## Date: 

## October 29, 2014 Case: NOPR 

## For PTACs and PTHPs

Ace-Federal Reporters, Inc. Phone: 202-347-3700 Fax: 202-737-3638 Email: info@acefederal.com Internet: www.acefederal.com( \ NOPRForPTACsandPTHPs October29,2014



### DEPARTMENT OF ENERGY MEETING Page 1 

### NOTICE OF PROPOSED RULEMAKING (NOPR) FOR PACKAGED TERMINAL AIR CONDITIONERS (PTACs) AND PACKAGED TERMINAL HEAT PUMPS (PTHPs) Wednesday, October 29, 2014

9:00 A.M.

202-347-3700 Ace-FederalReporters, Inc, 866-928-6509NOPRForPTACs and PTHPs October29,2014 Appearances for Department of Energy Meeting 2 3 Ron Majette, DOE 4 Doug Brookman, Public Solutions,

-- Moderator 5 Alison Williams, LBNL 6 Pete Cochran, DOE 7 Sarah Butler, DOE 8 Johnson Balski, DOE 9 John Cymbalsky, DOE 10 Ashley Armstrong, DOE II Christopher Lau, Navigant 12 Aniruddh Roy, Goodman Manufacturing 13 Dain M. Hansen, IAPMO 14 Jessica Lewis, Navigant 15 J. Decker Ringo, Navigant Page2

16 Laura G. Petrillo-Groh, Air-Conditioning, Heating, & 17 Refrigeration Institute 18 Marshall Hunt, Pacific Gas and Electric Company 19 Donald M. Brundage, Southern Company 20 Steve Bonner, Texas Instruments 21 Steven J. Rosenstock, Edison Electric Institute 22 Detlef Westphalen, Navigant

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## ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 Appearances for Department of Energy Meeting Bingyi Yu, Lawrence Berkeley National Laboratory Yoolanda Williams, General Electric Home & Business Solutions Page3

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PRO C E E DIN G S Page4

MR. BROOKMAN: Let's begin. Good morning everyone, welcome. This is the Notice of Proposed Rulemaking for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps. Today is October 29, 2014, here at the Forrestal Building in the Department of Energy. My name is Doug Brookman, Public Solutions, Baltimore, nice to see you here we are going to start with welcoming remarks from Ron Majette. MR. MAJETTE: Good morning everybody. My name is Ron Majette from the O.S. Department of Energy, Project Lead for this package that we are going to discuss today. I wanted to welcome everybody, the Department of Energy I hope you enjoyed your entrance into the building and you got your laptops in, I hope that was a fun experience. Anyway, I just kind of do the purpose of the meeting. Today we are going to present the Energy and Conservation Standards that DOE is proposing for PTACS and packaged terminal heat pumps.

We are inviting comment on the analysis from the

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509participants. NOPRForPTACsandPTHPs October29, 2014

We are going to have open discussionPage5

2 for the next steps for the rulemaking and I wanted to 3 make sure we encourage everybody to submit data and 4 information, any summary statements, written comments 5 and you know anything helpful to move the project 6 along, all right? Thank you very much. 7 MR. BROOKMAN: Thank you. We always 8 start with introductions. I'll start to my immediate 9 left, you can get used to turning this microphone on 10 and off, your name and organizational affiliation. 1I Don Brundage, Southern Company; Steve Rosenstock, 12 Edison Electric Institute; I'm Aniruddh Roy, Goodman 13 Manufacturing; Laura Petrillo-Groh, 14 Air-Conditioning, Heating & Refrigeration Institute; 15 Yoolanda Williams, GE Appliances; Marshall Hunt, 16 Pacific Gas and Electric and the statewide IE Team 17 from California; Pete Cochran , Department of 18 Energy, General Counsel's Office; Sara Butler, DOE; 19 Ron Majette, DOE; Johnson Balski, DOE; Decker 20 Ringer, Navigant Consulting; Bingyi Yu, Lawrence 21 Berkeley National Laboratory; Jessica Lewis, 22 Navigant; Detlef Westphalen, Navigant Consulting.

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### MR. BROOKMAN: Thanks to all of you. All 2 of you received a packet of information as you 3 entered the building this morning. I am going to do 4 a very quick spin through the agenda. You will find 5 that on slide number 3, 

### immediately following this 6 agenda review, there's an opportunity for anybody 7 that wishes to make brief summary remarks here at the 8 outset, brief comments about issues that matter to 9 you -- Moving on from there, Market and Technology 10 

### Assessment, Screening Analysis, then Engineering 11 

### Analysis. 12 

### We'll take a break mid-morning around 13 

### about 10:45 or so, following on from there Equipment 14 

### Price Determination, Trial Standard Levels, Energy 15 

### Use, Life-Cycle Cost Analysis. We'll take lunch 16 around about noon and then returning from lunch, 17 

### Shipments, National Impact Analysis, Manufacturer 18 Impact Analysis Emissions and Monetization of 19 

### Emissions, Utility Impact, Employment Impact, 20 

### Regulatory Impact Analyses and then a description at 21 

### the end of the day of the Proposed Standard. 22 

### At the very end of the day the last item

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for this group would be yet another opportunity to Page7

2 make closing remarks. Any other issues that haven't 3 been covered sufficiently, anything you wish to bring 4 to the floor that would be the time to do it. I 5 would ask for your consideration to observe the 6 following ground rules. 7 Please speak one at a time and say your 8 name for the record each time you speak. There will 9 be a complete transcript of this meeting. If you 10 can be concise share the air time, keep the focus 11 here, if your cell phones aren't on silent mode yet 12 please turn them on silent mode and Webinar 13 participants we welcome you. The Department of 14 Energy is trying to make these meetings accessible to 15 all live over the internet and they provide these 16 webcasts to accommodate stakeholders who are unable 17 to attend the public meeting in person. 18 You should be able to listen in and view 19 the sides and I would encourage you, the Department 20 would encourage you to submit written comments after 21 the public meeting like every other participant here 22 in the room and if you would please, please have your

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### either telephones on mute and raise your hand to be 2 

### recognized to speak. 3 Most of the time works these days that we 4 

### can hear you in the room as you speak via the Page 8

5 

### software. So that is most of the introductory stuff, 6 if you look at slide number 6 these issue boxes are 7 what the Department of Energy places in the packet to 8 

### ask for specific comment. That's where they call 9 out specific issues they wish to receive comment on 10 

### so as we are going along, we will pause to try and II 

### elaborate the points associated with those and then 12 

### finally how to submit written comments. 13 

### MR. MAJETTE: Ron Majette, DOE. For all 14 

### correspondence needs to be referred to the PTAC PTHP 15 

### Rulemaking

-- Energy Conservation Standards for 16 

### packaged terminal air conditioners and packaged 17 

### terminal heat pumps. Docket Number EERE-2012-BT18 

### STD-0029 and Regulatory Identification Number 19 

### 1904-AC82. We have the email information here as 20 

### well and you would just send it to Miss Brenda 21 

### Edwards, okay. Do not send direct comments to me, 22 

### there are public comments where they have to go

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 through the process so it's seen by everybody okay, 2 thank you. Page9

3 MR. BROOKMAN: It's important to note that 4 the way this is listed here, try and be accurate 5 because it may end up in the wrong spot if you don't 6 get all the dashes and dots and everything correct, 7 okay. So then opening remarks, anybody? Yes, 8 Laura please? 9 MS. PETRILLO-GROH: Thanks. Good morning 10 my name is Laura Petrillo-Groh, I'm the Engineering II Manager of Regulatory Affairs at the 12 Air-Conditioning, Heating and Refrigeration 13 Institute. AHRI is a trade association representing 14 over 300 manufacturers of heating, cooling, water 15 heating and commercial refrigeration equipment. 16 In the United States alone, AHRI's member 17 companies employ approximately 130,000 people and 18 support some 800,000 dealers, contractors and 19 technicians. We appreciate the opportunity to 20 comment on the U.S. Department of Energy's Notice of 21 Proposed Rulemaking on the Energy Conservation 22 Standards for Packaged Terminal Air-conditioners and

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2 However, we have several pressing concerns 3 that need to be addressed before this Regulation goes 4 into effect, The proposed levels stand to place 5 significant burden on industry. Based on data from 6 AHRI's certification directory accessed within the 7 past two weeks, 85% of PTACs and 77% of PTHPs will 8 require redesign to meet proposed level TSL2. 9 It is not clear from the analysis 10 accompanying the NOPR what the efficiency gains that 11 the equipment will achieve based on implementing the 12 technology options that DOE has considered. 13 Further, we have noticed that the DOE has selected 14 equipment for testing and teardowns in two different 15 size bins which may not accurately represent the full 16 capacity range of the product category. 17 We have prepared a brief slideshow and 18 would like to present it today on this issue. 19 Another concern that members have with this 20 rulemaking is that the median payback period for 21 PTAC's and PTHP's is in no case greater -- is with 22 the median payback period for PTAC's and PTHP's. In

202-347-3700 Ace-Federal Reporters, Inc, 866-928-6509NOPRForPTACs andPTHPs October29,2014 Page 11 no case is the median payback period shorter than the 2 life of the product. This places a burden on the 3 consumers of the product. 4 Finally, for PTAC's and PTHP's greater 5 than or equal to 12,000 Btu's per hour, the average 6 lifecycle cost savings is negative and for all of the 7 products the average lifecycle cost is zero. It's 8 unclear how DOE is proposing a level with a negative 9 LCC is economically justified. It is also unclear 10 what the future of the industry will look like should 11 the DOE proceed with setting such severe levels. 12 Over the years regulations have forced 13 manufacturing facilities for these products to move 14 overseas. If the DOE were to adopt such stringent 15 standards, we doubt that any PTAC's or PTHP's would 16 remain as made in the USA. AHRI looks forward to 17 working with the Department and others in 18 establishing workable and credible energy 19 conservation standards for packaged terminal 20 air-conditioners and heat pumps. Thank you for the 21 opportunity to present our views. We will provide 22 more detailed comments in writing.

