'm just 

15 wondering where. 

16 MR. MARIANO: What I've shown you in only 

17 really a snapshot of that full build materials. 

18 There's about 350 parts in the machine, so that's a 

19 spreadsheet that's 350 rows long. All of the 

20 components, including that bleach dispenser and the 

21 

22 

bleach tube are in there. It's just where they get 

attached, where the whole is cut on the lid. If it's 

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1 in the lid, it would go into typically the wood 

2 assembly area, and that's how we've accounted for it. 

3 MR. ESSMA: So it's just not broken out. 

4 MR. MARIANO: Right. If you haven't seen on 

5 here doesn't necessarily mean we don't have it. 

6 MR. ESSMA: Thank you. 

7 MR. MARIANO: The other thing is there are 

8 probably features in these particular models that 

9 aren't present -- I'm sorry. There may be features in 

10 other models that are not present in these models. We 

1 1 have not costed those and incorporated those into the 

12 analysis. 

13 If there's no further questions, I'll go on 

14 to some of our analysis. 

15 As you've seen already today in the 

16 sensitivity analysis as well as some simulations using 

17 something like crystal ball have been prevalent and I 

18 think we also are doing that in this analysis and we 

19 feel it's very important for us to understand the 

20 impact of certain variables on the cost of the unit. 

21 Just to show you an example of those, and by 

22 no means complete but certainly to give you an idea of 

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1 what things we are doing with the model and which 

2 variables we are at least currently looking at and 

3 we'd like to hear your input on which ones you think 

4 are relevant or others that you think we should 

5 consider. 

6 We're doing both single sensitivity analysis 

7 on each individual variable but also looking at using 

8 the Monte Carlo simulation, such as crystal ball. We 

9 are giving you just a representation of the numbers 

10 that we're looking at. 

1 1 As you can see in the plant output, I've 

12 already said that the capacity is 100 percent, 1.5 

13 million units. We are looking at lower volumes down to 

14 900,000, says about 60 percent capacity. Things like 

15 labor rates. I think Jim made a good point about 

16 variability and uncertainty. Labor rates most likely 

17 fall into that variability term that labor rates will 

18 differ for different manufacturers, different parts of 

19 the country. So there's analysis that we've look at, 

20 what if the labor rates were different from our 

21 baseline assumption of $24.00 . 

22 Uncertainty is a parameter that you can see 

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1 present in something like plant output. You really 

2 just don't know what is the plant output going to be. 

3 Are we going to really build and sell 1.5 million or 

4 maybe we're only going to sell 1.1 million, 1.2 

5 million. So that is an area that we can look at from 

6 the standpoint of uncertainty and evaluate its impact 

7 on cost. 

8 What I'm also showing is some of the 

9 probability distributions we've used. There's a 

10 variety of distributions that can be used. Whether 

1 1 they're uniform or not means that the labor rate can 

12 vary from $17.00 to $28.00 and no number is more likely 

13 than another. Where with the plant output we might use 

14 a triangular distribution which has a most likely value 

15 to it, we feel that 1.5 million units is most likely 

16 but it could vary from that. And that would just have 

17 an affect on the ultimate distribution of the final 

18 cost estimate. 

19 I won't go through all of the sensitivities 

20 because there are several here. And I'll certainly 

21 

22 

answer any questions about any specific ones you might 

have. 

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1 But just to show you an example of the 

2 analysis that we can do with the model -- and this we 

3 can do on a per unit baseline. We have two machines, 

4 one at baseline 1 and baseline 2. We can do it on the 

5 aggregated number as well. But what this allows us to 

6 do is compare what is the cost of the washer and what 

7 is the impact of a variation in the cost of labor. 

8 You can see here if we vary from $17 to $28 

9 for the baseline, $24, the impacts are plus or minus 5 

10 percent on the final cost of $203. So it just gives 

11 you some indication of which variables are more 

12 which variables the cost is more sensitive to. 

13 I'm just going to skip to the Monte Carlo 

14 simulation we ran just to give you a sense of what 

15 we're doing with that. 

16 Basically this analysis would take those 

17 Monte Carlo simulation inputs that we have for labor, 

18 plant capacity, investment, et cetera, and use 

19 generate random numbers in that probability 

20 distribution according to the distribution and come up 

21 

22 

with a range of ultimately the manufacturing full 

production cost. You can see here that just to give 

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1 you an example, we ran a quick analysis with 1,000 

2 trials. And within about 95 percent certainty the cost 

3 runs from $197 to $232. 

4 Actually, we've been running some more recent 

5 ones based on some more recent analysis and that 

6 information is leading us to a little bit tighter 

7 spread. So as we refine our data I think we're getting 

8 more and more closer to a good estimate of that range 

9 of manufacturing costs. 

10 And in conclusion, our assessment provides 

1 1 somewhat of a clear transparent analysis that can be 

12 reviewed for future cost analysis of the highe+ 

13 efficiency designs. Again, the reason we did the 

14 vertical axis baseline machine was to demonstrate to 

15 you that we can do this on a product and generate 

16 costs, as well as provide the ability to do some 

17 sensitivity analysis on those costs so that we can go 

18 forward with the prototypes. 

19 We are also going to be doing the H-axis. 

20 Those will be physical tear downs as well. 

21 

22 

The other things that I think we've given you 

is a number for a typical baseline clothes washer, 

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1 which I think agrees fairly well with what the results 

2 have been to date from various other sources. 

3 We are also able to aggregate a cost given 

4 multiple models. We can look at more than one model 

5 and aggregate those cost numbers based on having a 

6 model allowing us to quickly do that. 

7 I can answer any questions. 

8 MR. BROOKMAN: Questions on either the 

9 methodology or the results that's listed here. 

10 Particularly, what about some of the results that are 

1 1 shown there at the end of Phase I on the last page, on 

12 page 24. Is he within the range? 

13 I see one or two heads nodding up and down, 

14 yes. That's all I see. 

15 MR. STILWELL: Well, even if it isn't, you 

16 still get relative ideas of where the other products 

17 lay relative to this, even if this is not an accurate 

18 model. If it's off $10 or $15 one way or the other, 

19 you can use the same method and you'd be able to get 

20 the relative costs. 

21 

22 

MR. MARIANO: That's correct. That's another 

reason for doing the vertical axis machine allows us, 

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1 given certain processing assumptions about certain 

2 components. Granted there are different components but 

3 some of the components are similar, use similar 

4 manufacturing processes. Carrying those forward we're 

5 going to be again generating a differential number 

6 based on this vertical axis analysis. 

7 MR. BROOKMAN: Additional questions and 

8 comments? 

9 Yes, David. 

10 MR. GOLDSTEIN: David Goldstein. 

1 1 A comment. This seems to be a real thorough 

12 methodology and I think it addresses a lot of the 

13 issues I brought up this morning about the black box 

14 nature of the cost estimation methodology. If DOE 

15 plans on running something like this in parallel, then 

16 it provides a pretty good sanity check on whether the 

17 unreviewable numbers that it's getting from 

18 manufacturers make sense because you have something 

19 here that is reviewable. 

20 I guess the question is -- I'm assuming that 

21 this bill of materials, the 350 lines, is something 

22 that is going to be available to the public, at least 

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1 for the vertical axis machine? 

2 MR. BERRINGER: David, our plans were not 

3 to -- we didn't want to try to identify any one 

4 particular manufacturer, so we specifically scaled it 

5 back so you couldn't say this is so-and-so's model. So 

6 our intention was not to release any additional 

7 information. 

8 MR. GOLDSTEIN: Okay. Well, then, I think 

9 the issue -- maybe you can use this as a dry run to 

10 figure out how much of the information you could make 

11 available so that people could review the incremental 

12 cost estimate for efficiency improvements and see 

13 whether they made sense on a comparative basis. And 

14 obviously you wouldn't need to know most of those 350 

15 lines but there would be certain pieces of it that 

16 could be relevant that you would want to know so that 

17 you can say this piece costs $10 in the study and 

18 improves the efficiency 10 percent, so you'd expect to 

19 see -- and nothing else changes. So you'd expect to 

20 see that the other methodology gives you about a $10 

21 cost increment as well . 

22 MR. NADEL: Yes. This is Steve Nadel. 

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1 I mean, ultimately some of this data needs to 

2 be subject to public review rather than just be a whole 

3 bunch of black boxes that everyone is being told trust 

4 us. 

5 MR. BROOKMAN: Which data causes the 

6 question? What levels of aggregation would you be 

7 hoping to see? We talked about what's listed here on 

8 page 5, for example. I mean, do you understand? I 

9 presume you understand Bryan's concern about the 

10 proprietary nature of individual products. 

11 MR. NADEL: Of course. I think it's a little 

12 premature to come up with a specific example because 

13 what we've seen is a methodology for costing out the 

14 base case device and then, in comparison, there's 

15 another type of device, in this case, the H-axis, that 

16 they say they're going to do and haven't done yet. And 

17 there are certain components, in this case quite a few, 

18 that change between the se case and the higher 

19 efficiency case. And the cost of those changes would 

20 be the things that you'd want to review. 

21 

22 

MR. BROOKMAN: As opposed to the system, the 

appliance as a whole? 

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1 MR. GOLDSTEIN: Yes. The common elements we 

2 wouldn't need to know much or anything about. And some 

3 of the changes -- you know, if this used a different 

4 size fastener and the cost impact was 15 cents out of 

5 $40, you probably wouldn't need to know that. 

6 MR. BROOKMAN: Dave, you're in the que, but 

7 I'm going to let this continue on to its conclusion. 

8 Okay? 

9 Wayne? 

10 MR. MORRIS: Wayne Morris. I have a problem 

11 with that, David, only because we're not looking at 

12 this approach from the standpoint of design options. 

13 We haven't since the beginning of the data collection 

14 phase. We've been looking at it in terms of efficiency 

15 increases which could be very different from one 

16 manufacturer to another. So having available 

17 individual information about how one manufacturer went 

18 about getting to an efficiency level and trying to 

19 extrapolate that back to now looking at costs per 

20 design option seems to me to be an erroneous 

21 assumption . 

22 MR. GOLDSTEIN: Well, Wayne, I think -- I'll 

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1 draw a picture here. If you have a distribution of 

2 costs to get to a certain efficiency level, which is 

3 what they've got, and they do an analysis of this sort 

4 and they come up with a single cost which looks like 

5 this, you can say, well, yes, that's with the 

6 distribution. It's probably okay. 

7 But if it comes up way across there where 

8 Carl's sitting, you can say, there's a problem here. 

9 That's what I'm trying to be able to do. 

10 There's a reason why this might not be in the 

1 1 middle and it's just the reasons you gave, but at least 

12 somebody should have used the same technology. And so 

13 somewhere in the distribution function is one or more 

14 companies that equal this tear down kind of number. 

15 That's what I'm looking to see. 

16 MR. NADEL: Steve Nadel. A couple of 

17 comments. 

18 First, most recently, Wayne, as you may 

19 recall when we first discussed whether to use this. 

20 You know, manufacturers submit their 5, 10, 15 percent 

21 costs. There was a lot of concern among the non22 manufacturer parties that there's going to be a black 

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1 box. That they could be influence and biased. And as 

2 I recall, the resolution was that DOE was going to have 

3 available multi~le different methodologies and that 

4 some of those were going to be outside reviewable so 

5 that we could all feel comfortable that the best cost 

6 estimates were being used. 

7 And so this is all part of that. 

8 Speaking to the question about what data on 

9 this can be released, it strikes me that to the extent 

10 the data is on a model or models that are already in 

11 the public domain, it's not like there's any trade 

12 secrets involved. It's just DOE has paid to do 

13 something and anybody else with enough money could have 

14 paid to do the same thing. So I don't see what the 

15 problem would be. I understand that we have to get 

16 more creative when it comes to a proprietary design 

17 that's not on the market, but at least in terms of the 

18 other products, I would think that in some way it can 

19 be released. And I'm fine to aggregate things and 

20 really concentrate. 

21 One of the key questions is what are the 

22 drivers as opposed to how much does a nut or bolt cost. 

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1 MR. McCABE: I'm interested in everybody's 

2 comments on that request. We will certainly consider 

3 it and raise it and get back to everybody after we've 

4 had a chance to consider all the comments. 

5 Again, we had focused on a greenfield 

6 approach which is getting into more of a product 

7 specific approach, model specific. And we're trying to 

8 develop a wide range of data. None of them are 

9 directly comparable. The data here cannot directly 

10 compare to the data was submitted by AHAM because 

11 that's manufacturer data dealing with the circumstances 

12 that are unique to each manufacturer. 

13 I appreciate the desire to use all these data 

14 in order to determine the reasonableness of any piece. 

15 We'll look to see how we can provide that data so that 

16 everybody can feel comfortable with the analysis that's 

17 being performed. 

18 MR. BROOKMAN: So let me just echo, Michael. 

19 What I heard you say was you'd like to receive comment 

20 on this. And I've listed on my sheet of paper here at 

21 

22 

least four pieces of this which would be way to 

aggregate these structured bill materials. And then 

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1 the request for how you would show individual features 

2 with the corresponding efficiency benefits. 

3 And then seems to me if you're going to talk 

4 about that, you need to talk about kind of the unique 

5 design features as well, and that doesn't speak to 

6 imbedded capital, plant, all those kinds of issues. So 

7 it's a pretty complicated picture. 