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### MR. BROOKMAN: Okay, thank you and we will see those presentation slides when we reach the appropriate spot in the agenda. You said before they correspond to the (Discussion off mic.) MR. BROOKMAN: So you would like to do them now? MS. PETRILLO-GROH: Yeah if that's okay. MR. BROOKMAN: Okay, let's do them now. MR. HUNT: Excuse me will we have a copy of this somewhere? MR. BROOKMAN: It will be in the docket. MR. HUNT: Thank you, Marshall Hunt, PGE MS. PETRILLO-GROH: So thank you for continuing to let me present on this. A few weeks ago our manufacturers downloaded information from AHRI's certification data base and compared it with the current and proposed DOE minimum efficiency standards for these products. The current DOE requirement is different from the baseline requirement in the standard. The baseline requirement in the standard, in terms of this

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509NOPRForPTACs andPTHPs October29,2014 rulemaking is 90.1-2013 which is 1.8% higher 2 efficiency for PTACs and is currently in place. 3 We understand that that's the statutory 4 requirement that DOE needs to fulfill but you know 5 there are some areas of concerns that we have Page 13

6 regarding making sure that that is consistent across 7 the board with the analysis. 8 If you look at our first slide for PTACs, 9 we've plotted what the models from the AHRI directory 10 against the proposed levels. On the Y-axis, this is 11 the PTACs certified EER. On the X-axis is the 12 capacity. The proposed level is shown in I guess 13 orange on the slide and there are very few models 14 that meet this proposed level. I think 85% of PTACs 15 would need to be redesigned and if you notice, as I 16 mentioned in the opening statement the size bins that 17 the DOE looked at for testing and teardown was in the 18 -- I'm not sure, do you have a pointer? 19 The units the DOE tested were -- you can't 20 see that can you? In this size bin and this size 21 bin, and as I mentioned that you may not be able to 22

-- in the size bin about 9,000

-- around 9,000 Btu's

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and around 14 to 15,000 Btu's. Page 14 And as you see 2 those are the only two places where you have product 3 that is meeting these proposed levels at all. 4 Thanks. 5 For PTHPs the situation is slightly better 6 but not what we would consider fundamentally feasible 7 to manufacture these products. For the COP again, 8 the orange line is proposed TSL2 and you still see 9 the same size bins that were analyzed and not 10 necessarily represent the full capacity range of the 11 product. There are the spikes at 9,000 and these 12 are just around 9,000. 13 So for the models eliminated in the 14 directory you have got 85% at TSL2. Even at TSL1 we 15 are looking at 66% of models requiring redesign for 16 PTACs and almost 60% at TSL1 for PTHPs. 77% will 17 require redesign at TSL2. We are not sure if this is 18 consistent with the information you reviewed, but we 19 hope it is not because it is very significant and it 20 will place a severe burden on the industry. Thank 21 you for letting me present, do you have any 22 questions?

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509/ \ 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 MR. from DOE. Do the shipments NOPRForPTACsand PTHPs October29,2014

CYMBALSKY: This is you have a sense for by the size bins that Page 15 John Cyrnbalsky

the percentage of you showed up there because I know there is a lot of different size classes, but I am curious as to whether or not they are bunched in, you know, like 9,000 what percent of the market is 12,000 and other percent? MS. PETRlLLO-GROH: I don't have a breakdown of shipments by efficiency if that would help persuade the DOE I would be

-- I might be able to obtain that information however I might not be able to get it by the end of the comment period. MR. CYMBALSKY: Okay yeah, I was asking more about the different size bins irrespective of efficiency level are PTACs concentrated, I know there's a large range but are they concentrated in certain size bins? MR. ROSENSTOCK: Steve Rosenstock, EEl are you talking about shipments by capacity is that what you were? MS. PETRlLLlO-GROH: Again I wouldn't -- I don't have that information but I would be able to

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### 29,2014 Page 

### 16 obtain that information just maybe not by the comment 2 period, is that of interest to the DOE? 3 

### MR. CYMBALSKY: Yeah, well the 4 manufacturers are here so maybe they can answer as 5 well. 6 

### MR. ROY: Aniruddh Roy, Goodman. John 7 that's a very good question unfortunately the 8 directory does not classify units by shipment, just 9 pure ratings but I can tell you for a fact that there 10 are manufacturers out there that have all of their II 

### products

-- rather none of their products currently 12 on the directory. There exists manufacturers 13 none of their products would meet the proposed 14 standard as of now. 15 So it's a very easy exercise if someone 16 wanted to do it they could actually go to a 17 manufacturer and just analyze data and determine 18 which ones would not even be able to meet -- 19 MR. CYMBALSKY: Thanks. My real question 20 is so these go into hotel rooms right and as I travel 21 a little bit around I notice that they look all the 22 same. The size of the rooms look the same, so given

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a certain comment I'm assuming the capacity is Page 17

2 roughly the same on all of these units that at least 3 I've seen, I guess my question is you as a 4 manufacturer I'm sure you know off your line are all 5 of these 9,000 capacity or 12,000 or do you make a 6 few in 30 or 40 bins that are here. 7 I mean you can rate one everywhere but are 8 there it seems to me that this stuff is you know I 9 don't want you to use the term cookie cutter but a 10 lot of these appear at least to be the same 11 size-wise. 12 MR. ROY: For us I can say that we make 13 the standard PTACs and PTHPs so that's what we are 14 1imited to. 15 MR. BROOKMAN: Right, so those are -- need 16 a lot of them do you wish to comment? 17 MS. WILLIAMS: Yes, Yoolanda Williams, GE 18 Appliances. GE makes PTACs and PTHPs and several 19 what you call bins or capacity size and will 20 typically group those you know, although it may not 21 be exactly a 9,000 or 15,000 we'll group them under 22 those categories. I think in terms of shipment by

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each of those categories, if you wanted to get a Page 18

2 broad or concise view or summary for the industry or 3 at least with AHRI members are producing I think it's 4 something or data that could be collected. 5 It may vary by manufacturer so you can get 6 you know, an aggregate. 7 MS. PETRILLO-GROH: We could

-- aggregate 8 that

-- I'm also you know we do have product listed 9 at all of these different size ranges so maybe 10 motel's might be a very common application for this 11 product but by manufacturers producing product in all 12 these size ranges clearly there is market for each of 13 the size ranges and does not just exclusively just 14 9,000 or 15,000 Btu's. 15 MR. CYMBALSKY: Okay thank you Laura. If 16 the manufacturers producing in all these size ranges, 17 it's a process that's not so concentrated it would 18 appear one manufacturer is producing 45 different 19 capacity sizes that they are pretty flexible in their 20 process but I'm not an engineer but it seems to me 21 that that's the case. 22 MR. ROY: Aniruddh Roy, Goodman so John to

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 19 answer your question on the ranges -- so I think DOE 2 did the analysis on 9,000 and 15,000 right. So ours 3 range from for PTACs, our size ranges are from 9,000 4 to close to 15,000, I'm sorry 7,000 to close to 5 15,000. And then for PTHPs we are anywhere between 6 7,700 to 14,400 that's just for our models. 7 MR. BROOKMAN: Okay, thank you. 8 MS. ARMSTRONG: I just want to know one 9 thing. So now we did the rule in 2008, the data was 10 provided that showed that those were the peaks for II the shipment weighed capacities and they had changed 12 over time but at least to the DOE's knowledge we get 13 the fact that people make products over the range, I 14 don't think it's reasonable to think that DOE is 15 going to analyze every single discrete capacity and 16 obviously our inclusions account for the differences 17 those capacities may have and the impacts they may 18 have on efficiency but at the same time

-- I mean to 19 John's question. 20 The last time the data we got did support 21 this so and it was provided by the manufacturers. 22 You guys track your sales, it's a fairly easy

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page20 exercise to do, it's not something that should take 2 45 days so that being said you know I think it would 3 be helpful if the data has changed since that time to 4 provide DOE with that answer. 5 MS. PEETRILLO-GROH: 45 days I think 6 would be longer than we would need however I think 30 7 days would be reasonable, we do have to aggregate the 8 data to make sure that no one particular market is 9 exposed. 10 MR. BROOKMAN: Thank you Laura, thank you II Ashley. Okay so final comments in this segment and 12 this new data that was presented by AHRI before we 13 move on -- okay we are going to move on to the 14 Context slides. 15 MR. MAJETTE: Ron Majette, U.S. Department 16 of Energy. Laura thanks for your presentation. I 17 want to go ahead now and go back to the DOE 18 presentation so we are going into the overview, scope 19 and coverage. The first thing I want to make sure we 20 do is cover the regulatory history. 21 The Energy Policy Act of 1992 amended the 22 Energy Policy and Conservation Act of 1975 to include

202-347-3700 Ace-Federal Reporters,Inc. 866-928-6509( , \ 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 packaged terminal air conditions and packaged terminal heat pumps as a covered equipment type and established the first energy conservation standards for PTACs and PTHPs. On October 7, 2008 DOE published a final Page21

rule amending existing standards for PTACs and PTHPs hereafter named the

-- we are going to call that the 2008 final rule. On February 22, 2013 DOE initiated the rulemaking cycle by publishing a framework document and holding a public meeting on March 18, 2013. On October 9, 2013 ASHRAE Standard 90.1 2013 amended Standard 90.1 requirements for PTACs and triggered a DOE review. On March 13, 2014 DOE published a Notice of Proposed Rulemaking regarding test procedures for PTACs and PTHPs and on April 11, 2014 DOE published a Notice of Data Availability in response to the Amended Standard 90.1 requirements for PTACs. I'm not going to read all of this but this next slide represents the current standards as they stand. The next slide is the PTACs and PTHPs energy

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### conservation standards rulemaking schedule. As you 2 see we are projecting to have a final rule finished 3 by the end of next year so that's our goal. Page22

4 

### Yep, was there a question? Oh I'm sorry. 5 

### MR. HUNT: Marshall, Marshall Hunt PGE. 6 There's also the method of test in process so how do 7 these two proceedings interact? 8 

### MS. ARMSTRONG: There is a method of 9 

### tests. Most of the changes in the method of tests 10 

### at least that are proposed today are fairly 11 clarification in nature and shouldn't change the 12 

### values as you see them today or at least that's what 13 

### we heard. The test procedure will be finalized well 14 

### in advance of this standard's proceeding. We have 15 

### already put out the NOPR, the comment period ended, 16 

### the comments will come in so we are working on the 17 

### final rule now so I would expect you to see that 18 

### sometime early next year. 19 

### MR. HUNT: All right, fair enough. Thank 20 

### you. 21 

### MS. PETRILLO-GROH: Laura Petrillo-Groh 22 AHRI. Ron would you explain how this works with

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page23 90.1 2013 implementation? I believe that is January 2 1, 2015 the new standards for PTACs are effective but 3 I'm not entirely sure how it works with the rest of 4 the adoption of the standard thanks. 5 MS. ARMSTRONG: So the way this works is 6 that DOE once ASHRAE 90.1 comes out the new version 7 DOE is triggered to review and obviously we are 8 triggered to review and adopt unless we can prove 9 that there are significant energy savings at levels 10 at or above ASHRAE in which case we go to a typical, II what we would call a 7 Factor Rule and that's what we 12 are in now so it's a different timeframe. 13 So if we end up not adopting something 14 more stringent than the standards at 90.1 you will 15 see the Associated Final Rule dates and the 16 compliance dates associated with that rule they will 17 be different so they trump basically so it's all 18 dependent on the outcome, this is what happened when 19 we did the last rule. We ended up going more 20 stringent than the ASHRAE 90.1 at that time so that's 21 how it works. 22 MR. ROSENSTOCK: So Steve Rosenstock,

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### Edison Electric Institute. A quick question

-- the 2 last rule was published in October of 2008 and the 3 effective date was September, 2012. On this calendar 4 you are looking at I will say September, 2015 and an 5 effective date of 2019, the time period has shrunk 6 and I'm just wondering why you are giving less time 7 to the manufacturers to comply compared to the last 8 time? 9 

### MS. ARMSTRONG: So the compliance, I think 10 

### the lead time in the subject is four years, so it's 11 all going to be dependent upon when we issue the 12 Final Rule. 13 

### It's going to move. It's a compliance date projected 14 

### based on what's on that screen. 15 

### MR. CYMBALSKY: Yeah look at projected, 16 

### not required so. 17 

### MS. ARMSTRONG: It should just say 18 

### September. 19 

### MR. CYMBALSKY: Right, so the statutory 20 

### deadline is in 2016 so if it comes out in 2016 it 21 will be 2020 but we are projecting 2015, plus 4 is 22 2019.

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MS. ARMSTRONG: It's the month's right that are off. It's just going to be a four year difference, whatever MR. ROSENSTOCK: Steve Rosenstock, EEl it's just not showing four years on that one. MS. ARMSTRONG: Correct. MR. BROOKMAN: Laura, do you have an additional comment? MS. PETRILLO-GROH: So assuming that

-- just in case this Final Rule does decide to go with ASHRAE 90.1 2013 although I'm not sure that will be the way it's going would then that date still by January 2, 2017? Page25

MS. BUTLER: Sarah Butler DOE, it's a two year time period if we go with the 90.1 so that would be 2017, projected. MR. BRUNDAGE: I guess I have sort of a philosophical problem with the way you are approaching this because you reject the ASHRAE levels and then all of your paperwork is based on the last rulemaking and was cost effective beyond that it would seem like if you are saying that ASHRAE didn't

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### set the levels high enough you would also be looking 2 at cost effectiveness from the proposed ASHRAE level 3 

### you said was not -- was not high enough. 4 

### And that's a tougher test than it would be 5 

### for going back to the old baseline. 6 

### MR. CYMBALSKY: So, John Cymbalsky DOE, so 7 

### we are statutorily required to pick up ASHRAE. So 8 using yeah, the baseline ASHRAE we have to do. 9 

### MS. ARMSTRONG: The ASHRAE is the 10 

### baseline. I I 

### MR. CYMBALSKY: Is the baseline so the 12 

### tougher test is going above that that is what this 13 

### rule is. 14 

### MR. BRUNDAGE: So your baseline in this 15 

### rulemaking is ASHRAE 2013? 16 

### MS. ARMSTRONG: Correct. So we did it 17 

### as you would suggest. 18 

### MR. CYMBALSKY: So I don't mean to put you 19 

### on the spot, just so that I heard you right. You 20 

### think that's the correct method of doing the 21 

### analysis? 22 

### MR. BRUNDAGE: That's the correct method

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of doing the analysis to start from ASHRAE 2013. 2 MR. CYMBALSKY: Thank you so much. 3 MR. ROY: Aniruddh Roy, Goodman. So

-- 4 and during the course of your analysis was a 5 comparison made between the effective date of 2017 Page27

6 versus 2019, let's say if you were to adopt 90.1 2013 7 and the energy savings that would be achieved to an 8 accelerated timeframe versus the implementation date 9 of 2019 and the energy savings you would realize with 10 the effective date with the products having to comply II with the standards then, were those two comparisons 12 done in this rule? 13 MS. ARMSTRONG: So I don't know off the 14 top of my head but I'll go look. I mean I see your IS point about what's the difference in additional 16 energy savings between TSL2 over the 30 years versus 17 the 2 years you would get from early compliance of 18 the ASHRAE level. 19 MR. ROY: Right, the reason I ask is 20 because ASHRAE 21 MS. ARMSTRONG: I think we did calculate 22 the numbers, I'm not sure it's presented on the

202-347-3700 Ace-FederalReporters,Inc. 866-928-65092 NOPRForPTACsandPTHPs October29,2014 presentation but we could show you where that is, 

### MR. ROY: The reason I ask is because is 3 ASHRAE 90.1 statutorily that was made the baseline, 4 the 2013 standard but the design options that were 5 evaluated I don't think in the analysis it captured 6 the design changes that manufacturers made in the Page28

7 product to go beyond the current federal minimum and 8 achieve the 90.1 2013 standard which is 1.8% more 9 stringent for the PTACs side. 10 As an example, you use rotary compressors 11 as a technology that's promising but from my 12 knowledge everyone in the industry is using the low 13 grade compressors. And just to give you another 14 example of past rulemakings for the ice makers and 15 the commercial refrigeration, there was a point made 16 in those rulemakings of compressors where you would 17 achieve a certain amount -- you would predict an 18 efficiency savings of a certain percentage over a 19 certain period of time for compressors. 20 That was not mentioned in the screening analysis 21 here. 22 So that's the reason I ask, is that you

202-347-3700 Ace-Federal Reporters, Inc, 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page29 know if that comparison was made and we can get into 2 the details later once we explore those technology 3 options. 4 MS. ARMSTRONG: So to answer your 5 question, and I don't have it the exact comparison 6 but I think this provides you with enough information 7 to get your answer. The cumulative energy savings 8 for adopting ASHRAE are .001 quads whereas the 9 cumulative energy savings for adopting TSL2 are .065. 10 So I mean two years of .001, I mean cumulative 30 II years is far less than -- I think that gives you your 12 answer. That's in Chapter 10 of the TSD if you want 13 to know it specifically, table 10.6.5. 14 MR. CYMBALSKY: Yeah I have a question, 15 you mentioned the investment and whatnot to meet the 16 ASHRAE standard, can you -- does that mean the market 17 has already moved all the way to that level? 18 MR. ROY: Well you see ASHRAE 90.1 goes 19 into effect in 2015 so for new construction which is 20 about 20% of the buildings, if states adopt it, we 21 have to be able to make those products available in 22 the market.