8 Terry? 

9 MR. THIELE: Terry Thiele, WCI. 

10 If I understand it correctly, we are 

1 1 currently in the process of tearing down existing 

12 product which is a baseline exercise, if I understand 

13 correctly, for two purposes. One, to give a comparative 

14 baseline against future product of the same design of a 

15 higher deficiency where you have component 

16 substitution. And two, to give a comparative baseline 

17 against which to gauge different platforms altogether. 

18 So, if I understood it correctly, the 

19 principal purpose of this exercise was to come up with 

20 a relative measure, a comparative measure, not an 

21 

22 

absolute method. Isn't that the general thrust of it? 

So the delta is the issue, not the starting point. 

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1 MR. MARIANO: That's correct. Our analysis, 

2 the vertical axis baseline that we did was to have a 

3 sort of stake in the ground; where do we start from, 

4 where do we make our comparison to. 

5 At this point in the analysis, we're going to 

6 be doing the Whirlpool prototype, and there will be a 

7 differential number between our stake in the ground. 

8 And then there'll be H-axis designs, and we're looking 

9 at two H-axis, commercially available H-axis designs, 

10 and there'll be a comparative number as well there. 

1 1 And that's all that was provided is that comparative 

12 number. 

13 MR. THIELE: As far as these tear downs on 

14 these current models which are currently in production 

15 and currently for sale, I mean, we have absolutely no 

16 objection if the data is disclosed, as long as it's not 

17 our product that was torn down. 

18 (Laughter.) 

19 MR. BROOKMAN: Larry, did you have a follow 

20 on to this? 

21 

22 

MR. HAWKINS: Yes, I do. And to follow on 

what Terry says in response to Steve's comment, I 

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1 believe that this study goes beyond what could be just 

2 done by someone purchasing those products, taking them 

3 into a warehouse and tearing them down because I 

4 believe they'd need inputs and have achieved data that 

5 may not be readily available without the consent and 

6 agreement of the manufacturers concerned. 

7 That data and knowledge can be considered to 

8 be proprietary. 

9 MR. BROOKMAN: Would a representative from 

10 Arthur D. Little comment on that? 

1 1 MR. MARIANO: We have visited with 

12 manufacturers. The primary reason for that was to 

13 confirm our analysis and to discuss manufacturing 

14 processes associated with plants typical processes that 

15 they would use, so that we would represent the 

16 industry. So I think Larry's comment that that type of 

17 information would certainly have to be held out of 

18 information that was revealed. 

19 MR. RIVEST: Steve, it's not just the list of 

20 materials. This is Mike Rivest. It's the actual 

21 

22 

processes used to generate. And I think you touch on 

it perfect. I mean, there is information there that 

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1 might be valuable for a competitor. 

2 MR. THIELE: We're not talking about a 

3 product to be built in 2003. We're talking about 

4 product that's coming off the assembly line right now. 

5 MR. BROOKMAN: Okay. Michael McCabe has 

6 requested comment, further comment on this subject. 

7 And this ensuing discussion here I think was useful. 

8 Dave, you had an earlier question. 

9 MR. MODTLAND: Yes. I guess it's kind of 

10 getting into where Larry was. It's a question about 

1 1 from the preliminary report that was published on 

12 February 24th, there have been some significant changes 

13 in some areas, one being the fixed cost side which 

14 almost was cut in half. 

15 MR. MARIANO: That's right. 

16 MR. MODTLAND: And I guess the question that 

17 I'm kind of alluding to is what was the involvement 

18 with the manufacturers or how did that influence that 

19 process of refining those numbers. Because in order to 

20 assess the accuracy of the methodology and the results 

21 

22 

that it achieves, it's a little bit different depending 

upon if you have the answer, so to speak. 

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1 MR. MARIANO: Yes. That was definitely one 

2 of the major differences between our most recent 

3 analysis. And what was driving that sort of change is 

4 discussions with manufacturers about processes that 

5 were used, and also interviews with equipment 

6 suppliers, et cetera. So, collecting the additional 

7 data on costs of equipment, capacities, potential 

8 capacities of equipment. 

9 Obviously if it has a higher capacity, 

10 quicker die change, there's less investment because it 

1 1 can just process more equipment. You'd need one rather 

12 than four or something. So definitely there was 

13 interaction there I think with the manufacturers at 

14 that stage to guide us that we'd definitely have to 

15 as Mike has said, there's more than just the list of 

16 parts here. There is process. And what we've 

17 generated internally at ADL through supplier interviews 

18 or through manufacturer interviews is certainly 

19 information that shouldn't really be readily produced 

20 for public consumption. 

21 

22 

MR. BROOKMAN: Gene? 

MR. FOLEY: I just want to make sort of a 

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1 general point. Gene Foley from the Alliance to Save 

2 Energy. 

3 Going back, way back to process improvement 

4 and the whole point of process improvement, it seemed 

5 one of our main goals was to eliminate the black box, 

6 to make the process the way we determine a rulemaking 

7 transparent so that anybody could come in, look at the 

8 process and determine what was happening. 

9 It sounds to me like what instead we've done 

10 is we've traded one black box that was somewhat 

1 1 confusing for one that not only is a black box but one 

12 that you promise you will never open up. 

13 MR. RIVEST: I'm not sure how useful it would 

14 be for you. 

15 MR. FOLEY: You're telling us it's a black 

16 box and you're telling us it's not useful. 

17 MR. RIVEST: For you. 

18 MR. FOLEY: But that's not the whole point of 

19 process improvement. 

20 

21 

22 

MR. BROOKMAN: As another participant in 

process improvement, I'll go out on a limb and say one 

thing. That is, process improvement and the ability 

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1 for people to come forward with things like data 

2 depends on their ability to feel comforts surrounding 

3 the boundaries of the use of that data. That's kind of 

4 the underpinning of things like trust. And that's 

5 even though trust is not ubiquitous in this world, 

6 that's what allows the exchange to continue that can 

7 make something like a regulatory process be productive. 

8 So, I think definition, further definition 

9 needs to be put in place before things are generally 

10 and specifically characterized as black boxes. And it 

1 1 seemed like in the earlier discussion there were 

12 opportunities to work this issue. So let's work the 

13 issue and see what we come up with. 

14 MR. NADEL: Yes. We understand that there's 

15 data that needs to be collected in confidence and that 

16 there's five major companies here and we have to be 

17 concerned about what one company sees about the other's 

18 product. We're not trying to breach those bounds. 

19 We're trying to have some data that we can review and 

20 get comfortable with to help give us support for the 

21 overall data that's generated . 

22 If we get two bits of data that say the same 

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1 thing but neither of those can we necessarily get 

2 comfortable with, it leaves us the same place as 

3 before. So, if DOE or ADL can think about what they 

4 can make available, that would be useful to help us get 

5 comfortable with what appears to us to be largely black 

6 boxes. That would be helpful. 

7 Based on these two methods -- the other thing 

8 that was discussed a while ago, and I can't remember 

9 what happened, is we talked that we'd also continue to 

10 move forward the old engineering analysis. We were 

11 going to take the results of that last engineering 

12 analysis, recast it in terms of MEF terms, give 

13 manufacturers -- and they did in this last period -- a 

14 chance to say that they wanted to revise some of those 

15 estimates. But that's another way that we can have an 

16 analysis that hopefully will be internally consistent 

17 that we can review, but something so that this overall 

18 package is something that we can say, yes, we're 

19 comfortable with that. 

20 

21 

22 

MR. BROOKMAN: Additional comments on this 

presentation and on reverse engineering generally? 

MR. McCABE: I'd like to ask a question as 

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1 far as Gene, Steve and David. Has there been anything 

2 that you have seen that has made you uncomfortable as 

3 far s the data that has been reported? Not to say that 

4 that means that you are comfortable. 

5 MR. GOLDSTEIN: This is David. My reaction 

6 is I think you're starting off down the right path. 

7 The somewhat troubling piece of information was simply 

8 finding that the detailed results of that won't be 

9 available for my review or for review of consultants 

10 that I'd want to work with. 

11 And I understand there are good reasons why 

12 the whole thing isn't. What I'm hopeful that DOE can 

13 do with its contractors is construct a subset of the 

14 information that doesn't violate confidentiality but 

15 that does give me something that I can use as benchmark 

16 to review whether the manufacturer efficiency curve 

17 cost estimates are in the ballpark. 

18 And I'll offer kind of a couple of metaphors 

19 here. One is I could hire somebody to do the exact 

20 same thing that ADL is doing and they would get less 

21 

22 

cooperation from manufacturers, but you could figure 

out with them how much of the information they wouldn't 

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1 have gotten without that kind of cooperation. And 

2 certainly that stuff I could get anyway. And that 

3 ought to be available. 

4 MR. BROOKMAN: Steve, would you like to 

5 respond? 

6 MR. NADEL: Yes. The one area I mentioned 

7 where I do have some discomfort from what I've seen so 

8 far is the jump in the manufacturer cost estimates 

9 between a 40 percent and a 45 percent energy savings. 

10 It's like a $50 increase. And that did not strike me 

1 1 as reasonable from what I know about the products out 

12 there. So I'm very interested in the reverse 

13 engineering and potentially looking again at the 

14 engineering analysis to get greater comfort with that. 

15 MR. BROOKMAN: Charlie, you were next in the 

16 que, and then Terry. 

17 MR. STEPHENS: Yes. Charlie Stevens, Oregon 

18 Energy Office. 

19 I just wanted to go back about 18 months here 

20 if I can. I think the original intent here was to 

21 

22 

include the data on the Whirlpool prototype in all the 

dots on this graph of MEFs versus costs. Am I right 

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1 about that? 

2 We wanted to make sure that that data was in 

3 there, along with everything else; that it was 

4 considered along with all the other estimates. 

5 MR. BROOKMAN: Can you refer to the page, 

6 Charlie? 

7 MR. STEPHENS: It's page 8 from Mike Rivest's 

8 presentation this morning on clothes washer 

9 manufacturing costs. 

10 MR. BROOKMAN: Bryan? 

1 1 MR. BERRINGER: Bryan Berringer. Just to 

12 respond, Charlie, one of the things about that is we 

13 have two different types of data. Again, the 

14 manufacturing data versus this greenfield data. So 

15 what we were going to do is do an independence where 

16 you have again a vertical axis, a prototype and the H17 axis, a separate sort of -- keep it separate LCC type 

18 of run and see if it falls in the same range, again, as 

19 a sanity check against what was submitted. 

20 But to say that those are dots into that 

21 

22 

graph would be a bit apples and oranges. So that was 

not our intent to put that in there, to insert that as 

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1 a data point. 

2 MR. STEPHENS: Okay. Then I am confused. 

3 MR. BERRINGER: What we're looking at is to 

4 see if that prototype falls within the data that we 

5 received, that it wouldn't be an issue as far as the 

6 analysis is concerned. 

7 MR. STEPHENS: I think that's what I'm 

8 saying. If you end up with -- I mean, you can do a 

9 greenfield. You can do an adaptation of another plant. 

10 You can do almost anything you want and basically 

1 1 you'll end up with more dots for this curve. 

12 Whether you actually represent them or not, 

13 you're looking to see if they fall in the range of dots 

14 that you already have. 

15 MR. MARIANO: That is correct. 

16 MR. RIVEST: But what we're not doing is 

17 taking that dot, reaggregating it with the other data 

18 and creating a new distribution or something like that. 

19 MR. BROOKMAN: Mike Rivest, would you please 

20 repeat what you said? We couldn't hear it. 

21 MR. RIVEST: No . 

22 (Laughter.) 

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1 I said certainly the intention was not to 

2 take that data, introduce it in the raw data, 

3 regenerate a distribution and run a life cycle cost. 

4 That's why the whole issue about a separate analysis 

5 with different stakes, relative stakes. 

6 MR. BROOKMAN: Additional questions on this 

7 subject? 

8 Yes, Wayne? 

9 MR. MORRIS: Just for clarification, I don't 

10 know exactly what you were referring to, Steve, but I 

11 don't know of any agreement by the manufacturers to go 

12 back and take the data from two or three years ago and 

13 agree to update that on the basis of today's 

14 information. 

15 Now if the Department wanted to do that, we 

16 have no say about it, but I don't know that the 

17 manufacturers ever agreed to do that. I jut wanted to 

18 make sure that was clear. 

19 MR. NADEL: What I was referring to was a 

20 workshop in this very room at which we discussed using 

21 the manufacturer cost data and at which we said we 

22 could go along with that provided this data was 

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1 available and that we'd look to the Department to 

2 revise that data and that we'd make available to the 

3 manufacturers, if they thought any revisions were 

4 needed to that data, they should submit it at the same 

5 time as they did the other data. 

6 I'd have to check the exact minutes for the 

7 exact words, but my clear recollection was that we were 

8 saying that that was a third potential data option 

9 because there was back then, just as you're hearing 

10 now, concern about what appears to us to be a black 

11 box. 

12 MR. MORRIS: As long as it's understood that 

13 that was a comment that was made. I didn't know that 

14 we had made it. 

15 MR. NADEL: I believe the Department may have 

16 responded to something. As I said, I'll have to check 

17 the notes. 

18 MR. McCABE: Michael McCabe. We are looking 

19 to gather as much information from as many different 

20 sources with respect to the price of equipment in order 

21 to be able to understand and appreciate what it is that 

22 we have. And the closer all of them come to agreement 

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1 the greater comfort we will have with all the data. 

2 And while we have not gone back to take a look at --

3 I'm not aware that we've gone back recently to take a 

4 look at comparing the earlier engineering analysis with 

5 these data. We are open to doing that. 