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MR. CYMBALSKY: I think you made the Page 30

2 statement you have invested a bunch of money to do it 3 already so I guess I'm asking you know what part of 4 your shipments or what part of the market is already 5 at that level, since you've made the investment and 6 have already started producing them? 7 MR. ROY: Well I think you mentioned 8 manufacturers in the process of making that shift 9 because again it depends on demand and supply. 10 Obviously we know what changes we need to make in our 11 design to comply with 90.1-2013 but the real fact is 12 that 20% of the buildings will have to make sure for 13 new construction that we have those products 14 available by 2015 so we have our engineers working on 15 that to come up with new designs. 16 But if DOE were to go to these TSL2's and 17 obviously in other design changes would need to be 18 made because they are more stringent than the levels 19 in 90.1 right now. 20 MS. ARMSTRONG: So can I ask you a 21 question and this is hopefully the manufacturers in 22 the room can help. Before we had done our analysis

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### you guys commonly build a single platform or similar 2 

### platforms for air-conditioners and heat pumps, is 3 that accurate to say? 4 In other words you build them over on 5 similar designs and you do minor modifications 6 because the platforms are generally the same, is that 7 

### accurate for AC's and heat pumps? Okay, you are 8 saying yes. 9 And so right now the ASHRAE 90.1 levels, 10 

### you are basically just bringing up air-conditioners II 

### to heat pumps, so I'm actually wondering what level 12 

### of redesign will that really take because the heat 13 

### pump standards are unchanged. They are at the 14 

### federal minimums in 90.1-2013 and you are bringing up 15 

### AC's and if they are both on a common platform 16 

### wouldn't those platforms already have them designed? 17 

### MS. PETRILLO-GROH: Laura Petrillo-Groh 18 

### AHRI. They are clearly not the same platforms. If 19 

### there was a reason to increase the

-- or have had the 20 

### PTAC level lower than the PTHP lower for ASHRAE there 21 

### were reasons involved, and persuasive reasons 22 

### involved because ASHRAE 90.1 is a standard, it has a

202·347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page32 consensus body that approves and writes the standard 2 so it's not just the manufacturers involved with 3 that. There are advocates there are users of the 4 standard involved with it so there was a persuasive 5 reason to have had different levels to begin with. 6 I was not in the room at that time and you know we 7 would like to follow up with that on our written 8 comments. 9 But no, they are different. They are 10 1.8% different. 11 MR. ROY: Aniruddh Roy, Goodman. So 12 actually when you say a platform just to clarify that 13 is that like different assembly lines? Are you 14 referring to different 15 MS. ARMSTRONG: The chassis is what I was 16 getting at which I think were the same based on -- I 17 mean I don't have far the expertise as you guys do 18 on your manufacturing lines and your different 19 options, but my understanding at least from my 20 experiences previously was that they are similar 21 chassis. You can say yes, it's okay. 22 MR. ROY: I can't comment on that right

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MR. MAJETTE: Okay are there any more Page33

3 questions? All right we'll just move on and speed up 4 a little bit. This slide represents the EPCA Factors 5 and there are 7 of them that we are directed by 6 through legislation, they are listed here. All 7 right, so I want to go over the Scope of Coverage. 8 DOE is proposing standards for PTACs and 9 PTHPs defined by EPCA Section 340 as follows. A 10 packaged terminal air conditioner is a wall sleeve II and a separate un-encased combination of heating and 12 cooling assemblies specified by the builder and 13 intended for mounting through the wall and includes a 14 prime source of refrigeration, separable outdoor 15 louvers, forced ventilation and heating availability 16 by builder's choice of hot water, steam or 17 electricity. 18 A packaged terminal heat pump is a 19 packaged terminal air conditioner that utilizes 20 reverse cycle refrigeration as its prime heat source 21 and should have supplementary heat source available 22 to builders with the choice of hot water, steam or

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electric resistance heat. Page34

2 Okay, this last slide represents where we 3 are in the NOPR stage. 4 MR. BROOKMAN: Any comments on the 5 definitions? They are established they are okay? 6 Heads nodding yes, okay thank you. 7 PARTICIPANT: Go talk to your Congressman 8 if you don't like them. 9 MR. WESTPHALEN: Hi I'm Detlef Westphalen. 10 I'm going to be presenting on the Market and 11 Technology Assessment and the Screening Analysis. 12 The Market and Technology Assessment includes 13 determining equipment classes, research on the 14 market, the manufacturers and shipment trends and 15 identifying technology options to improve efficiency. 16 The Screening Analysis takes over from the 17 Technology Assessment and screens out technologies 18 that will not be considered in the Engineering 19 Analysis that occurs later and there are 4 screening 20 criteria listed here: technological feasibility; 21 manufacturability, install ability, service ability; 22 adverse impacts on equipment utility or availability;

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and health and safety issues. 2 As you know DOE divides equipment Page35

3 categories into equipment classes and sets different 4 standard levels for each of those classes. So, 5 classes are divided according to the type of energy 6 used, the capacity of equipment or other performance 7 related features that effect energy use but also 8 represent utility features. 9 DOE is proposing to maintain the existing 10 equipment class provisions and here I might skip to II the next slide first. Ron already showed a table 12 with some of the classes but there are 3 parameters 13 that are used to distinguish the different PTAC and 14 PTHP classes. First of all Type of Equipment

- AC 15 versus heat pump; next Physical Dimensions

- there 16 are standard sizes in which the width is 42 inches 17 and height is 16 inches and non-standard sizes where 18 one of those dimensions is less than for a standard 19 size and also there are different standards, 20 equations and values depending on the cooling 21 capacity range and so here are the 12 different 22 classes that have been established initially by

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509NOPRForPTACsand PTHPs October29,2014 Page36 statute which DOE is not proposing to change at this 2 point. 3 Going back up to the next slide here, the 4 last bullet, DOE is not in this rulemaking proposing 5 any new energy conservation standards for 6 non-standard size PTACs and PTHPs. As mentioned 7 non-standard size would have one of the dimensions 8 less than 16 high or 42 inch wide. The non-standard 9 equipment category holds a very small part of the 10 market and the energy savings that would be realized 11 by amending the standards for these products would be 12 small. 13 Moving on to technology options and 14 screening analysis. DOE identified technology 15 options that can improve energy efficiency, PTACs and 16 PTHPs. We already talked about the criteria that 17 are used in the screening analysis to take some of 18 these technology options off the table and then DOE 19 also eliminates some of technology options where for 20 one reason or another there would not be any savings 21 according to the existing test procedure. For 22 instance available data suggests there are negligible

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### efficiency benefits. Page37 

### There is not any data available 2 to evaluate the efficiency characteristics for the 3 test procedure the EER or COP that is used for 4 evaluating PTAC efficiency does not measure the 5 benefit of the technology. 6 So the table on this slide we show

-- we 7 deal with the Technology Options and the Screening 8 all at once. All of those technology options were 9 identified. A lot of them were screened out and we 10 

### are left with the 4 at the top, higher efficiency II 

### compressors, higher efficiency fan motors, increased 12 

### heat exchange area and improved air flow and fan 13 

### design. 14 

### And I don't want to get into what Decker 15 

### is going to be talking about, you know the 16 

### Engineering Analysis too much but the analysis was 17 

### conducted on an efficiency level based approach 18 

### looking at different products and either based on 19 

### rating or testing basically saying okay that's the 20 

### efficiency of that particular design and some of the 21 

### products evaluated had different compressors with 22 different efficiency levels. These are all existing

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### compressors. NOPRForPTACs andPTHPs October29,2014



### The analysis did not consider any 2 future efficiency levels of compressors. 3 Likewise some of the models had higher Page38

4 

### efficiency fan motors than others. In the analysis 5 there is no consideration of any future fan motor 6 efficiency, likewise for the other design options. 7 MR. BROOKMAN: 

### Laura? 8 MS. PETRILLO-GROB: 

### Detlef, I think you 9 might be getting into this later in the presentation 10 but just one, two questions I have. Will you please 11 go over some of the information you have on the 12 compressors that were evaluated, as Aniruddh 13 mentioned earlier, -- these compressors are being 14 

### used across the board. 15 Also, we are also interested in what your 16 analysis showed in terms of implementing improved air 17 flow design and fan design along with the heat 18 

### exchanger area. Some of us have looked at that and 19 

### have wondered if those two technology actions 20 

### actually fight each other, but we would really be 21 interested to see what your analysis showed on those 22 two items.

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### MR. WESTPHALEN: Well I'll say from the Page39



### 2 get-go that you know we didn't do focused analysis on 3 design options such as improved air flow pattern. 4 

### We did an efficiency level based analysis. Our 5 conclusion regarding these design options were based 6 on looking at the products and saying okay well 7 there's a design difference here, there are 8 

### dimensional differences. It's likely that there are 9 some improvements in air flow and fan design that is 10 

### contributing to the better efficiency of this II 

### particular product and we didn't necessarily drill 12 

### down into the level of okay how much of the 13 

### efficiency benefit is associated with this improved 14 

### air flow and fan design versus the compressor versus 15 

### the heat exchanger? 16 

### I should say a lot of the response to your 17 

### questions I think Decker is going to be in a better 18 

### position to respond to regarding say the EER's of the 19 

### compressors that we found in these products that we 20 

### tested. 21 

### MS. PETRILLO-GROH: Thanks I'm really 22 interested in seeing how the analysis went if there

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### \ 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014

weren't quantifiable energy savings associated with each of these design options. Page40

MR. BROOKMAN: Yes, Decker do you want to chime in here or do you want to wait? MR. RINGO: I think once we discuss the efficiency level approach MR. BROOKMAN: Decker there's a dead spot there, find -- MR. RINGO: Decker Ringo, Navigant consultant.MR. BROOKMAN: Yeah, thank you. MR. RINGO: I think once we talked about the efficiency level approach and the creation of the cost efficiency curves that we conducted, this might become more clear. MR. BROOKMAN: Okay thank you, Don Brundage? MR. BRUNDAGE: Don Brundage, Southern Company. I'm a little confused with a few lines she gave alternative refrigerants particularly HCFC 32 with HCFCs being phased out I don't know why they would be considered an alternate for the future but I

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### think the big issue with alternate refrigerants is 2 not opportunities for increasing efficiency is with Page41



### 3 restrictions increasingly being proposed over on the 4 EPA side for the use of standard refrigerants. 5 The potential degradation of the possible 6 

### efficiency from not being able to not having as 7 much choice of refrigerants as we have now and to add 8 any consideration of impact of other rulemakings on 9 what refrigerants you can use. 10 

### MR. WESTPHALEN: Well I think you will II 

### find that my response is similar to the response in a 12 

### whole lot of other DOE rulemakings that you know, 13 

### until there is a rule that has been finalized, the 14 

### DOE analysis can't be based on consideration of that 15 

### rule being finalized. 16 

### In some cases if a particular proposal is 17 

### put forth, we might consider it an alternative 18 

### analysis to consider the direction the particular 19 

### other rulemaking might be headed. In this case we 20 

### are aware that EPA has proposed that hydrocarbons 21 

### could be used in PTACs and we have a request for 22 comment that addresses that later. I don't know if

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that's what your question is. MR. BRUNDAGE: Well I understand that, Page42

that it is something that will not be considered as a hard and fast thing, it should be considered a threat for the future just like the potential impact of higher raw materials costs would be. It is even that you don't know what it is going to be, it would have a negative impact on the future capability of efficiency levels. And with the anti-backsliding rule it's critical to not set a level so high that with a monitored change like that it may not be technically possible to meet the standard in the future, thank you. MR. ROSENSTOCK: Steve Rosenstock, yeah I know it's a little early because we are going to talk about alternative efficiency but to follow-up with what Don said, when I looked at July, 2014 EPA NOPR the effective dates start January 1, 2016 and it depends on the type of technology, whether you talk about new commercial equipment and the retrofit, but the range of effective dates was anywhere from 2016 to 2021 and the later dates were for mobile

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509applications. NOPRForPTACsandPTHPs October29,2014 Page43 The earlier dates were for commercial 2 refrigeration, ice makers, et cetera so I think 3 that's going to playa very big role possibly in this 4 rulemaking. 5 The second thing I wanted to ask about was 6 the line about high efficiency fan motors, you know 7 the final rule for small motors goes into effect in 8 2015 and in ASHRAE 90.1 there were other standards 9 put in for small motors so basically the baseline is 10 now for the small motors has gone up and so I'm just II kind of curious where the levels considered, were 12 they the levels now going to be basically cemented 13 into the new rule in 2015 or where they above those 14 levels that are going to go into effect in 2015? 15 Just on the fan motors side? 16 MR. WESTPHALEN: I can't answer the 17 question as to what range of motor efficiencies you 18 know were considered at the different TSL or would 19 have been required to get to the different TSL 20 levels. Certainly the highest TSLs would far 21 surpass the motor regulations requiring permanent 22 magnet motors.

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### MR. ROSENSTOCK: Okay thank you. 2 

### MR. BROOKMAN: Chris do you want to 3 contribute here? 4 

### MR. LAU: Chris Lau, Navigant. Just to 5 clarify the statement Steve, the HCFC phase out 6 that's in the proposed EPA rule equipment class is Page44



### 7 product specific and as you mentioned it's you know, 8 ice makers, commercial refrigeration equipment but at 9 this stage, that proposed rulemaking does not cover 10 

### PTACs. 

### Am I correct? I just want to make sure. II 

### MR. ROSENSTOCK: Steve Rosenstock, yes for 12 

### now. 13 

### MR. LAU: Right but there is no proposed 14 

### rule at this point that would cover this equipment 15 but we recognize, we understand the industry's 16 concerned that since there is a trend but to Detlef's 17 point, you know it's always been DOE's policy 18 it's always been DOE's policy that they can't 19 

### speculate on future legislation regulation that 20 

### doesn't have a definitive plan. 21 

### MR. BRUNDAGE: Don Brundage, it's not 22 

### speculating on future possibilities when you have got

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### 866-928-6509NOPRForPTACsandPTHPs October29,2014

a rule on the books already under the Montreal 2 protocol that new HCFC equipment is not going to be 3 shipped out the door of manufacturer's after 2020, Page45

4 that's been on the books for like 10 years or more so 5 I don't think it's speculative to say that the 6 manufacturer is not going to be shipping HCFC 7 equipment of any type after 2020. 8 MR. ROY: Aniruddh Roy. Chris you make a 9 very good point but I think it's safe to say that 10 this analysis covers 2019 a period of 2019 to 2048 so II anytime between that period, I think it's safe to say 12 that there will be a phase out rule. 13 MR. LAU: Thank you. 14 MR. BROOKMAN: Let's make sure that we 15 address sufficiently issue number 1, issue box number 16 1 Detlef? 17 MR. WESTPHALEN: Sure I think that next 18 page -- this issue for comment asks about alternative 19 refrigerants. DOE did not consider alternate 20 refrigerants in the analysis because the DOE is not 21 aware of any SNAP-approved refrigerants that are 22 known to have better efficiency than the R410A for

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### this equipment. DOE requests feedback from the 2 efficacy of alternative refrigerants for PTACs and 3 PTHPs. 4 

### MR. ROY: Aniruddh, I'm going to 5 reiterate some of the points that Don Brundage 6 

### raised. One being that switching into the 7 alternative refrigerants will affect the energy Page46



### 8 performance of products and you know that's something 9 

### that needs to be considered in DOE rulemaking. I 10 

### understand that DOE's hands are kind of tied on this 11 

### issue, but when you do an analysis over a 30 year 12 

### time period, it has to be accounted for that there is 13 

### going to be change in the refrigerants or a 14 

### compromise has to be made in terms of backsliding 15 efficiency levels because if you cannot predict what 16 the performance of the unit is going to be

-- for 17 

### some reason if you switch refrigerant and it 18 adversely effects equipment performance. 19 

### Right now DOE's hands are tied by statute 20 

### that they cannot go back on the levels that they have 21 

### set so that puts manufacturers in a precarious 22 

### position for the future because it's a cumulative

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page47 regulatory burden. We are required by EPA to follow certain steps and then we are required by DOE to follow certain steps and so that should be part of DOE's cumulative regulatory burden analysis and should be factored into the INPV which I am sure you know you have already done. But you know again, these issues I think have been pointed out in previous rulemakings and the fact that they are not being acknowledged in current rulemakings you know, is not adequate. I think DOE needs to give this a serious thought. MR. BROOKMAN: Thank you, additional comments on alternative refrigerants? Steve Rosenstock?MR. ROSENSTOCK: Steve Rosenstock yeah again I think that that ruling in July, that proposed rule was -- there was actually another role in I think it was August about flammable refrigerants and I think that's just going in another direction as well. They are now approved but I was just really

-- I was kind of surprised in terms of the use conditions that are going to be required by EPA in

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terms of

-- and the reason I mentioned that is for 2 certain as I recall on that rule for certain Page48

3 flammable refrigerant, and I think they did do things 4 on PTACs, they are limiting the amount of refrigerant 5 in those units based on certain use conditions. 6 As I recall from that rule they have 7 specific conditions and one of the conditions was you 8 are only allowed to use a certain amount of 9 refrigerant in certain size units and I believe as I 10 recall, I wish I had that rule in front of me that it 11 was -- I think they were talking about it was either 12

-- I think it was room air conditioners, it might not 13 have been PTAC's it was room air conditioners. 14 But again similar capacity type units just IS you know there are these new directions coming out 16 just to follow up to say hey there are certain things 17 that will have an impact, that could have an impact 18 on performance. 19 MR. WESTPHALEN: Yeah I think the proposal 20 was for say a 9,000 Btu PTAC could use 140 grams of 21 propane. 22 MR. ROSENSTOCK: Something like that yes,

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I don't remember the exact numbers but I just 2 remember the capacity sizes were exactly similar to 3 what we are talking about here in terms of 9,000, 4 8,000 up to 12 or 15,000 Btu's for hour. 5 MR. WESTPHALEN: And if we look at the 6 units that we tore down and considered changes in 7 heat exchanger sizes or tube diameters to reduce Page49

8 charge, you know some of those units if we went down 9 to smaller diameter round tubes could potentially get 10 you know, if you consider the differences in 11 densities between HFC's and the HC's. You could 12 potentially get close to that 140 gram limit but you 13 know it would be a stretch. 14 MR. BROOKMAN: Okay, yes Aniruddh? 15 MR. ROY: I'm Aniruddh, of Goodman. This 16 question is for Ron Majette so Ron with respect to 17 back-sliding just a question that came up in my mind. 18 Let's assume that DOE does go back, slides back to 19 lower level accounting for a refrigerant which is 20 highly unlikely but if that happens would you be able 21 to do carbon dioxide emissions analysis using 22 refrigerants? Just based on the GWP?