6 Right now, I have a fairly high comfort level 

7 with what I'm seeing reported, the variety sources that 

8 we have. We've taken both the actual sales data and 

9 price and we've taken the industry information that was 

10 provided from AHAM on manufacturer costs and looking at 

1 1 the reverse engineering are remarkably consistent in my 

12 view. They're not exact. I wouldn't expect it to be. 

13 But they're a lot closer than what I would have feared 

14 they may have been. 

15 MR. BROOKMAN: Go ahead, David. 

16 MR. GOLDSTEIN: I think this well, Mike's 

17 comment raises the key reason that I'm dwelling on 

18 this. This is perhaps the last rulemaking for which a 

19 comparison similar to what Mr. McCabe just spoke about 

20 can be made. There was a previous measure base cost 

21 

22 

curve. And so we can look at the numbers that AHAM has 

submitted and my personal reaction, and I've only seen 

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1 them today, is these look in the ballpark. They look 

2 in the ballpark compared to a measure base curve that 

3 said you do this so this component; here's how much it 

4 costs and here are the components of it. And I'd say, 

5 yes, that's about in the same ballpark. It looks 

6 reasonably good. 

7 And what I'm worried about is that when you 

8 don't have that reviewable stake in the ground out 

9 there in future rulemakings, how will you know whether 

10 these 10 percent more efficient, X more dollars kinds 

1 1 of curves that we're getting are correct. And how do 

12 we know that the manufacturers in those future 

13 rulemaking will be motivated to try real hard to 

14 minimize costs in meeting those efficiency levels. 

15 I don't manufacture stuff for money but I do 

16 sometimes write reports for money. And if I'm giving an 

17 estimate on a consulting study that I don't 

18 particularly want to do and I say it's going to cost 

19 $100,000, trust me. That maybe a good number. But if 

20 I know that there's going to be a competitive bid out 

21 

22 

there and someone else is going to bid $55,000 and I'm 

going to look pretty silly for having bid $100,000, I 

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1 may sharpen my pencil a little bit. 

2 And that's the process that I want to see 

3 going on in future rulemakings. 

4 MR. NADEL: Getting back to this specific 

5 rulemaking rather than future one, Mike, I agree with 

6 you that the reverse engineering and the base life of 

7 the manufacturer are very consistent. I'd be very 

8 concerned if they weren't because that's the easiest 

9 case. 

10 I look forward to seeing the reverse 

11 engineering of some of the advanced products, and that 

12 will be much more important. And to the extent we can 

13 be comfortable with that reverse engineering, to the 

14 extent we could have a revised engineering analysis to 

15 improve our comfort, that would be helpful still. 

16 MR. BROOKMAN: Additional comments or 

17 questions on reverse engineering? 

18 (No response.) 

19 I think we're on track to finish by the end 

20 of the day. I'm going to suggest we take a break. But 

21 before anybody moves, this week we really need any 

22 if you know of any single person who might show up 

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1 tomorrow, we need their names and we need to have you 

2 give them to Brenda and Sandy so that they don't show 

3 up tomorrow and expect that a lot of people are going 

4 to be here, only to make a trip that's unnecessary. 

5 So, please, if you know of someone, take the 

6 time to give the name and perhaps the telephone number 

7 to Sandy and to Brenda over here at the table. 

8 Bryan? 

9 MR. BERRINGER: I just want to make a 

10 comment. There is a revised attendance list that they 

1 1 have and the people -- basically the people that 

12 responded that said they were coming, they were checked 

13 of here, so everybody's here. John Tomlinson was the 

14 only one that was in question and we called his office 

15 and he didn't have travel arrangements to come here. 

16 So to our knowledge, everybody who said they 

17 were coming is here and we do have a revised list. 

18 MR. ROSENSTOCK: He's the one that did the 

19 Bern, Kansas study; right? Wasn't he going to pass 

20 them out or something? I'm Steve Rosenstock. 

21 

22 

MS. LAUGHLIN: He was going to come. He said 

he might come. We called and he didn't have any 

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1 tickets. 

2 MR. BERRINGER: I'll make a comment when I 

3 talk about the studies. I have his number. The 

4 reports are being published. They're color reports so 

5 they're not readily available. I have one and I guess 

6 Lauren has one. And I can give people, if they're 

7 interested, John's number to give him a call. 

8 MR. ROSENSTOCK: I already gave him the 

9 number. 

10 MR. BROOKMAN: So when we return from break, 

11 and we'll start at 3:30, we'll take up consumer issues 

12 and we'll play that out until it's finished this 

13 afternoon. 

14 Thank you. 

15 (Whereupon, a recess was taken.) 

16 MR. BROOKMAN: As a way of starting this 

17 session, Jack -- Jack, what is your last name? 

18 MR. LINARD: Linard. 

19 MR. BROOKMAN: Jack Linard from Chlorox had a 

20 chance to briefly scan through --

21 

22 

MR. LINARD: Unilever . 

MR. BROOKMAN: Pardon me. Pardon me. 

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1 Unilever, has a comment or two. 

2 MR. LINARD: I'm going to try to make this 

3 fast. First of all, having a look at the report, I 

4 caution you please look at the data rather than just 

5 some general conclusion. 

6 First of all, there are a number of detergent 

7 products on the market now which have recommended 

8 dosages of a half cup to one cup still. Not every 

9 detergent has a four-tenths or half cup dose. So if a 

10 significant number of people were using those in Phase 

11 I and then you off er them a detergent which has a four12 tenths to a half cup dose and most people take it, your 

13 total detergent should actually decline per dose. So, 

14 please look at that. 

15 The other thing is if you look at the number 

16 of people under-dosing, you'll find as people change to 

17 the H-axis machine, with their standard washing 

18 machine, 34 percent used a quarter cup. After they got 

19 the new H-axis, only 25 percent used a quarter cup. 

20 That would be to us an under-dosing situation. So the 

21 

22 

number of people under-dosing declined significantly . 

The number of people using, quote, the 

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1 correct dosage actually increased from 43 percent to 58 

2 percent. This could be a reflection of the fact that 

3 people are dosing properly. 

4 The only major decline is people using three5 quarters of a cup. This could merely just reflect the 

6 fact that people had a one-cup detergent or two-thirds 

7 cup detergent and had replaced for the recommended 

8 dosage of a half a cup. 

9 So, please look at the data. It may just be 

10 a gross over-exaggeration to say that on average the 

1 1 dosage declined. You have to look at the recommended 

12 dosages of the products used prior to the changeover in 

13 machines. 

14 Thank you. 

15 MR. BROOKMAN: Thanks, Jack. 

16 Okay. Bryan Berringer is ready to talk about 

17 consumer issues. 

18 MR. BERRINGER: Thank you. 

19 Consumer issues. This has been something 

20 that's come up as far as the Advisory Committee. One 

21 

22 

of the first steps they asked us to look at was 

basically to look at research that's already out there. 

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1 So that's what our first step was . 

2 In the draft report, there's a number of 

3 items in there. It's in your package. It should be 

4 about the last thing in your package. It's compiles a 

5 lot of the research that's already been done. 

6 If there's anything when you're looking 

7 through that that seems like it's missing or you know 

8 of other studies, please let us know. Number one does 

9 encompass research studies, utility rebates, consumer 

10 surveys and magazine articles, like "Consumer Report." 

1 1 One of the things going through this, some of 

12 the reports, the major studies, Thelma and even some of 

13 the stuff as far as I was just talking about with Tom. 

14 It didn't incorporate some of the new Maytag Neptune 

15 unit, but he did indicate there are some updates to 

16 that. They're going to go out and do some more survey. 

17 But basically, based on the current 

18 information, there's a lot of positive response in 

19 there as far as the H-axis is concerned, so we've seen 

20 a lot. Based on the current information, it indicates 

21 that the H-axis machines are acceptable to consumers . 

22 We haven't seen anything contradicting that to date. 

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1 MR. JONES: A question, Bryan, with all due 

2 respect. 

3 What do you mean it's acceptable? I mean, 

4 was that ever a question? 

5 (Laughter.) 

6 MR. BERRINGER: Maybe we misinterpreted your 

7 questions from the last three workshops. 

8 (Laughter.) 

9 MR. JONES: I've always taken the position 

10 that consumers ought to have the right to buy whatever 

1 1 it is they want to buy. And obviously, there are 

12 consumers who've been buying this product. 

13 So I guess my point is if the conclusion that 

14 one is expected to draw from this is that consumers see 

15 no difference between the products then you certainly 

16 have no shown that. I want to make sure that's not 

17 what you're saying, or is it? 

18 MR. BERRINGER: Could you repeat the 

19 question? I could barely hear you. 

20 MR. JONES: My question was are you saying 

21 that consumers see no difference between these products 

22 or are you saying that consumers find them, quote, 

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1 acceptable? 

2 MR. BERRINGER: Consumers find them 

3 acceptable as far as the use and as far as other issues 

4 that come up as far as -- you say bending over or 

5 washing, cleaning. 

6 MR. JONES: Well, is it the Department's 

7 position then that these data support the proposition 

8 that the utility issue is nonexistent, it's off the 

9 table, that it's been resolved by consumer buy habits 

10 or what. 

1 1 MR. BERRINGER: Based on these studies, it's 

12 up for question. As far as what we were putting out 

13 there, yes, it seems that the majority -- we have not 

14 seen -- maybe there are some issues that haven't been 

15 addressed in these studies but it addresses a large 

16 portion of those issues. 

17 MR. JONES: Well, see, I'd like to understand 

18 exactly how these studies do that because from what I 

19 understand, what they appear to stand for is that 

20 consumers who choose to buy these products like them, 

21 which is not to say that consumers generally do . 

22 MR. BERRINGER: Well, there's also 

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1 MR. JONES: I mean, that's just as truism. 

2 That if you presume people who migrate to a product and 

3 decide that they want to buy, which isn't to say that 

4 they're representative of all consumers .. 

5 And I guess my question is is that the level 

6 of rigor of the Department's analysis of which they're 

7 going to proceed in this rulemaking. 

8 MR. BERRINGER: Based on what we've read 

9 before, it's talking about performance and utility 

10 issues. These reports address some of those. I'm not 

1 1 saying it addresses all of them. That's up for 

12 discussion and debate. But there's a lot of other 

13 things, as far as results from Consumer Report. We've 

14 heard do these products -- you know, is it clean, is it 

15 going to be acceptable to the public. 

16 Well, to the extent we've seen that based on 

17 these reports that it is acceptable. It's a product 

18 that people are going to buy. 

19 MR. JONES: Well, that's not what the 

20 Consumer Report study says, Bryan. I don't want to take 

21 

22 

up the time here to debate that question. 

I guess the real question I'm asking is are 

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1 you saying that the record as the Department sees it is 

2 that these studies have removed any concern on consumer 

3 utility issues and that it is up to people who feel 

4 otherwise to put it back in the record or to contest 

5 that, or are you saying that you're still looking to 

6 establish whether that is true or not. 

7 MR. BERRINGER: If there are issues that are 

8 not addressed by these reports 

9 MR. JONES: That doesn't answer the question. 

10 What is the Department's position at this point in time 

1 1 on this issue? 

12 MR. BERRINGER: On this issue, it's very 

13 vague as far as what -- we'd like to know specifically 

14 what --

15 MR. JONES: The record is not established 

16 then. You're not going in one way or another. 

17 MR. McCABE: Let me jump in. This is Michael 

18 McCabe. 

19 Again, what we are presenting is staff 

20 information, so we're not going to speak to this is now 

21 

22 

the Department's position. We're looking at the 

information that we have at present, which includes the 

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1 survey information as well as the preliminary 

2 evaluation of engineering data for the prototype, the 

3 patented information for the Whirlpool design and 

4 others, that the consumer utility issue with respect to 

5 classes does no seem to be an issue, and that there 

6 appear to be multiple approaches without regard to 

7 access in order to get to relatively the same level of 

8 efficiency. And that that, the performance of those 

9 different designs, seems to be all within the same 

10 region that consumers find to be acceptable. 

1 1 MR. JONES: As a choice. And I guess my 

12 question is does that mean then that they are prepared 

13 to do without other choices? 

14 MR. McCABE: I'm not following that. 

15 MR. JONES: Well, it's one thing to say that 

16 a person will buy something. It's another thing to say 

17 that they'll be happy with all they can buy. 

18 MR. McCABE: And what I'm saying is given 

19 what we see right now, we see a number of approaches 

20 that can be -- designs that can reach the same, 

21 

22 

relatively same level of efficiency without limitations 

with respect to the port of access. So that consumers 

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1 would have the choice if the choice was focused on port 

2 of access, front load or top load. But they will have 

3 both choices available to them. They will also have 

4 access, both vertical and horizontal, to get to the 

5 same level of performance. 

6 If you're limiting the choice to those two 

7 issues, it would appear that choice still remains. 

8 Will exist, I should say. 

9 MR. JONES: And I gather then that the last 

10 point you just made is based on information which is 

1 1 available only to the Department and presumably cannot 

12 be shared with the general public and cannot be 

13 otherwise commented on because it involves proprietary 

14 information. 

15 MR. McCABE: Some of that information is on 

16 the public record. As far as the patent, there's 

17 information which we have shared today which is not a 

18 matter of public record as far as the testing of units. 

19 We've provided some summary information. So it is 

20 certainly limited information. It is more information 

21 that what we've had available in some earlier 

22 rulemakings on some advanced design refrigerators. But 

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1 we are striving to put as much information on the 

2 record as possible. 