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### \. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACs andPTHPs October29, 2014 Page 50 MR. MAJETTE: Unfortunately in a case like this we are limited by what EPCA allows so it's going to be dependent on that. MR. ROY: I was just thinking from the C02 emissions because that's something you have added you know, as a factor that goes into selecting TSL's you know, but social costs of carbons so any GWP savings that you get from switching refrigerants and comparing that to let's say reducing the EER to account for the refrigerant switch. I think that type of an analysis would be very useful as well to do in the future. MR. MAJETTE: Okay can you provide that as a comment? MR. ROY: Yes. MR. MAJETTE: Because it looks like there's something you gave us another dynamic to research so let's look into that. MR. ROY: Yes, right. Because that might help you know, again it's contingent upon if you reduce the EER but that might help in providing those arguments as to why even the reduction of EER overall

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### you know, still saves the nation energy. MR. BROOKMAN: Final comments on 3 refrigerants because we are about to move on, okay. 4 I think at this point we move on to the Engineering 5 Analysis and I will hand it over to Decker. 6 

### MR. RINGO: Good morning, Decker Ringo 7 

### from Navigant Consulting. I'm going to discuss the 8 engineering analysis methodology and the results. Page 51



### 9 The purpose of the engineering analysis is to examine 10 

### the relationship between manufacturing production 11 

### costs and efficiency levels for the PTAC and PTHP 12 

### equipment. 13 

### The engineering analysis uses as input a 14 

### market and technology assessment and the screening 15 analysis results and the output of the engineering 16 analysis is a set of cost efficiency relationships 17 

### for different equipment classes and capacities and 18 those cost efficiency relationships serve as the 19 

### basis for the remainder of DOE's downstream analyses. 20 

### So I'm going to discuss now how we derive 21 

### these cost efficiency relationships. There are 22 

### different approaches that one can take to assess the

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### 29,2014 Page

### 52 relationship between cost and efficiency. We alluded 2 to a design option approach where for each design 3 option you calculate or estimate the amount of 4 efficiency that will gain you in a particular 5 

### machine. That is not the approach that we used in 6 

### this rulemaking. We've seen it in other rulemakings 7 such as ice makers but in this rulemaking, we use the 8 combination of an efficiency level approach and a 9 reverse engineering approach. 10 And what that means is that we selected II 

### certain representative equipment classes and 12 capacities to represent the entire PTAC and PTHP 13 market. We developed a set of efficiency levels 14 ranging from the baseline efficiency up to the 15 maximum feasible technology. We chose units from 16 the market that span that range of efficiency levels 17 and then we tested and tore down those units to 18 estimate the manufacturing production costs 19 associated with producing those individual units. W 

### I'm going to walk through each step of 21 this analysis now. 22 MR. PETRILLO-GROH: Laura Petrillo-Groh,

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509AHRI. NOPRForPTACsandPTHPs October29,2014 Decker, would you explain why this approach 2 was taken as opposed to the design option approach? 3 MR. RINGO: Certainly. Decker Ringo, 4 Navigant. In the collection of units that we tore 5 down we observed that manufacturers took different Page53

6 steps to reach different efficiency levels and we do 7 not want to pre-judge how manufacturers

-- what 8 approach they will take to reach a given efficiency 9 level but we do want to estimate the cost associated 10 with different efficiency levels. 11 They may reach it by using more efficient 12 fan motors or compressors or what have you, better 13 insulation, whatever. What we are trying to 14 develop is a set of cost efficiency curves that can 15 allow the downstream analysis to estimate the 16 national impacts and the employer manufacturer 17 impacts. 18 MS. PETRILLO-GROH: Since I'm not as 19 familiar with this approach as the design option 20 approach I want to make sure I fully understand. So 21 in reviewing specific models the DOE observed 22 technology options that were implemented and used the

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page54 cost of that unit against the efficiency of that unit 2 to generate the cost efficiency curves? 3 MR. RINGO: That's correct. As you will 4 see in the coming slides we selected a range of units 5 so we have low efficiency and high efficiency units 6 and those in between and we estimated the 7 manufacturing production cost of each of those units 8 across that range. 9 And then that enabled us to create a cost 10 efficiency curve to fit the equation to those points II and then at each efficiency level we essentially took 12 a slice out of that equation to say to reach this 13 efficiency we estimated we would have to incur this 14 specific incremental cost. 15 MR. ROY: Aniruddh Roy, Goodman. So I 16 guess for the other efficiencies did you use a factor 17 to kind of you know, predict the levels for those 18 efficiencies? 19 MR. RINGO: I want to make sure I 20 understand your question. Are you talking about 21 within the range? 22 MR. ROY: Within the range right, so for a

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### 12,000

-- let's say they are 12,000 capacity

-- MR. RINGO: Right. Page55

3 

### MR. ROY: And you use the predictive tool 4 to-- 5 

### MR. RINGO: We used the representative 6 cooling capacities of 9,000

- 15,000 Btu's per hour. 7 It enabled us to create a weighted average to 8 represent the entire PTAC and PTHP market which would 9 include shipments of the 12,000 Btu. 10 

### MR. ROY: Okay the reason I ask this II 

### question is that I think you guys did a great job on 12 

### the 9,000 and 15,000 as the AHRI showed the data in 13 

### those ranges. I think some of the products are able 14 

### to meet TSL2 but I think somewhere along the way the 15 

### predictive analysis for the other ranges might need 16 

### to be re-evaluated because there are several products 17 

### that just don't even meet TSL2, based on the AHRI 18 

### data. 19 

### MR. RINGO: Thank you, that's a comment we 20 

### will take into consideration. Okay, I'm going to 21 

### walk through the individual steps of this analysis 22 

### and provide the details of what we did to arrive at

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### the cost of the efficiency relationship. Page56



### 2 In the market for PTAC and PTHP equipment, 3 there are variations in the cooling capacities and 4 the efficiencies, there is different equipment 5 available and to account for these variations in our 6 analysis we selected representative cooling 7 capacities to represent the PTAC and PTHP market. 8 As a first step we examined the AHRI 9 

### directory of certified product performance. Laura 10 

### presented the histogram representing the different II 

### models that are contained in that directory earlier. 12 

### We observed that the largest number of models listed 13 

### in the directory, are clustered around the 9,000 Btu 14 

### per hour capacity so we selected that to represent a 15 

### wide swath of the market. 16 

### Additionally our interviews with 17 

### manufacturers, several manufacturers indicated that 18 

### the bulk of their shipments are in the 9,000 Btu per 19 

### hour capacity. Also in manufacturer interviews, 20 

### manufacturers asked that we examine the 15,000 Btu 21 

### per hour capacity because this capacity poses the 22 

### greatest technical hurdles in terms of increasing

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Those are the two representative cooling capacities that we considered for this analysis. The next step in the analysis was to develop a set of efficiency levels ranging from the baseline efficiency up to the maximum tech level. As we have discussed earlier today the ASHRAE standard 90.1 was issued in the course of this rulemaking and it raised its minimum standard for PTACs to 1.8% above the current federal minimum standard for PTACs. At a minimum, DOE is obligated to adopt this revised ASHRAE 90.1 standard or it may adopt a more stringent standard. But because of that we selected the ASHRAE 90.1 standard as the baseline efficiency level for this analysis. Page57

At the other end of the spectrum, the max tech efficiency level represents the most efficient model or models that we observed in the market. Now in the framework documents for this rulemaking, DOE said it would consider using a max tech level equal to 20% above the current federal minimum PTAC

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### standard. After acquiring equipment rated at that 2 level, DOE has revised the max tech level to 18% 

### 3 above the current federal minimum standard. 4 So that's the baseline and the maximum 5 

### tech level. In between those bounds, DOE selected 6 efficiency levels in increments of 4%. 

### As you can Page58



### 7 see here on slide 27, 

### we selected 6 

### efficiency levels 8 at 1.8%, 4%, 8%, 12%, 16% 

### and 18% 

### above the current 9 federal standards for PTACs. 10 

### The table on the following slide presents 11 

### these efficiency levels and their corresponding 12 

### values. This table is quite dense so I will call 13 

### your attention to several points about it. 14 

### MS. PETRILLO-GROH: In this sort of 15 

### analysis is max tech the same as max available? 16 

### MR. RINGO: Can I defer that question? 17 

### MS. BUTLER: Sarah Butler, DOE. Max tech 18 

### is a statutory requirement under EPCA that we have to 19 

### evaluate. I'm not sure what you mean by max 20 

### available? 21 

### MS. PETRILLO-GROH: This is I think one of 22 the questions I had regarding the differences between

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this approach and the design option approach where Page 59

2 the design option approach you can I don't know, put 3 together a Frankenstein machine implementing all of 4 the design options and get to an efficiency level 5 which would be the max available. However, if you 6 are looking at implementing design options based on 7 models currently in the marketplace, it would seem 8 that the max available would be the same as the max 9 tech. 10 MR. RINGO: Decker Ringo from Navigant. 11 The max tech level proposed here is a level that we 12 observed tested in the piece of equipment. 13 MR. BROOKMAN: It's in the market. 14 MR. RINGO: It's in the market. 15 MS. PETRILLO-GROH: Both PTACs and PTHPs? 16 MR. RINGO: I believe so yes. 17 MR. BROOKMAN: Thank you, so now we are to 18 this large table this one -- Aniruddh? 19 MR. ROY: Aniruddh Roy, Goodman. So 20 Decker the TSL2, does that coincide with EL2 or is it 21 a mix of EL2 and other ELs? 22 MR. RINGO: The TSL2 corresponds with EL3

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for PTACs and EL2 for PTHPs. Page60

2 MR. ROY: Okay. So basically it's an 8% 3 increase over the 2012? 4 MR. RINGO: That's correct. 5 MR. ROY: Okay, thank you. 6 MR. RINGO: I want to draw your attention 7 to several points in this table. The presents the 8 efficiency levels that I just discussed for the PTAC 9 and PTHP equipment. These efficiency levels are 10 calculated based on an equation that is based on the 11 cooling capacity of the equipment. 12 For both PTACs and PTHPs the cooling 13 efficiency is calculated as the energy efficiency 14 ratio EER, expressed in Btu's per watt hour and for 15 PTHPs the heating efficiency is calculated as the 16 coefficient of performance, COP which is unit-less. 17 On this table we have calculated the efficiency 18 levels for the representative cooling capacities of 19 9,000 and 15,000 Btu's per hour. 20 The current federal minimum standard for 21 PTHPs is higher than the current minimum standard for 22 PTACs and where this table refers to percentages, 4Sl- 

### 0,

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8% and so forth, those are percentages relative to 2 the current federal standard for PTACs. 3 Because the current standards for PTACs 4 and PTHPs, oh sorry, one point first. As we noted 5 on the previous slide the baseline level for both 6 PTACs and PTHPs is equivalent to 1.8% above the Page 61

7 current federal standard that is equal to the ASHRAE 8 90.1-2013. Now because PTAC and PTHP minimum 9 standards are not equal, the efficiency level 10 numbering in this table does not line up and I 11 apologize for that. 12 But I want to draw your attention the 13 efficiency level 2 for PTACs is the same as 14 efficiency level 1 for PTHPs. Efficiency level 3 15 for PTACs is the same as efficiency level 2 for PTHPs 16 and so forth. I wanted to get that out so that it 17 does not cause any confusion. The trial standard 18 levels that Bingyi will present will clarify that 19 further. Are there any questions on this table 20 before we move on? 21 MR. BROOKMAN: Just a lot of data here, 22 give them one moment to take a peek, Marshall?

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### MR, HUNT: This is Marshall Hunt, PGE. 2 

### So I look at the equations and that doesn't compute Page62

3 

### for me so let's look at the equation EL3 for PTAC 4.9 4 minus that EL2 oh I see they are lined up, okay I 5 MR. BROOKMAN: I tried that first also but 6 they are lined up, yes. They are vertical, the 7 correspondence is vertical, yeah Laura? 8 

### MS. PETRILLO-GROH: I do have a quick 9 question about

-- so you mentioned the 4% and 8% was 10 

### an increase over the current PTAC federal minimums? 11 

### MR. RINGO: That's correct. 12 

### MS. PETRILLO-GROH: For PTHPs is it the 13 

### same? 14 

### MR. RINGO: No, all of the percentages in 15 

### this table are referred to the PTACs standard and so 16 

### currently the federal minimum standard for PTHPs is 17 

### 1.8% above the federal standard for PTACs and that's 18 

### the baseline level which is why you see the NA

- 19 

### non-applicable under the current federal PTAC 20 

### standard column. 21 

### MS. PETRILLO-GROH: Why was the percent 22 

### savings for PTHPs not compared to the current level?

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I'm just curious why it is all compared back to 2 PTACs when the PTHPs really won't be seeing that 3 significant of any energy efficiency increase 4 compared to the current baseline? 5 MR. RINGO: That's an excellent question 6 and that's why I wanted to clarify what these 7 percentage levels mean so that there isn't any 8 confusion. 9 MR. ROSENSTOCK: Steve Rosenstock EEl. 10 probably should draw these but I'm just kind of II curious so I'm just looking at the heat pumps and 12 again I'm just looking at EL3, EL2 just that one 13 line. When you are saying 8% is that the increase 14 in the EER and the COP or is that just the EER and 15 there's a different percentage for the COP? Page 63

I

16 MR. RINGO: That's just the EER. The COP 17 was calculated using a regression based on models 18 observed in AHRI directory as certified product 19 performance. 20 MR. ROSENSTOCK: Thanks and Steve 21 Rosenstock, I didn't do it on my calculator yet but 22 what is the percentage increase on the COP side? I

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### should have done it on my calculator but I didn't 2 have time yet. 3 

### MR. RINGO: I should have done it on my 4 calculator too, I don't know that off the top of my 5 head. Page 64

6 

### MR. ROSENSTOCK: I'll figure it out thank 7 

### you. 8 

### MR. BROOKMAN: Okay, so additional 9 comments or questions on this table with the 10 

### efficiency levels for PTACs and PTHPs? Nothing 11 

### additional? 12 

### MR. RINGO: Thank you. Now that we have 13 

### developed the efficiency levels that will be 14 

### considered in this analysis, the next step in the 15 analysis is to select representative units from the 16 market that will be used in the testing and tear down 17 

### portion of the analysis. 18 This slide 29, 

### presents the 5 criteria 19 

### that DOE used in selecting units for testing and tear 20 

### down

-- first DOE selected equipment that would cover 21 

### the entire range from the baseline efficiency level 22 

### up to the max tech efficiency level. The selected

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### equipment was picked around the cooling capacities Page 65



### 2 that I described earlier, 9,000 and -15,000 Btu's per 3 

### hour, DOE tried to select equipment that was 4 similar in nature from similar equipment lines from 5 the same manufacturer so that we could observe 6 differences between the lower and higher capacity 7 equipment. 8 We selected equipment from manufacturers 9 who have a large share of the market so it would be 10 

### representative of the industry and the selected II 

### equipment we picked units without any additional 12 

### features or add-ons that would add cost without 13 

### affecting equipment efficiency. 14 

### The next slide 30, presents a chart 15 

### showing the capacity, cooling capacity and Btu's per 16 

### hour on the X axis versus the cooling efficiency EER 17 

### on the Y axis. This chart has markers representing 18 

### the 20 units that were selected for testing and 19 

### teardown analysis. The colored lines on the chart 20 

### indicate the current federal minimum standard for 21 

### PTACs and then the 

### 6 efficiency levels above that. 22 

### What you can see looking at the chart is

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### \. 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29, 2014

that the selected units, as I mentioned, are around the representative cooling capacities of 9,000 and 15,000 Btu's per hour and they span the range from the baseline up to the max tech. Page 66

I should note that these markers represent the rated efficiency of the units after DOE acquired these units and tests were done to verify the heating efficiency and cooling efficiency. MR. BROOKMAN: Joanna Moyer who is joining us via the web has a question or a comment. Joanna I need your phone, let's see if we can hear you. MS. MAUER: Thanks, this is Joanna Mauer from ASCEP I just wanted to quickly note that I also took a look at the efficiency levels of models that are available today and there are models available across the range of capacity levels with efficiency levels that significantly exceed the proposed standard levels, including capacity around 7,000 and 12,000 Btu's per hour in addition to models around 9,000 and 15,000 Btu's per hour thank you. MR. BROOKMAN: Thank you. Yes please Laura?

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page67 MS. PETRILLO-GROH: I just wanted to point 2 out that in the slide the highest efficiency PTAC you 3 see is it 16% and that's in the 9,000 Btu per hour 4 category but in the you know 15,000 Btu per hour 5 category the highest efficiency is less than 12% so 6 it's not entirely clear to me how the max tech works 7 for the PTAC units given this data. 8 MR. WESTPHALEN: I know Decker would want 9 to talk about all of this a little bit more rather 10 than letting me talk about it but many of or I should 11 say at least one and I don't know how many of the 12 PTACs that we ordered were actually PTHPs. Also it 13 is our understanding that it is easier to attain a 14 certain efficiency level with a PTAC than a PTHP 15 because of the additional losses associated with the 16 reversing valve and also the reduced flexibility you 17 have when you have to deal with both the reverse 18 cycle and forward cycle in designing the heat 19 exchange. 20 MR. HUNT: Marshall Hunt, PGE. Just a 21 clarification, Decker you said that the chart is for 22 the rated efficiencies?

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MR, RINGO: That's correct, Page 68

2 MR, HUNT: And you did test them, how did 3 the rated efficiency compare to your test efficiency? 4 MR, RINGO: I encourage you to look at the 5 technical support document for the NOPR it includes 6 the testing result data, As a summary they also 7 spanned much of the range of the efficiency levels we 8 considered, 9 MR. HUNT: Thank you. 10 MR. ROSENSTOCK: Steve Rosenstock EEl. II Now again please forgive me I didn't

-- I haven't 12 read the technical support document yet but I see the 13 things kind of the curves they just flat line above 14 15,000 and then below 7,000 and I'm just kind of 15 curious was that based on your test or is that just 16 figured that that would be

-- or is that based on the 17 AHRI directory or I'm just kind of curious you 18 have this linear fit for all these other sizes then 19 it is literally stopped at 15 and it literally stops 20 at 7 I'm just kind of curious. 21 MR. RINGO: That's a good question and 22 that's based on the current federal standards and

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## ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 Page 69 the ASHRAE 90.1 standards. I use those equations we discussed in the efficiency level table between 7,000 and 15,000 Btu's per hour and above 15,000 and below 7,000 there is a set value. MR. ROSENSTOCK: Thank you. MS. WILLIAMS: Yoo1anda William, GE Appliances. Just a question, I know you have referenced the technical support document for additional information on the test of the values, the question is within your presentation do you have a similar chart than the one you have up now with the tested bodies laid on top of the levels? MR. RINGO: I do not. MR. BROOKMAN: Additional comments before we move on?MR. RINGO: Okay thank you. The final step in the analysis is to test and disassemble the units to estimate the manufacturing production cost for the individual units and then create the cost efficiency relationship curves. DOE disassembled each of the units, purchased as indicated on the previous slide and created detailed bills of

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These bills of materials account for Page70

2 every single component part in that unit and estimate 3 the cost associated with either fabricating or 4 purchasing each part. 5 The purpose of the bills of materials is 6 to estimate the materials, labor, capital and 7 overhead costs associated with fabricating and 8 assembling the piece of equipment. More details 9 about the teardown and cost estimation methodology 10 can be found in chapter 5 of the technical support II document. 12 I will note that during the teardown and 13 cost estimate analysis, DOE observed that typical 14 PTHP model has a manufacturing production cost of 15 roughly $37.00 more than an otherwise identical PTAC 16 model associated with the reversing value and the 17 additional labor and assembly required. We observed 18 that additional cost for PTHPs does not vary by 19 efficiency level. 20 MS. WILLIAMS: Yoolanda Williams, GE 21 Appliances. Could you review the testing process 22 that you used on these units that were selected in