3 MR. JONES: Okay. 

4 MR. BERRINGER: Okay. Moving forward. 

5 Thank you, Earl. Thank you, Michael. 

6 There's been three major studies and maybe 

7 some of these points are taken care of as far as the 

8 consumer. Earl feels that there's no question as far as 

9 the acceptability of these machines but there is some 

10 other data that can be derived from these studies. The 

1 1 three major ones were the Thelma, the Bern, Kansas 

12 study and the washWise. 

13 Basically, the Thelma had a consortium of 28 

14 utilities. It was done by EPRI. The study entailed 

15 focus groups with consumers, laboratory testing of 

16 washing effectiveness and energy/water efficiency use 

17 and in-home testing. 

18 The Bern, Kansas study is the most recent one 

19 using obviously the Maytag Neptune. John Tomlinson 

20 isn't there and Lauren -- let me borrow her report. I 

21 can everybody John's -- you know, for people's 

22 information, this is a color report. When I talked to 

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1 John, they are in publication. They are printing this 

2 now. But I'll give -- if people want to indicate, take 

3 John Tomlinson's number down, can probably get copies 

4 of this report. It's area code 423-574-0291. And I'll 

5 leave that number also with Sandy if you can get that. 

6 But this has just been released in March 1998 so it's 

7 being published. 

8 Basically, part of DOE and Maytag were 

9 sponsoring this. They monitored washing machines in 

10 105 homes, measured energy and water use for existing 

11 vertical axis washers, and he maytag Neptune H-axis. So 

12 it was a comparison type thing and it has impacts on 

13 consumer laundry habits. 

14 Tom Eckman is now sitting at the table. He 

15 just gave me a report, the final report that they have 

16 done on the WashWise program, and he also has a Web 

17 site on here. We'll make this available. He said it's 

18 be there on the Web page in about two weeks. Get into 

19 a little bit more detail. Is a more recent study. 

20 

21 

22 

He also indicated to me earlier that they are 

going to go out and do some more surveys, a 

questionnaire that have participated in the program. So 

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1 this might be an opportunity if there's questions that 

2 are not answered or have not been answered, it may be 

3 an opportunity to add those questions to their survey. 

4 So I appreciate that, Tom. 

5 I'll make it available, but it's 

6 WWW.NWALLIANCE.ORG. And the number, the telephone 

7 number is 503-827-8416. And I have -- this is from 

8 Northwest Energy Efficiency Alliance, and it's Report 

9 Number E98-003. 

10 Yes, Tom? 

1 1 MR. ECKMAN: If you want to give me your 

12 business card, I can make sure that they'll send you 

13 one if you don't have Web access yet or don't want to 

14 download it. 

15 AUDIENCE PARTICIPANT: Could you repeat the 

16 Web address? 

17 MR. ECKMAN: The Web site is WWW.NWALLIANCE. 

18 ORG. You can reach me at extension 234 at that phone 

19 number or e-mail me at TECKMAN at the same e-mail 

20 address. TECKMAN@NWALLIANCE.ORG. 

21 

22 for Tom. 

MR. BROOKMAN: We have a question, I think 

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1 MR. ROSENSTOCK: Just a quick one. Steve 

2 Rosenstock, EI. 

3 Is that report going to be PDF format? 

4 MR. ECKMAN: Yes. 

5 MR. BERRINGER: Okay. Again, the sponsor of 

6 that was Northwest Energy Efficiency Alliance, 

7 comprised mainly primarily of electric utilities in the 

8 Northwest. It included a survey of rebate program 

9 participants, intercept surveys of consumers in 

10 shopping centers or shopping for washers, and a survey 

1 1 of retailers and manufacturer surveys. So, obviously, 

12 Tom's here if anybody has any specific questions on 

13 that, or once you receive the report, he could help you 

14 out on that. 

15 MR. JONES: Are the actual survey questions 

16 in this report? 

17 MR. ECKMAN: Yes, they are. Both the 

18 retailer and the customer. 

19 

20 

21 

22 

MR. HAWKINS: [Off mike.] 

MR. ECKMAN: The sample was drawn from the 

first 1900 purchasers in our program and roughly 420 

respondents in a telephone survey after they've had --

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1 about 60 percent of them had six weeks or more use of 

2 the product. 

3 MR. BERRINGER: Also, John Tomlinson is a 

4 contact if you have questions -- you know, Thelma 

5 reports and so forth. Some of that information is 

6 dated but the washWise information and also the Bern, 

7 Kansas is fairly recent information. 

8 There's also incorporated into the report 

9 there's utility survey rebate education programs. 

10 Again, Northeast Energy Partnership Consortium for 

1 1 Energy Efficiency and individual utility surveys and 

12 rebate programs. There's also -- EPRI was also 

13 involved in some of that and also the Thelma report. 

14 Government projects. Obviously, Energy's 

15 Star Program, DOE/EPA program, the labelling, label 

16 efficiency, Web sites. So there's also a Web site, 

17 Energy Star Web site. Utility participants, retail 

18 participants, and also demonstration programs. 

19 MR. JONES: Excuse me. Earl Jones here 

20 again. 

21 Bryan, what is this supposed to be? I know 

22 what the paper says but what is it supposed to stand 

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1 for? 

2 MR. BERRINGER: Well, this is basically -- in 

3 the report that was in your package, it sort of talked 

4 about the background and gets into a little bit more 

5 detail about what all has been done out there. 

6 MR. JONES: Are there any conclusions that 

7 the Department is relying upon for any proposition in 

8 this rulemaking coming out of the Energy Star Program? 

9 MR. BERRINGER: No. At this point it's just 

10 to bring it up as far as what programs are out there 

1 1 and what type of information is available on clothes 

12 washers. There is a large amount of information out 

13 there on that. 

14 MR. NADEL: Steve Nadel. 

15 I mean, I took a look at this draft report 

16 which, as you said, basically describes the information 

17 that is out there. That they did a survey. But it 

18 doesn't describe the results at all. I think it would 

19 be very useful, and maybe you're planning on doing 

20 this, to take it the next step and have your contractor 

21 

22 

summarize the results and bring it all together in one 

place. 

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1 Because one of your questions, I assume, is 

2 do we have enough consumer information. And I'm 

3 familiar with probably two-thirds of these studies, not 

4 with all of them. I think it would be helpful to 

5 everybody to see what the results were and see how 

6 consistent they were and exactly what questions were 

7 asked rather than just -- gee, they conducted a survey. 

8 Assuming you want us all to give you feedback on 

9 whether this is sufficient or what more is needed. 

10 MR. BERRINGER: Again, this is just other 

11 places where information was available. Consumer 

12 Reports had test rests again of acceptability and 

13 cleanliness type of information that's reported. 

14 There's also some other publications that are listed in 

15 the report. 

16 MR. MORRIS: Bryan, Wayne Morris. Just a 

17 question is for you. 

18 One of the assumptions I know that's been 

19 looked at and I think was alluded to even earlier today 

20 was the issue of removing any type of a heated rinse 

21 

22 

from washing machines to achieve some level of 

efficiency. Were there any studies that were in this 

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1 paper that looked at that issue of consumer acceptance 

2 of no or of cold rinse only on their machines? 

3 MR. BERRINGER: I don't recall that being an 

4 issue that any of them have addressed. And that's a 

5 perfect example, Wayne. If there are other issues that 

6 need to be addressed that haven't been, then we'd like 

7 to know. We have issues. We're on the same wave. 

8 There's a lot of consumer issues. It could be a 

9 shopping list of any -- as Earl said, you could have 

10 all kind of nuts and bolts and every kind of people 

1 1 coming up with every scenario and the Department 

12 doesn't want to go down that shopping list to say that 

13 there's an endless or infinite number of issues that 

14 need to be addressed. 

15 So if we could refine that list of consumer 

16 issues that need to be addressed, that would, 

17 especially what you had marked -- what you had indicted 

18 there, Wayne, would be one of the places. 

19 Steve? 

20 

21 

22 

MR. NADEL: Just to comment on that last one. 

That was a significant issue in the last clothes washer 

rulemaking, as you may recall. And as I recall, that 

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1 was a design option approach. One of the design 

2 options that was included in selecting the standard 

3 level was elimination of the rinse. I think there was 

4 quite a bit of information presented by Proctor and 

5 Gambel and some of the manufacturers on that issue. 

6 I haven't looked at the data lately but my 

7 impression is the vast majority of washers now on the 

8 market do not have the warm rise any more. 

9 MR. JONES: Well, I'm not sure about that. 

10 And I think the people up in Minnesota in December and 

11 January, particularly those that have arthritis, would 

12 have real problems with that as a solution to the 

13 problem. 

14 And you're going to see as well, Bryan, that 

15 it seems to me that the Department's data at this point 

16 on consumers consists of two categories of folks; those 

17 who got the product for free and those who paid $1,000 

18 for it and were therefore quite happy with it. But 

19 there seems to be very little data on anybody else, 

20 like other type consumers. 

21 I guess my question is are you going to get 

22 to the point of saying how do you get that data? 

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1 MR. BERRINGER: What data are you looking 

2 for? 

3 MR. JONES: I'm not the decisionmaker here, 

4 fortunately. 

5 MR. BERRINGER: Well, you asked a question. 

6 You said are you going to get that data. 

7 MR. JONES: Yes. I'm asking the Department 

8 whether or not they're looking for -- they have a way 

9 or they have plans to seek information from consumers 

10 who are not in either of those two categories. 

1 1 MR. BERRINGER: Either free or paid $1,000 

12 and are happy with it? 

13 MR. JONES: Yes. Well, no. They may be 

14 happy with it, but I suspect that if you paid $1,000 

15 for it you would tend to be happy with it. 

16 MR. BERRINGER: Yes. I agree it's self17 fulfilling information. 

18 

19 

20 

21 

22 Charlie. 

MR. JONES: Right. 

MR. BERRINGER: But how do you get at that? 

MR. JONES: Maybe you have some ideas. 

MR. BROOKMAN: I saw Mike and then I saw 

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1 MR. MARTIN: Michael Martin, California 

2 Energy Commission. 

3 I'd like to reword what I think Earl is 

4 saying. He wants the opinion of those who don't use 

5 washing machines, those who've never used washing 

6 machines, those who have washing machines and have 

7 never bought a new one in the last 10 years -- that me. 

8 And he wants opinions of the vast majority of the 

9 public who are totally uninformed about this. 

10 Isn't that what you're saying? 

1 1 MR. JONES: Oh, I didn't think I said that. 

12 (Laughter.) 

13 I also wasn't as misinformed in phrasing the 

14 question. My question is the average selling price of 

15 a washer in the United States is about $349. And I 

16 don't know when you bought yours last, but I suspect it 

17 was probably the same price. 

18 The question is is the Department going to be 

19 getting information on consumers who spend average 

20 prices, who pay the average price for a washer, who 

21 

22 

don't get it for free, who don't pay $1,000, but who 

spend about $349. That was my question. 

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1 MR. BROOKMAN: Charlie. 

2 MR. STEPHENS: Charlie Stephens, Oregon 

3 Energy Office. 

4 I guess I should say, Earl, most of the 

5 people out in our area aren't paying even half of that 

6 all net for their clothes washers. The vast majority 

7 of the people who buy the washers in our programs pay 

8 less than $600. 

9 MR. JONES: Okay. 

10 MR. STEPHENS: How much less do you want them 

1 1 to pay? 

12 MR. JONES: $349. Again, I'm not going to 

13 argue, Charlie, on the point because it really isn't 

14 worth arguing about. I had a very simple question. 

15 Does the Department have any plans to get information 

16 from consumers who buy washers at a more -- shall we 

17 say standard price. That's all. It's not a debating 

18 point. 

19 

20 

21 

22 

AUDIENCE PARTICIPANT: [Off mike.] 

MR. JONES: Well, that isn't a question which 

is, I think, relevant to this proceeding. The question 

is when is the record going to be complete enough for 

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1 the Department to make a decision that's appropriate, 

2 not when am I going to be satisfied, or for that 

3 matter, when will you be satisfied. 

4 MR. BROOKMAN: It seems as though, Dan, you 

5 have a comment. And then Steve is next. 

6 MR. BARZEL: I think what Earl is asking is a 

7 good question, which is what is the price elasticity 

8 of a washer. What will people pay for additional 

9 energy efficiency, what's the price they'll pay. And 

10 if you give them $100 a year, will they pay you $300 

1 1 more for the washer. And if they save $200 a year, 

12 will they pay $400 more, and so on. 

13 And then it's really a very -- the Advisory 

14 Board, the Consumer Advisory Board to the DOE, is 

15 struggling with that. How do yo measure that issue. 

16 Because there really -- the truth be known, there's 

17 only one way to measure it and that's with real product 

18 and real dollars and real purchases. Because asking 

19 people what they'll do -- and it's a terribly difficult 

20 problem, because asking people what they'll do when 

21 

22 

they make a purchase and what they actually do are 

different things. 

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1 And so you can go ask 100 people will you pay 

2 $300 more for a washer that saves you $100 a year and 

3 90 percent of them might tell you yes. And when it's 

4 time to buy, it's only 50 percent that buy. 

5 I think to Charlie's benefit, they captured a 

6 terrific share of market with fairly high priced 

7 washing machines up in the Northwest. Are the results 

8 public on that? 

9 MR. STEPHENS: Yes. 

10 MR. MARTIN: And is it 20 percent? Is that 

1 1 the right number? 

12 MR. STEPHENS: We're currently about 10 

13 percent and doing 15 percent. 

14 MR. MARTIN: I thought I saw numbers as high 

15 as 18. 

16 MR. STEPHENS: Eighteen. In one month we 

17 were 18 percent of the market. 

18 MR. MARTIN: But if a product is capturing 18 

19 percent of a market -- now given that there are pretty 

20 significant economic incentives to it. I guess the 

21 

22 

argument -- I'm making it for Charlie, but the argument 

that Charlie is making is if 20 percent of the people 

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1 are buying it, that's pretty convincing evidence . 

2 That's a pretty significant portion of the market 

3 that's accepting the technology. 

4 And is that the be all/end all? No. And how 

5 will you ever prove that 80 percent of the market will 

6 accept a technology? Well, the answer is, I think, 

7 only when you're selling 80 percent of the market that 

8 technology will you know that. Asking people whether 

9 they'll do it or not is really a very difficult way to 

10 get it. 

1 1 And the truth is that all the measurements 

12 that you're suggesting would be necessary and that 

13 anybody would suggest would be necessary, would only 

14 measure opinions about what's available or what's not 

15 available or how much people would pay for it. So I 

16 think it's a terribly difficult issue, is what I'm 

17 saying. I think it's a good question. I just don't 

18 know an easy way to answer it. I think it's expensive 

19 to answer it. 

20 MR. JONES: But, Dan, just to follow up on 

21 this point, there are some places you might look. It's 

22 clear that the choices made by people in areas like the 

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1 Northwest where water costs are, I gather, quite 

2 different and other kinds of issues drive consumer 

3 choices than it is to say that it might be in a place 

4 like -- any other American city, some major cities in 

5 the American South. 

6 You have no data that I've been able to see 

7 that when no one's attended these meetings. You 

8 have no data respecting any of those places. It 

9 exists. 

10 MR. BARZEL: What exists? 

1 1 MR. JONES: Data about sales of these 

12 products. 

13 MR. BARZEL: The market shares don't approach 

14 18 percent. 

15 MR. JONES: Dan, you said if 20 percent of 

16 the people are going to buy this product, then that 

17 says a lot. And my question is is it clear that 20 

18 percent of the people are going to buy this product in 

19 New Orleans or Philadelphia? 

20 

21 

22 

MR. BARZEL: If they're given the same 

economic incentives that they're giving up in the 

Northwest? 

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1 MR. JONES: Well, no. You'll never prove the 

2 point until you see 80 percent of the product. All I 

3 want to say is what is the record showing. What does 

4 the data show? 

5 MR. BARZEL: The data will never show market 

6 acceptance of a product at a level that's 

7 MR. JONES: Than I suspect that the record is 

8 going to be inadequate. 

9 MR. BROOKMAN: Excuse me. The Court Reporter 

10 is having a hard time capturing this conversation and 

1 1 that we don't want to miss. 

12 MR. JONES: The question is whether the 

13 Department is going to take any action. Does it have 

14 any plan, does it have any information or any ideas on 

15 how to go about getting consumer information from 

16 places other than the Northwest. 

17 MR. BROOKMAN: Steve has been patient here. 

18 Let's give him a chance to respond. 

19 MR. NADEL: Okay. Let me try to address a 

20 couple of the issues that have come up in the last 

21 couple of minutes . 

22 First was a question of, gee, is there 

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1 anybody who's been surveyed who hasn't gotten a machine 

2 for free or for $1,000. My understanding -- and 

3 Charlie and Tom, correct me if I'm wrong -- is that 

4 there are people today in the Northwest who are paying 

5 as little as $300 net for their machines. So there is 

6 [sic] consumers available. 

7 And, if I understood Tom correctly, they are 

8 going to be doing another survey later on this Spring 

9 of more than a thousand of these purchasers with a full 

10 range of purchase prices. And Tom is offering to the 

1 1 Department and I suspect to Earl or anybody else if 

12 they have some particular questions like administered 

13 in that type of questionnaire that this would be a good 

14 opportunity. 

15 That addresses the range of prices and can we 

16 get additional information. 

17 MR. JONES: Excuse me. If someone is going 

18 to give me a Mercedes for the price of a Saturn, that 

19 somehow that's going to change my willingness to pay 

20 for a Mercedes? I don't think so. 

21 

22 

(Laughter.) 

MR. NADEL: [Off mike.] 

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1 MR. JONES: Take things the way you will, but 

2 in terms of --

3 (Laughter.) 

4 That's a fair conclusion because we're 

5 talking about a product which for many people sits in 

6 the basement and should be -- [inaudible]. 

7 MR. BROOKMAN: Let's let Steve respond. 

8 MR. NADEL: That is a definite offer we have, 

9 it looks like, from the Northwest. I know that there's 

10 utilities in California that have been doing a lot of 

1 1 work. I see Lauren Casentini there. They periodically 

12 do surveys and maybe they could. Also you talked about 

13 other regions. 

14 I see Christine Egan over there from the 

15 Consortium for Energy Efficiency who is working with 

16 utilities all over the country. I know there are 

17 utilities in Iowa, Wisconsin, New England. It may be 

18 possible to use this network of people who are 

19 purchasing these machines by the thousands. 

20 

21 

22 

MR. JONES: [Off mike.] 

MR. NADEL: I'm suggesting it as a potential 

opportunity and maybe one that the Department should 

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1 take advantage of. 

2 MR. BERRINGER: Yes. We're open to 

3 recommendations. The one thing that Dan didn't bring 

4 up was sales data. There is some information that 

5 Arthur D. Little has collected as far as ELCAP and 

6 stuff like that and through Intellectual Services, 

7 where we can get some sales data and sales information, 

8 if that's a reasonable response to answer your 

9 question, Earl. 

10 Christine, do you wish to comment? 

1 1 MS. EGAN: Yes. I just want to say we do 

12 have members across the nation who are promoting these 

13 programs. None in New Orleans, unfortunately. But we 

14 do have data potentially form California, the 

15 Northeast, the Northwest. The bigger the program, the 

16 more surveying and the more extensive the consumer 

17 search. 

18 If there are specific questions the 

19 Department or others around the table would like to be 

20 asking consumers, let me know. I'm glad to pass on to 

21 our membership that those questions should be included . 

22 Tom Eckman has already volunteered to do it. I think 

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1 others would do it as well . 

2 We would certainly like to be able to answer 

3 the question clearly that consumers do or do not value 

4 and accept these machines. 

5 MR. BROOKMAN: Thank you. 

6 Steve Rosenstock. 

7 MR. ROSENSTOCK: Steve Rosenstock, EI. I'm 

8 going to divert the subject. 

9 Under Thelma there were focus groups. I 

10 don't know how detailed they were but there was under 

1 1 Thelma. It's in this rough document, talking about '95 

12 focus groups. But one thing I wanted to also say is 

13 that it's a nice combination of information that's out 

14 there and all the programs that are out there right 

15 now, all the voluntary and national and regional and 

16 local efforts that are going on that are promoting 

17 especially the horizontal access washing machines. 

18 I think what would be useful for a lot of the 

19 number crunching is to -- well, obviously get kind of 

20 current either '96-'97 data on actual sales, number 

21 

22 

one. And then also, really, I would like to -- again, 

to help the process, just see some of the projections. 

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1 What are the projections in terms of what they think . 

2 How long their programs are going to go on, number one. 

3 And number two, what kind of impact they think they're 

4 going to have. Because obviously it's going to make a 

5 difference in I'll say the baseline reference case. 

6 I mean, if all these things are going on 

7 right now, obviously it's going to have an impact by 

8 the year 2003. 

9 MR. JONES: Earl here again. 

10 Actually, Bryan, I was anticipating what I 

11 thought was one of the items on the agenda on consumer 

12 issues. And it says that the Department is seeking a 

13 subgroup of stakeholders in order to assist the 

14 Department in further developing a strategy for 

15 addressing consumer issues. 

16 And actually, I assume that you put that 

17 question there that you had planned to do that. 

18 MR. BERRINGER: Well, at this point the 

19 Department is not wedded to any one path to go. And 

20 that's why we're looking for input, number one, if 

21 

22 

there are. There's costs, but if somebody's willing to 

pay, how much are they willing to pay for this higher 

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1 efficiency product. That is not addressed in the 

2 studies. So, I mean, that would 

3 MR. ECKMAN: The question was asked if the 

4 sales staff that's trying to move this product and the 

5 retailers, how much they thought the consumer would pay 

6 incrementally and how much market share they'd get by 

7 whether it was $100 or $200. So that information is 

8 available in the survey, the WashWise survey. We did 

9 ask that. 

10 MR. BROOKMAN: Did everybody hear that? 

1 1 AUDIENCE PARTICIPANT: Repeat it. 

12 MR. BERRINGER: Yes. 

13 MR. ECKMAN: We asked the sales that was 

14 trying to move this product in the retail 

15 establishments how much they thought they could move at 

16 various incremental costs, being $100, $200 over a 

17 standard of the day, what they would normally sell. 

18 And they gave estimates. The results of that question 

19 is in the report that is available. And we will repeat 

20 that question in the Spring to get some idea. 

21 

22 

The sales staff has a pretty good sense of 

price elasticity. They make their money on moving 

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1 product. 

2 MR. BROOKMAN: Additional questions, comments 

3 at this point? 

4 MR. JONES: Is there going to be a subgroup? 

5 MR. GOLDSTEIN: To discuss what 

6 recommendation? 

7 MR. BROOKMAN: Michael, do you have a 

8 comment? 

9 MR. JONES: What it says on the agenda. 

10 MR. McCABE: This is Michael McCabe. 

1 1 This is one area that we're -- I'm not real 

12 comfortable that we have all the answers. As Dan 

13 rather eloquently put it, it's a very complicated 

14 issue, the elasticity. The information that Tom has 

15 just referred to is particularly useful but I would 

16 like to get some we're open to a subgroup. We're 

17 open to recommendations as to what the issues are to be 

18 examined. 

19 When we look at the information that is 

20 available as far as the utility of the product and the 

21 performance, there appear to be a number of paths to 

22 get to the higher efficiency levels that consumer 

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1 utility does not seem to be the issue that it.may have 

2 been earlier. The price elasticity is certainly a 

3 significant issue. I'd like to get at that. I'm not 

4 certain how to accurately characterize it. 

5 As to whether or not there may be other 

6 issues, I'd like to get input on those, and 

7 recommendations as to whether or not to have a group 

8 get together and develop this and make some specific 

9 recommendations as to how to capture consumer impact 

10 issues. 

1 1 I'm open to it and I'm also open to 

12 recommendations that would be submitted in response to 

13 this discussion, this information. And then we'd try 

14 to advance the ball. But it has proved to be rather 

15 difficult to get a handle on it and resolve all of 

16 those issues. 

17 MR. BROOKMAN: Steve? 

18 MR. NADEL: As a recommendation on how to 

19 move forward, what I'd maybe suggest is that first, as 

20 quickly as possible, the Department take this current 

21 draft report and flesh out and summarize what we do 

22 know already and circulate that to people. Then 

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1 maybe -- I don't know. You can form a group, if you 

2 will. I think we can do it rather conference calls 

3 rather than a formal meeting. But set up a conference 

4 call of these people to maybe discuss what you have and 

5 what the key questions are. Then the Department can 

6 prepare a draft plan and have a follow-up conference 

7 call. 

8 It might be an efficient way to do this. I'd 

9 also recommend doing it fairly quickly if we're going 

10 to be able to take full advantage of the offer from the 

1 1 Northwest in terms of their survey, which is -- when is 

12 it going out, Tom? 

13 MR. ECKMAN: Probably late May or early June. 

14 MR. NADEL: But I throw that out there for 

15 people to react to as a way to move forward. 

16 MR. McCABE: Well, again, my reaction to that 

17 is that I assume the Department put this on here 

18 because they were trying to follow up on the commitment 

19 they made on the interpretive rule to seek consumer 

20 information. And I can't judge, of course, whether or 

21 

22 

not the information which you all describe here is 

relevant to that purpose. I assume it says something. 

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1 But whether it answers all the questions, I wouldn't 

2 know. 

3 What concerns me, Michael, was that your 

4 statements seemed to indicate a prejudgment on the 

5 Department's part, even though the record is still by 

6 no means complete on the question of consumer utility. 

7 And it seems to me that the question I really want the 

8 Department which I assume the Department is actually 

9 addressing in this sentence here was some way of 

10 getting information about that question. What do 

1 1 consumers value in terms of utility of these products 

12 and in what respect. Do they see no distinction in 

13 terms of the port of access. 

14 And if that was what you're looking for, as I 

15 hoped you were, then I would like to have some input in 

16 such a subgroup. If you're telling me the Department 

17 has made up its mind on that subject and that the only 

18 question is what price people are prepared to pay for a 

19 product which otherwise is just no problem for them, 

20 then that's a different question. 

21 

22 

I'm really trying to hear from you exactly 

what is the scope of the question you're interested in 

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1 getting information on, and then, of course, we can 

2 decide at least on that what's the appropriate way we 

3 can participate, if at all. 

4 The Department has not reached a conclusion 

5 on any of these issues. As I stated in my opening 

6 remarks, what I'm offering is a staff position. In 

7 particular, how I would look at what information has 

8 been input before me and that many of the questions as 

9 far as what consumers value, they may very well value 

10 port of access. They may very well value axis. But 

1 1 looking at the products that are in the market or based 

12 on patent and other information will be coming into the 

13 marketplace, it appears that there will be a range of 

14 choices so that consumers will still have those choices 

15 available to them. 

16 MR. JONES: So you're saying -- you're 

17 telling the rest of us that since one of our 

18 competitors has a product, proprietary technology, 

19 which would solve all these problems, that we should be 

20 happy about that? I mean, I'm not sure what we're 

21 

22 

supposed to do about that . 

MR. McCABE: Well, I wouldn't say that you 

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1 should be happy about it . 

2 MR. JONES: Well, then, what are we supposed 

3 to do with that information? What is the relevance of 

4 that on this rulemaking and what are we supposed to do 

5 with that? How do we comment on that except to say 

6 well, a couple of things. 

7 (Laughter.) 

8 MR. BROOKMAN: David, you have a comment? 

9 Are you finished, Michael? For the moment, 

10 perhaps. 

1 1 MR. GOLDSTEIN: David Goldstein. 

12 It seems to me that before you can answer a 

13 question you have to frame the question. And the way I 

14 would propose to deal with framing the question is to 

15 ask what does NACA require in terms of demonstrations 

16 to set a standard at a particular level. And what it 

17 requires with respect to consumer utility is a very 

18 small section that says that standards can't -- I don't 

19 remember the words -- significantly reduce consumer 

20 utility. 

21 And so if the Department is going to study a 

22 standard at an MEF of whatever, they have to be able to 

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1 frame the question and answer it whether they see any 

2 evidence in the record that such a standard will 

3 significantly compromise consumer utility. 

4 And so it seems to me that what Mike is 

5 saying, what I would agree with, whether or not he's 

6 saying it 

7 (Laughter.) 

8 some evidence in the record on this 

9 question and that that evidence does not suggest that a 

10 standard at any of the levels under study here would 

11 compromise consumer utility at all. 

12 MR. JONES: But it seems to me, David, that 

13 you have to known first of all what are utilities that 

14 consumers value. That's the first question I think you 

15 have to ask or have asked. And it seems to me that the 

16 record is devoid in this rulemaking on information on 

17 that subject. 

18 Now we can make assumptions based upon what a 

19 certain portion of the consuming public has done in 

20 buying particular products. We know that some people 

21 have no issue. What we don't know is what does that 

22 mean for a great number of consumers and do you care 

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1 about the opinions of those other people and is there a 

2 way that this rulemaking can access that information. 

3 MR. GOLDSTEIN: If you or any stakeholder 

4 wants to suggest what those questions are and how they 

5 could be answered, that would be a non-sandbagging 

6 response to the question. If you want to simply ask 

7 questions and say I'm not convinced that the record is 

8 adequate but I'm not going to tell you how to make it 

9 adequate until the lawsuit afterward, I don't think 

10 that's going to be looked on very favorably. 

11 MR. JONES: My point is that I am sure that 

12 working together in this subgroup which I assume that 

13 Bryan was going to be proposing here today, we would 

14 come up with exactly the questions to get to that 

15 point. And that together we would resolve this 

16 question once and for all. 

17 MR. GOLDSTEIN: It seems to me that nobody in 

18 this group has any rigorously defined answer to the 

19 questions because I haven't heard you suggesting any 

20 and I haven't heard DOE suggesting any. And if no one 

21 can suggest any, no one can answer them and the record 

22 is not deficient for such absence of answers. 

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1 (Laughter.) 

2 MR. JONES: The question is certainly there. 

3 MR. GOLDSTEIN: One question is certainly 

4 there, Earl. 

5 MR. JONES: I'm saying I'm not a marketing 

6 expert. I know what questions consumers are often 

7 asked when it comes to making a judgment on this issue. 

8 I assume it can be pulled together. 

9 MR. BROOKMAN: Terry has ben waiting and then 

10 we'll move back to Bryan or to Steve. 

1 1 MR. THIELE: Terry Thiele, WCI. 

12 We need to recognize in the debate that a 

13 discussion of consumer utility is inextricably linked 

14 to the question of economic justification insofar as 

15 the consumer may have in the final analysis access to a 

16 wide range of product designs that offer different 

17 features, whatever they may be, so that the consumer 

18 can walk onto the selling floor and however you define 

19 utility it is represented there. 

20 But from the manufacturer's standpoint, the 

21 

22 

utility features that sell may not necessarily be 

available to all manufacturers. 

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1 So the point I'm making is that utility and 

2 the features that represent that utility and 

3 manufacturing capacity or capability are not one and 

4 the same. And simply because the consumer can have 

5 access to it doesn't mean the manufacturer has access 

6 to it, whatever it is the provider of _this utility. 

7 And so in this discussion, the Department 

8 needs to recognize that there is an economic side from 

9 a manufacturer perspective to the debate on consumer 

10 utility. And if you're drawing the conclusion from the 

1 1 available evidence that all aspects of utility, however 

12 it is defined, are satisfied from the consumer 

13 standpoint, you nonetheless have to complete the 

14 analysis and flip it over and see whether all 

15 manufacturers are going to, from an equal economic 

16 footing, be able to serve the consumer by providing 

17 that utility. 

18 Because if Acme can build it but Ajax cannot, 

19 the consumer gets it but Ajax is economically 

20 disadvantaged because of the rulemaking. 

21 MR. McCABE: You're absolutely correct, 

22 Terry. And that is, as we've discussed in the past, 

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1 one of the features that we are going to be examining 

2 in the manufacturer impact analysis. Because a standard 

3 that may be, quote, acceptable, unquote, to consumers 

4 may be not economically justified from the Department's 

5 perspective. 

6 MR. THIELE: The only point I wanted to make 

7 was as long as the Department recognized and kept that 

8 nexus. 

9 MR. McCABE: Absolutely. 

10 MR. BROOKMAN: Additional comments or 

1 1 questions at this point? 

12 (No response.) 

13 Bryan, did you have further materials to 

14 present? 

15 MR. BERRINGER: No, no. That was it. I 

16 guess one of the things we talked about was a 

17 discussion of comments, comments or data submittal. We 

18 put something out new to the group as far as requesting 

19 additional information from the manufacturers for the 

20 v-axis at 30, 35 and 40 percent. And what sort of time 

21 

22 

frame we should look for comments. 

Obviously there's a lot of discussion. 

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1 There's some unanswered questions or recommendations to 

2 be set forward and we'd like to establish a date for 

3 that. I think in one of the notices we put April 15th. 

4 If we need to go further, if we need 35 or 45 days to 

5 do that, I'd like to see if ~nybody has any 

6 recommendations on the comment period. 

7 MR. BROOKMAN: Steve? 

8 MR. NADEL: Yes. I mean, yes, everybody can 

9 and should get comments in by April 15th. I was 

10 wondering whether maybe the Department can get answers 

1 1 to a couple of questions even now. One, would it be 

12 possible for the Department to summarize the available 

13 research in terms of the results as opposed to, gee, 

14 they asked questions. That's one question. 

15 Two, it sounded like you were suggesting 

16 setting up some group to deal with these issues. 

17 Northwest Efficiency Alliance said they can include 

18 questions if they know about them by May. 

19 Do you want to wait until we get comments in 

20 mid-late April and then address it or do you want to 

21 get volunteers to participate setting up a conference 

22 call around about April 15th. 

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1 MR. BERRINGER: I think if we can see the 

2 interest as far as people wanting to participate in 

3 that group and setting up a conference call, I think 

4 that would be a good opportunity. 

5 Do we have any volunteers? 

6 MR. JONES: Yes. 

7 AUDIENCE PARTICIPANT: What did you volunteer 

8 for? 

9 MR. JONES: I'm volunteering somebody. 

10 MR. BROOKMAN: Steve, when you listed before 

11 possible next steps, you also said summarize the 

12 information on consumer issues. 

13 MR. NADEL: Yes. I think it would be very 

14 useful to take this report. You've already got the --

15 this is the methodology for each of the studies. But 

16 then write about a page or so on what the key findings 

17 of those studies were. You know, the major ones or two 

18 or three. Not a big pass but something that a 

19 researcher should be able to pull together if they're 

20 working full-time in less than a week. 

21 MR. MORRIS: If the Department believes in 

22 the conclusions. 

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1 MR. NADEL: Or at this point, all it is would 

2 be drafting. It could be one researcher's opinion of 

3 those conclusions. Then I'm sure if people don't agree 

4 with those conclusions, they'll let the Department know 

5 that. 

6 MR. BROOKMAN: Bryan, and the Department at 

7 large, is it possible to do this? Steve's making a 

8 request and it seems to be linked to the effectiveness 

9 of this conference call on consumer issues. 

10 MR. BERRINGER: Yes. I think that can be 

1 1 accomplished. 

12 MR. NADEL: In a week? 

13 MR. BERRINGER: Within a week. Yes. 

14 MR. ROSENSTOCK: A quick comment. Steve 

15 Rosenstock, EI. 

16 As part of the Industry Advisory Committee 

17 there is a consumer issues working group. I'll call it 

18 that. Kathy Utney is kind of in charge of it. So 

19 they're proceeding forward with it. 

20 So, they might be doing some activities 

21 

22 

already. I mean, if you can not reinvent the wheel -- I 

don't know how far along. 

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1 MS. LAUGHLIN: I believe that the Advisory 

2 Committee and their subcommittees are more generic at 

3 least. And this is specific to the clothes washer 

4 rulemaking. 

5 MR. MORRIS: Yes. I think any questions out 

6 of this need to be really directed to this rulemaking. 

7 MR. ROSENSTOCK: Okay. I was just saying in 

8 terms of more people for the group. There might be 

9 some interest in some of those people, just for -- if 

10 you're recruiting. 

1 1 MR. BROOKMAN: Is there a contact person for 

12 the -- who's going to shepherd the conference call on 

13 consumer issues at this activity? 

14 Bryan is. 

15 So we have two next steps so far. One is to 

16 set up a conference call on consumer issues. Bryan is 

17 the contact on that. So anybody that wishes to 

18 participate should contact Bryan, either e-mail, 

19 telephone, either one. 

20 MR. BERRINGER: Yes. 

21 MR. BROOKMAN: And then someone will be 

22 tasked for the summary on the consumer issues studies 

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1 results. Is there a name we put next to that or is 

2 that yet to be determined? 

3 MR. BERRINGER: Also I'll be the contact for 

4 that as team lead. 

5 MR. BROOKMAN: Are there any other next steps 

6 or action items we should establish at this point? 

7 MR. McCABE: Well, another next step that 

8 Bryan will be the contact person is, as Tom had 

9 offered, and it is certainly appropriate that we 

10 contact the range of utilities and owners who are doing 

1 1 some studies and likely be surveying to see if there's 

12 some information that we can piggyback onto in very 

13 short order. That's one thing that we should start on 

14 immediately and not try to get things come out of what 

15 may be a protracted discussion. And we may look at the 

16 same time to see if coming out of any comments or the 

17 discussion today if we can identify some other items. 

18 But as I said before, as Dan pointed out, 

19 this is a month that's been extremely difficult for 

20 Frank. 

21 

22 name also. 

MR. BROOKMAN: Okay. I have put down Bryan's 

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1 MR. MORRIS: Doug, just a suggestion. You 

2 may want to just take that sheet over there, before 

3 people leave, those people that want to be included in 

4 the conference call, have them sign their name and put 

5 their telephone number on there. Bryan can take it 

6 with him and he'll have the list of people that want to 

7 be included. 

8 MR. NADEL: Tell you what. I'll send around 

9 a piece of paper. 

10 MR. BROOKMAN: Okay. That sounds good. 

1 1 Any other action items or next steps we 

12 should list at this point? 

13 MR. MORRIS: Just a comment. It's Wayne 

14 again. 

15 In terms of the comment period for the 

16 workshop and all of the activities that we've heard 

17 today, some of the information was really available the 

18 first time here today when we saw a lot of this. Jim 

19 has been gracious enough to put a lot of the 

20 information up on the Web through DOE, which we think 

21 is an excellent way of distributing information. But I 

22 think a lot of this, as a result of the workshop, it's 

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1 going to take a little time to digest. 

2 You suggested 45 days for a comment period. 

3 I think that that would be probably a minimum that I 

4 would like to ask for. So, I think we're looking 

5 really at the end of April of a comment period or 

6 something close to that. You can work on that, but I'd 

7 have a little heartache with trying to do that by the 

8 15th of April, especially if we're going to include in 

9 our comments the summary of the consumer issues paper 

10 that's going to be out in a week or so and to try and 

11 also keep things moving as much as possible and have 

12 one comment period rather than multiple comment 

13 periods. 

14 MR. BROOKMAN: What about Wayne's comment? 

15 How does that sit? Does it compromise the Department's 

16 time schedule, the calendar? 

17 MR. BERRINGER: I think we still -- yes. 

18 MR. BROOKMAN: Yes? 

19 MR. McCABE: Again, the analyses that we have 

20 presented, they are those which will be included along 

21 with the advanced notice of proposed rulemaking. 

22 Following the supplemental ANOPR, we will have a 

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1 workshop which we're going to go into, which I was 

2 expecting to go into some of the detail that we've gone 

3 in today but relatively more subjects of manufacturer 

4 impact analysis. 

5 So we're dealing with preliminary life cycle 

6 cost analysis, preliminary energy forecasting, and in 

7 fact, the first of what would be considered two LCC 

8 analyses. And energy forecasting would be that which 

9 would be used for the proposed rule. 

10 And listening to the comments that have been 

1 1 received today that there are some areas where there've 

12 been substantial comment, consumer impact analysis 

13 being one, but when you look at the life cycle cost 

14 analysis that Jim had presented, some of the work that 

15 Mike Rivest had presented, I didn't hear much exception 

16 or supplemental information being presented. And I'm 

17 not certain what there is out there, what there likely 

18 will be. 

19 And my first concern is with respect to the 

20 direction which these analyses are taking. Are they 

21 

22 

headed in a useful direction. And from the comments 

that I've heard, I think almost to a person the answer 

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1 is yes. They're not going off on a tangent. They're 

2 going to produce meaningful results. 

3 And again, those results that are really 

4 meaningful would be those that would be presented for 

5 the NOPR so that the information that will then be 

6 presented to the decisionmakers here in the Department 

7 will be on target. 

8 The NOPR is scheduled for --

9 MR. BERRINGER: The schedule for the ANOPR is 

10 for the end of May. 

1 1 MR. McCABE: And the NOPR? 

12 MR. BERRINGER: It's January '99. 

13 In the July workshop following the ANOPR 

14 there's going to be more detailed information exchanged 

15 that will guide the completing of the life cycle costs, 

16 the manufacturer impact analysis and the other 

17 analyses. Going to the first order question, are we on 

18 target? Are some of those things questions that can be 

19 answered in the 30-day period? Many of the others are 

20 going to take more than 30 days and they'll be picked 

21 

22 

up in the NOPR. 

MR. BROOKMAN: I guess one thing as I've 

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1 listened to this conversation that I was unclear about 

2 is how much refinement you need on these consumer 

3 issues now. It seems like there's special issues to be 

4 addressed. I didn't know whether it was possible to, 

5 as you suggest, use a 30-day comment period to address 

6 what's been presented here and maybe extend it a little 

7 bit, if that's what required, to get comment on the 

8 consumer issues. 

9 MR. McCABE: We have also made the request 

10 for additional engineering data. I don't expect that 

1 1 those data are going to be collected within 45 days. 

12 We're going to have to sit down with the manufacturers 

13 and talk about it in some detail so there is 

14 information that's going to be received well after --

15 30 days after that 45 day period. 

16 I'm looking to what is important now in order 

17 to aid the preparation of the ANOPR, which we're 

18 looking at in the May time frame. 

19 MR. BROOKMAN: Mike, you're saying let's 

20 stick to 30 days to the extent you can? 

21 

22 

MR. McCABE: I would. Yes . 

MR. BROOKMAN: Steve Nadel? 

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1 MR. NADEL: I was just going to comment and 

2 agree that for the information that was presented here, 

3 I think 30 days should be more than sufficient, 

4 particularly since a lot of this was discussed in the 

5 preliminary workshop in February for those who chose to 

6 send people. 

7 To the extent there is additional information 

8 on consumer issues coming out in a week or two, then 

9 for that particular document maybe a longer comment 

10 period, but let's not delay comment on everything 

1 1 because of that one document . 

12 MR. BROOKMAN: Would 30 days comment be 

13 sufficient once that consumer paper is out, the 

14 consumer issues summary? Would that be sufficient at 

15 that point? 

16 MR. McCABE: A different response period? 

17 MR. BROOKMAN: Yes. I mean, I guess I'm king 

18 of splitting the question before we try to roll it 

19 together. 

20 MR. THIELE: I thought I heard Mike say that 

21 there are really two dates here. The one is when we 

22 need to comment on in preparation for or in expectation 

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1 of influencing the ANOPR, and then once the ANOPR is 

2 out, you can comment your brains out. 

3 MR. BERRINGER: I'd just like to make the 

4 point that the consumer portion that we're bringing up 

5 here is not critical to the ANOPR. It's really the 

6 next phase. So we're just beginning that. 

7 So the consumer issue, that would have no 

8 impact on the ANOPR. 

9 MR. BROOKMAN: Michael McCabe makes the 

10 request, I believe, that we try and do comments -- you 

1 1 collectively try and do comments within 30 days. Is 

12 that going to work? I see several people nodding yes. 

13 The rest of you I think are tired. 

14 Thirty days is what's being suggested. If 

15 it's going to be a real heartburn for you, you should 

16 say so now. Noting we're not talking about consumer 

17 issues in this case. 

18 And then, as a way of dealing with consumer 

19 issues, is it really possible to get a report written 

20 in the span of a week? 

21 

22 

MR. BERRINGER: I think we can . 

MR. BROOKMAN: Pretty close to it? That 

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1 would mean the due date or the distribution date out of 

2 DOE by say the 18th or could we give it the 20th, to 

3 the 20th, March 20th? March 18th is seven days. 

4 MR. BERRINGER: What's that on the calendar. 

5 We're not working on Sunday. 

6 MR. BROOKMAN: Let's be realistic about this. 

7 MR. NADEL: I said a person working full-time 

8 could probably do it in a week. I know it's probably 

9 going to take a couple of days to figure out who's 

10 going to do it. I wasn't trying to set a rigid one-week 

1 1 time frame. I was just saying it was a relatively 

12 quick turnaround. That's the point. 

13 MR. BROOKMAN: Do you have somebody in mind 

14 who can do this and get it turned around in 7-10 days? 

15 MR. McCABE: I have somebody in mind. 

16 (Laughter.) 

17 MR. BROOKMAN: If we said two weeks would 

18 that be reasonable, two weeks? And then the comment 

19 period follows -- is 30 days after that two weeks? 

20 

21 

22 

MR. KESSLER: I'd like to ask for somewhere 

between 45 and 60 days. I don't have the resources 

that Earl has. 

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1 (Laughter.) 

2 MR. BROOKMAN: To review the consumer issues 

3 document or --

4 MR. KESSLER: To comment no this. 

5 MR. BROOKMAN: On today's? 

6 MR. KESSLER: Yes. 

7 MR. BROOKMAN: I see. So I don't know what 

8 to do with this. 

9 Michael? 

10 AUDIENCE PARTICIPANT: Doug, you're the 

1 1 facilitator. You can't pass the buck . 

12 MR. BROOKMAN: Some people were saying that 

13 there's a lot here to review before they feel like they 

14 can comment. You can't squeeze it up into 30 days? 

15 MR. KESSLER: I'd like to have more time. 

16 MR. BROOKMAN: Could we split it half between 

17 45 and 30? That would get us 38. 

18 [Crosstalk.} 

19 MR. NADEL: I think people should bear in 

20 mind this is not the final last chance to comment. 

21 We've got about five more comment periods in the 

22 schedule. I mean, I guess the two choices are we do 

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1 them quick or we cut out comment periods and give more 

2 people a longer time before each set of comments. I 

3 can go either. But we can't extend -- have five 

4 extensive comment periods. 

5 MR. MORRIS: To follow that, Steve, maybe 

6 what we need to do is figure out what parts of all of 

7 the stuff that we saw today influenced the ANOPR and 

8 have our comments only deal with those specific parts. 

9 MR. BROOKMAN: That's your suggestion, as 

10 well? And are those clearly identifiable, do you 

11 think? 

12 MR. KESSLER: They're not to me. 

13 MR. McCABE: Well, let's just discuss the 

14 ANOPR. The ANOPR that we publish is going to be unlike 

15 anything that the Department has published before. 

16 Previous ANOPRs were nothing more, as I've 

17 characterized them, as running the flag up the 

18 flagpole, then say the Department is going to be 

19 conducting a rulemaking on these products. The 

20 Department will be performing an engineering analysis. 

21 Here are the design options that are going to be 

22 considered. Here are the tools that are going to be 

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1 used. 

2 There were no results presented. It was just 

3 a very broad framework. This ANOPR which we've had 

4 some preliminary -- very preliminary discussions as to 

5 the format, is going to be different in that, one, it's 

6 going to have a technical document that's going to 

7 accompany it. 

8 Ideally, we will release these technical 

9 documents that accompany an ANOPR or a NOPR or a final 

10 rule in advance of the publication of those Federal 

1 1 Register notices. 

12 In this case, it's going to have what I have 

13 called a preliminary life cycle cost analysis, 

14 preliminary engineering analysis and preliminary energy 

15 forecasting analysis with results of those. 

16 I stress preliminary because the workshop 

17 following the publication of the ANOPR as we've 

18 described in the process rule is for the purpose of 

19 defining the inputs, the variables that will be used in 

20 the complete analysis so that what I would find to be 

21 

22 

most valuable and the purpose of all these workshops 

and meetings that we've had is to hone in and narrow 

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1 the definition of the life cycle cost analysis. And 

2 we've put a fair amount of definition as to what is 

3 going to be the form and substance of the life cycle 

4 cost analysis. 

5 The comment I'd like to see on the ANOPR with 

6 respect to the life cycle cost analysis is is that 

7 analysis reasonable? Does it capture the range of 

8 impacts on consumer life cycle costs? And if we had 

9 just published and were just relying on an average life 

10 cycle cost analysis, I would expect the comments that, 

1 1 no, it's not adequate because it needs to look at the 

12 whole range of variables that consumers experience. Up 

13 in the Pacific Northwest, the cost of electricity is 

14 very different than it is in New York State, and that 

15 you need to have a more robust analysis. 

16 When it comes to whether or not the price of 

17 electricity, the range of electricity prices is from 2 

18 cents to 18 or if it's from 1.5 to 19, that's in the 

19 noise and that's something that personally I see that 

20 can be resolved, addressed, between now and the initial 

21 part of that workshop following the publication of the 

22 ANOPR. 

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1 But if the structure that Jim has presented 

2 on the life cycle cost analysis, the approach that Mike 

3 has presented on taking and developing some mark-ups, 

4 if you all think that we're way off base on that, 

5 that's what I'm interested in the comment on the ANOPR. 

6 But if it's going to be fine tuning it, that's between 

7 now and when we start to do the analysis for the 

8 proposed rule. But more importantly, the time to get 

9 all that fine tuning done is by July when we have the 

10 workshop following the publication of the ANOPR. 

1 1 MR. BROOKMAN: I guess then, Alan, I'd direct 

12 the question to you. Do you think based on what 

13 Michael said you can get your comments in on that scope 

14 of comment by in the next 30 days? 

15 MR. KESSLER: Yes. Fine. 

16 MR. BROOKMAN: Okay. So no one's got a 

17 problem with 30 days, I'm hearing. Now let's turn to 

18 the consumer issues. 

19 Thanks for that clarification, Michael. 

20 

21 

22 

Consumer issues. Hopefully we'll have a 

report in the span of two weeks and it's out the door; 

right? And then after two weeks, what's a reasonable 

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1 comment period for the consumer issues? 

2 MR. MARTIN: Thirty days. 

3 MR. BROOKMAN: Thirty more days? 

4 MR. MARTIN: Yes. All you're really looking 

5 at is to say I've got a copy of that report and you've 

6 got it wrong. It's a summary of what's available and 

7 the comments would be inaccuracies in the summary. 

8 MR. BROOKMAN: I should think also that we 

9 also listed that a conference call might occur or 

10 should occur. That based on that report, people would 

1 1 come forward and say you asked the wrong question, 

12 based on the preceding point -- discussion. That you 

13 missed this question. This is a fundamental question, 

14 as Earl and others have pointed to that should be 

15 answered, that should be part of the record before the 

16 Department goes forward. 

17 So I would hope there'd be more than you're 

18 right or wrong. 

19 

20 

21 

22 

Thirty days. Is that sufficient? 

(No response.) 

Thirty days is sufficient. Okay. Good. 

Any other additional items, next steps or 

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1 action items we should address at this point? I note 

2 you put the framework up there. Did you wish to make a 

3 comment on that at this point? 

4 MR. BERRINGER: No. It's just one way of 

5 discussing as far as what is the most critical thing 

6 that is needed so we can proceed with the ANOPR. 

7 Obviously, comments on the engineering analysis, life 

8 cycle cost, shipments, and those, and the less critical 

9 are the consumer and the reverse engineering. Although 

10 to proceed forward with the reverse engineering, Steve 

11 Mariano would need comments to make sure he's on the 

12 right track in order to move forward. 

13 So, that's the only thing I wanted to say 

14 about that. 

15 MR. ROSENSTOCK: Steve Rosenstock, EI. 

16 Just for this consumer issue, this revised 

17 report, if it gets done in two weeks, are you going to 

18 only send it out by e-mail and fax so that you known 

19 people get it, so that they have 30 days? Again, just 

20 for this part of it, just because 30 days can be less 

21 than maybe 25 days if you send it out via mail, regular 

22 mail. 

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1 MR. BROOKMAN: Based on the people that want 

2 to participate -- or, I guess we can send it out to 

3 everybody. We can send it out. We can also post it on 

4 the Web page. 

5 AUDIENCE PARTICIPANT: Let me ask. Should 

6 the consumer issues paper that's going to go out in two 

7 weeks, should that be sent to everybody in this room or 

8 everybody on the distribution list? How should that be 

9 handled? 

10 MR. JONES: I don't think it matters whether 

1 1 it goes out or whether you post it, but we just have to 

12 know that it's available. 

13 MR. BROOKMAN: Can everybody access it via 

14 the Web site? Does anybody have a problem accessing it 

15 via the Web site? Speak now. 

16 (No response.) 

17 No one has a problem. Okay. So the need to 

18 know it's available. 

19 Qonnie? 

20 MS. LAUGHLIN: I have a question. I want to 

21 know what kind of summary. I mean, some of these are 

22 fairly huge reports. What kind of summary are you 

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1 looking for? I mean, we can't possibly put like all 

2 the questions to be asked, which is kind of what we 

3 would like to know. So, I mean, it might be difficult 

4 for us to determine what kind of summary you want. 

5 Do you want it by issues? Do you want it by 

6 just generally what the general conclusions are? Do 

7 you want ~ description of who they surveyed? 

8 I mean, you know, there's all kind of 

9 summaries. 

10 MR. JONES: I think you got them all, or at 

1 1 least that was a start. 

12 MR. JONES: No. I mean, seriously, I don't 

13 think you can simply go right to the point of saying 

14 this is what the conclusion was because I think we'd 

15 like to be in a position to know exactly what the 

16 approach was in setting up the survey. 

17 Did they talk with people who spent $1,000 

18 and who didn't want to seem like they were idiots for 

19 having done so. Things like that. 

20 You want to be in a position to judge whether 

21 or not there was some objectivity in the approach that 

22 was used by the surveyors as opposed to having to guess 

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1 at that. 

2 MR. NADEL: This is Steve Nadel. I had in 

3 mind nothing too long but a paragraph or so on the 

4 methodology and the key things. You know, gee, it was 

5 a survey of appliances, consumers in major appliance 

6 stores or whatever it was. You know, the key 

7 methodology and what the key findings were. 

8 The idea is not to make -- to have to do a 

9 doctoral dissertation but to let everybody understand 

10 about where things are. If they want more information, 

1 1 they can follow up with the original citation. But to 

12 give a picture about what is the state of knowledge 

13 with regard to consumer acceptance of these new high 

14 efficiency technologies. 

15 MR. BROOKMAN: Noting that there are 10 or 15 

16 sources that are listed in the document here today. So 

17 if it's even one page per source, that would be a 

18 significant report. 

19 MR. JONES: Just looking at -- I think Jim 

20 did this. It doesn't say, but it's from LBNL. And on 

21 page 11 of that draft, if you look at that -- I mean, 

22 pick any one. There's a description of some of the 

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1 studies. Page 12, for example. And then there's a 

2 summary. 

3 Now, I guess I was looking for something 

4 other than this. And I guess, Steve, I'd ask you if 

5 you could look at that. Is that what you think would 

6 be an adequate synopsis? 

7 MR. NADEL: Yes. I found that basically the 

8 summary said that they did these surveys. it didn't 

9 say anything about what the findings were. It doesn't 

10 say that -- you know, what are the key questions. And 

1 1 gee, if a question was consumer satisfaction with the 

12 technology. You know, 88 percent said yes, they were 

13 very satisfied. What are some of the key results 

14 rather than -- this basically says, yes, we got some 

15 results. 

16 MR. MORRIS: This is Wayne. I thought what I 

17 had understood what people were asking for was, if you 

18 will, a summary of the conclusions. What is it that 

19 the Department is taking away from these studies. What 

20 is it that the Department believes is the result and 

21 conclusion of this study that is going to then 

22 influence the rulemaking. 

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1 So it's not just the summary of how the study 

2 was conducted. It's a summary of the conclusions. 

3 MR. THIELE: This is Terry Thiele. And I'd 

4 just simply throw out as an editorial comment that it 

5 would be more useful if -- working off of what's 

6 already there, obviously but if this summary review 

7 could attempt to follow more or less the same format on 

8 each of the studies, so that you were comparing an 

9 apple and an apple and an apple, and then add on the 

10 conclusions . 

1 1 MR. BROOKMAN: Steve? 

12 MR. NADEL: The other thing I'd point out is, 

13 I think as Bryan pointed out, there are like three 

14 major studies that goes two or three pages. The 

15 WashWise, Bern and one of the other ones, you can get 

16 by much more briefly. 

17 MR. BROOKMAN: Now, I would note, I've also 

18 noted as next steps that Bryan is also on the hook to 

19 contact the utilities and others about surveys and 

20 other things that are prospective that are happening 

21 soon. Tom and Christie and others had other vehicles 

22 to obtain this information. 

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1 MR. JONES: Earl here. And I assume that we 

2 would know that in the conference call, that utility X 

3 or Y is getting ready to, on this kind of a schedule, 

4 to conduct a study and would you want to try to affect 

5 that in some way; right? 

6 MR. BROOKMAN: And the sheet was circulated. 

7 Where did it end up? 

8 AUDIENCE PARTICIPANT: I have it here. 

9 MR. BROOKMAN: Okay. So it's still being 

10 circulated for anybody that would wish to sign it . 

11 MR. NADEL: It never made it down this side 

12 of the table. 

13 MR. BROOKMAN: So let's send it back up here. 

14 Yes. Thank you. 

15 Any additional action items or next steps 

16 before I hand it back to Bryan and Michael McCabe? 

17 MR. BERRINGER: I guess there would be one 

18 other thing, too. If we're planning to keep on 

19 schedule, we're looking at a workshop in July. And 

20 obviously the 4th of July wouldn't be a good week, but 

21 are there any conflicting dates we want to look at as 

22 far as next steps. 

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1 When would be a good time? Is there any 

2 major conflicts in July that are occurring? Any 

3 proposed dates from anybody? 

4 MR. NADEL: The question is basically are 

5 there any days in July that are not good? 

6 MR. BERRINGER: That is correct. 

7 MR. BROOKMAN: Can we discuss by early July? 

8 You know, a week time frame in there? 

9 MR. McCABE: This is going to be -- there are 

10 a number of issues. This is going to be following the 

1 1 publication of the ANOPR. That's the focus. Another 

12 part of the question which has not been asked is how 

13 much time after the ANOPR is published are people going 

14 to need to review it. I would assume that it's going 

15 to be in about 30 days after in order to look at the 

16 information that's included in there. 

17 So if we were successful in publishing it in 

18 mid-late May, you're talking about the first of June 

19 for all practical purposes and you're talking about the 

20 first of July would be the 30 days. The first week of 

21 

22 

July, I suspect, would be out. 

MR. HAWKINS: I would like to see it pushed 

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1 beyond the second week of July, myself. 

2 MR. BROOKMAN: Someone on this side of the 

3 room said the fourth week. Steve Nadel, did you have a 

4 comment? 

5 MR. NADEL: I was trying to clarify, Mike. 

6 Is this workshop primarily to deal with like new 

7 issues, like manufacturing impact and not so much to 

8 repeat issues we've discussed now or is it a 

9 combination of going over these issues again and 

10 getting to the new issues? 

1 1 MR. McCABE: It will cover everything so that 

12 on these issues, we're going to get down to many of the 

13 points that Alan has; precisely what is the right 

14 value, the correct value that should be used in the 

15 reverse engineering analysis that Steve has described. 

16 We may be going beyond what has been 

17 submitted in the interim. It's going to be looking at 

18 the life cycle cost analysis saying that these 36 runs 

19 are reasonable, but there should be these additional 

20 scenarios besides the EIA, the three EIA cases, and the 

21 one GRI. There should be three others and here are 

22 what they are. 

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1 So it's going to be going through that level 

2 of detail for those. It's going to get into the 

3 manufacture impact analysis and that will be new 

4 information there as far as presenting methodology. 

5 So it is not going to be one that we're going 

6 to take a day and a half and do in a day. If anything, 

7 it's going to be taking a day and a half and do it in 

8 three days. 

9 MR. BROOKMAN: I've heard only two things 

10 about the date so far. One person said I'm free to do 

1 1 it after the second week and another person said how 

12 about the fourth. That's what's on the table so far. 

13 So we're talking the third and fourth, based on all 

14 that's been said, which is very little. 

15 MR. NADEL: Not the 23rd. 

16 MR. BROOKMAN: Not the 23rd. So it seems as 

17 though everybody is okay if we go the third or fourth 

18 week. And the dates are out there. We'll leave it to 

19 the Department to establish them. 

20 MR. NADEL: Could they get back to us fairly 

21 quickly because what we're saying now applies now, but 

22 it may not apply in two weeks. 

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1 MR. BROOKMAN: Should we establish the fourth 

2 week now? 

3 MR. McCABE: No. We cannot establish when 

4 it's going to be because it's going to be dependent 

5 upon when the ANOPR is published. But what Steve was 

6 getting to is appropriate, and that is, we will be 

7 talking to all parties before we publish the ANOPR. 

8 The publication of the ANOPR is not going to be a 

9 surprise. And when we publish that, we will have a 

10 need for a hearing, for a workshop. And that date will 

1 1 have been something that will have been discussed prior 

12 to publication so that people will have had a say and 

13 we will have gotten input as to when that date should 

14 be. 

15 We have a sense as to the last half of July 

16 right now. And if we are on schedule with publishing 

17 it late May, I think that's what I would recommend. 

18 But before we publish it, Bryan, who's got his name for 

19 everything else, will contact AHAM, will contact some 

20 of the states, will contact some of the efficiency 

21 advocates and many of those who are here to get a sense 

22 as to what falls within your calendar. 

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1 We're not going to satisfy everybody. There 

2 are some who will go off on vacation during the July3 August time frame. Can't change that. There are some 

4 who are going to have -- their bosses are going to have 

5 demands on them. Can't change. But I'd like to try to 

6 satisfy the majority of people because it's not going 

7 to be worthwhile if only have a few people there. 

8 MR. NADEL: I guess, Mike, I might want to 

9 suggest a slightly alternative way to do it. First, I 

10 think from my experience trying to set up large group 

11 meetings in August, it's very difficult. If you don't 

12 make July, you're going to have thin attendance. 

13 I think if you wait until you have a firm 

14 date on the ANOPR, sometime in May, you're going to 

15 lose a significant number of people because you haven't 

16 set it. 

17 I would encourage you to set a date now and 

18 then make sure that the schedule fits it in order to 

19 get the vast majority of people who need attend it. 

20 People's schedules do fill up. I'm pretty open now but 

21 

22 

just to speak personally, my April and May are getting 

pretty crowded. I'm mainly working on scheduling June 

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1 now. So don't delay it too long. 

2 MR. MARGOLIS: If we are delayed for some 

3 reason and we set the date, then are you saying? That 

4 we should get out the ANOPR anyway if we're delayed and 

5 cut out certain things? That cannot be. 

6 MR. NADEL: The option is to cancel the 

7 meeting in a worse case. But you do everything 

8 possible to -- from this conversation, I'd say let's do 

9 it the last week in July. Let's set a date now. And 

10 DOE does everything possible to make that work. And if 

1 1 it doesn't, then we have to cancel it. But recognize 

12 that it probably won't rescheduled again until 

13 September. 

14 AUDIENCE PARTICIPANT: Am I on the record as 

15 saying I agree with Steve? 

16 (Laughter.) 

17 MR. BROOKMAN: Typically workshops are held 

18 in the middle of the week, like Wednesdays and 

19 thursdays. Is that a good time? Or would you rather 

20 do earlier in the week, the middle of the week? 

21 And I think this all depends on what Michael 

22 said earlier. Perhaps a two-day meeting, Mike? 

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1 MR. McCABE: I think at least two days. 

2 MR. BROOKMAN: At least two days. 

3 So the last week in July is what I've heard. 

4 Does anybody have a calendar? 

5 Wednesday the 29th and Thursday the 30th, at 

6 a minimum. Can you pencil in those dates? 

7 AUDIENCE PARTICIPANT: Maybe it ought it be 

8 Tuesday-Wednesday, because then if it needs to go a 

9 third day, then you have the Thursday. 

10 MR. BROOKMAN: Does that make it the 28th? 

1 1 Pencil in the 28th, the 29th and maybe the 30th. 

12 AUDIENCE PARTICIPANT: No. Leave it two 

13 days. People will burn out by then. 

14 MR. McCABE: You were deciding which one of 

15 the three -- which two of the three you would take but 

16 not the three days. 

17 MR. BROOKMAN: Well, let's pick two now. 

18 Tuesday is the day to start. Okay. That's the day the 

19 start. That's the 28th of July. 

20 

21 

22 

MR. NADEL: The 28th, 29th. 

MR. BROOKMAN: Okay. So is there any other 

business that we should take up before we close out 

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1 this meeting? 

2 Any other next steps or action items we 

3 should establish? 

4 (No response.) 

5 Then I'll just turn it back to Bryan, and 

6 thank you all for a very productive meeting from my 

7 perspective. 

8 Thank you. 

9 MR. BERRINGER: I'd just like to thank 

10 everybody. I'm amazed and shocked that we made it 

11 through this meeting in one day. Appreciate your 

12 openness and your comments on that. 

13 Michael, do you have any other closing 

14 remarks? 

15 Again, I'd like to thank everybody for 

16 attending. 

17 MR. BROOKMAN: I've got one thing I want to 

18 say. Steve asked if the Economic Analysis Working 

19 Group Subcommittee could hang on immediately after the 

20 meeting to decide where you're going to meet tomorrow. 

21 

22 

So everybody just hang on right here. Stay right here. 

And please hand your evaluation forms to 

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1 Brenda and to Sandy as you walk out the door. 

2 (Whereupon, the proceedings were concluded at 

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REPORTER'S CERTIFICATE 

This is to certify that the attached -

proceedings before: DEPT. OF ENERGY 

In the Matter of: CLOTHES WASHER WORKSHOP 

were held as herein appears and that this is the 

original transcript thereof for the file of the 

Department, Commission, Administrative Law Judge 

or the_ ~g~ncy. 

DAVID McCoy 

Official Reporter 

Dated:MARH 11, 1998 

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