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### terms of you know number of samples, were they tested 2 right out of the box, were you using the proposed 3 test procedures? 4 

### MR. RINGO: Yes, these tests were 5 conducted by a third party contractor using federal 6 test procedures for PTAC and PTHP equipment and the 7 testing values provided in the technical support 8 document only for the single pieces of equipment 9 between equipment units that were purchased for this 10 

### analysis. 11 

### MS. WILLIAMS: Okay. And again we're 12 

### sorry I'm sorry were they tested new, out of the 13 

### box? 14 

### MR. RINGO: They were tested out of the 15 

### box, with a break-in period. 16 

### MS. WILLIAMS: Okay no break-in period. 17 

### MR. RINGO: I believe there was a break-in 18 

### period. 19 

### MS. WILLIAMS: Okay. 20 

### MR. BROOKMAN: Is there supposed to be a 21 

### break-in period? 22 MR. RINGO: Yes, yes there is.

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MR. ROY: Aniruddh Roy, Goodman. So Page72

2 there is a NOPR test procedure out there and so that 3 has not been finalized and there are I know Ashley 4 Armstrong mentioned that you know it's very minor 5 changes that will not affect the overall efficiency 6 level in any way but there is I think, there was a 7 consideration of moving from ASHRAE 37 to ASHRAE 16 8 which would impact the testing in a major way. 

### In 9 between using I guess calorimetric rooms or 10 psychrometric rooms so was that evaluated in any way 11 in the course of testing the 9,000 and 15,000 Btu 12 capacities? 13 MR. WESTPHALEN: The tests were done using 14 the ASHRAE 16 approach. I believe the Goodman 15 comments on the test procedure NOPR indicated that 16 there was not a significant difference in the results 17 between ASHRAE 16 and ASHRAE 37 and as Ashley said 18 that rulemaking is still in process and not finalized 19 so DOE hasn't make final decisions on what direction 20 to take. 21 MR. ROY: Okay so you are saying that it 22 was tested per the NOPR? Because ASHRAE 16 was

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recommended in the NOPR right? MR. WESTPHALEN: That is correct, ASHRAE 3 16 was used and that was proposed in the NOPR. 4 MS. PETRILLO-GROH: To further clarify 5 ASHRAE 16 and I honestly don't remember, the two Page73

6 tests that are currently allowed to be used on these 7 products, I believe the recommendation to move to 8 ASHRAE 16 was based on ASHRAE 16 adopting both of 9 those methods, is that correct? 10 MR. WESTPHALEN: Detlef Westphalen. I II think you probably have to go to the NOPR to read 12 what the justifications were for proposing moving to 13 16 but if I recall correctly it was based on DOE, 14 third party funded testing. DOE funded testing at 15 third party labs which showed there was a significant 16 difference and so that was somewhat more limited test 17 data that then was later provided by some of the 18 manufacturers as part of commentary and so DOE is 19 taking all of that into consideration. 20 MR. BROOKMAN: Okay. 21 MR. RINGO: Thank you. I want to -- so 22 as I mentioned earlier the results of this estimate

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of manufacturing production costs for individual 2 units were compiled into cost efficiency curves for 3 the different cooling capacities and the equipment 4 types. You can see a visualization of those cost 5 efficiency curves on slide 32 here. In the 6 shipments analysis which we will present later, DOE Page74

7 combined these representative curves based on market 8 share to create a weighted average curve that 9 represents the cost efficiency for the PTAC and PTHP 10 market. 11 That combination is illustrated here. I 12 want to talk about some results from the cost 13 efficiency analysis here, slide 33 presents the 14 results for the 9,000 Btu's per hour capacity. I 15 want to note that the costs in this table are 16 incremental costs associated with efficiency 17 increases above the baseline efficiency level. The 18 first step from 1.8% above federal PTAC standards to 19 4% above incurs incremental costs of $3.88 and those 20 incremental costs increase up to the max tech level 21 which by our estimates would cost about $35.94 more 22 to manufacture when compared to baseline.

202·347-3700 Ace-FederalReporters,Inc. 866·928·6509NOPRForPTACsandPTHPs October29,2014 Page75 These cost efficiency results are charted 2 in the plot on the right with efficiency on the X 3 axis versus incremental cost on the Y axis. 4 MS. PETRILLO-GROH: Ron this is really for 5 you. If the charge here is to review increasing 6 efficiency levels over ASHRAE 90.1-2013 levels, I'm 7 just curious why it's still being compared back to 8 the baseline of today's standards for PTACs? 9 It seems contradictory to the purpose or the stated 10 purpose of the rule. 11 MR. RINGO: I'll field that one. The 12 baseline represented here in the first row of this 13 table is the ASHRAE 90.1-2013 level. It's not 14 referring to the current federal minimum PTACs, are 15 you curious why we are using the percentages? 16 MS. PETRILLO-GROH: The 1.8% above 2012 17 PTAC energy conservation standards, that's what's in 18 effect today. 19 MR. RINGO: Right and that 1.8% level is 20 considered as the baseline for this analysis. 21 MR. BROOKMAN: And that's the ASHRAE, the 22 current ASHRAE 1.8% above that's what we heard

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MS. WILLIAMS: The incremental cost at Page76

that level there's a bar so everything above it, like the $3.88 is being compared to that ASHRAE level. The 1.8% maybe just

-- so think about it. MS. PETRILLLO-GROH: Its 4% increase in efficiency over the ASHRAE 90.1-2013 level? MS. WILLIAMS: No. MR. RINGO: The 4% is relevant relative to the current federal PTAC standards but the cost, the incremental cost is relative to the first line of that table the baseline for this analysis. And I included

-- because I foresaw this would be an issue with communication I included the efficiency level and baseline and percentage there on each of these tables so that it's consistent and we can be talking about the same thing. MS. WILLIAMS: So, this is Allison. I think what happened really is at the framework stage, that's when these percentages were developed and that was before ASHRAE came out so they've kept these just for consistency with what's in the framework

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document so I apologize if it's a little confusing 2 right now, does that help you at all? Page77

3 MS. PETRILLO-GROH: It is confusing but I 4 do appreciate the background. My real concern here 5 is that we are talking about efficiency increases 6 over the current level which is not what we are 7 supposed to be looking at in terms of this rulemaking 8 is additional savings with energy and emissions above 9 the 90.1 level so is that, you know can we really 10 call that maybe 3.

--- 11 MS. WILLIAMS: I think this is really just 12 like a nomenclature thing, all the numbers that you 13 are going to see, the costs, the energy savings, 14 everything are going to be compared to the ASHRAE 15 level so it's only those percentages that are off and 16 you are right, we can certainly adjust those 17 percentages against the ASHRAE baseline. 18 MS. PETRILLO-GROH: Would you be able to 19 publish that before the final or at least revise the 20 slides? 21 MS. WILLIAMS: I'm not sure but those 22 numbers are just nomenclature for reference they are

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not actually used per the analysis, correct, yeah. MS. PETRILLO-GROH: Okay. MR. BRUNDAGE: I was just going to make the comment we have pretty much already covered it. It looks like you are buying 4% greater efficiency for $3.88 but you are really buying 2.2% greater Page78

efficiency for the $3.88 so I agree with Laura it is very confusing. MR. HUNT: Marshall Hunt, PGE. Where would I find the KWH savings per year that would be offset by this incremental? MS. WILLIAMS: This is Allison, we are going to get there once Decker finishes it will be several slides later. MR. HUNT: Thank you, I'll wait. MR. RINGO: Sorry I'm being long-winded I'll be done shortly. MR. BROOKMAN: Let's move on to 15,000. MR. MAJETTE: Ron Majette, DOE just one clarification. Laura and Don I guess for presentation purposes what do you need to see? What's causing you the confusion?

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page79 MR. BRUNDAGE: Well it's just you have got 2 two numbers side by side on the table that are off of 3 different baselines which is confusing so incremental 4 costs versus baseline would be one thing, incremental 5 costs versus a different baseline that starts at 1.8% 6 is

-- I mean if you had 2.2% and 6.2% and so forth 7 for incremental savings above 90.1 I don't know, it's 8 just somewhat misleading the way the table is 9 written. 10 MS. PETRILLO-GROH: And my main concern is 11 that it is it provides a real opaqueness to the 12 rulemaking in terms of what is being presented as the 13 efficiency increase that you are going to see versus 14 maybe what's buried in several hundred pages of the 15 technical support document and you know the 16 additional difficulties it creates in communicating 17 you know, what the actual effects of this rule are in 18 terms of energy savings, in terms of cost and 19 comparison purposes. 20 Because people reading this see 4% above 21

-- 4% and it's just not clear, it's just not 22 consistent, so I think it works it out for me.

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### MR. ROSENSTOCK: Steve Rosenstock, EEl. 2 I get it's about nomenclature because you know we 3 are all trying to figure out the TSL's versus the Page 80



### 4 EL's and there's a baseline and then you show ELI in 5 a baseline on the same line and it's like wait what's 6 the baseline for that, that kind of threw me off a 7 

### little bit too. But you know until I went to the 8 Rosettae Stone of TSL's to, EL's and Table V.I in 9 the NOPR document I was able to figure it out. 10 

### But again, looking at the table just gets 11 

### confusing just because of the, you know the 12 

### nomenclature of EL's versus TSL's and then throwing 13 

### in the word baseline also could throw people off, so 14 

### it's nomenclature, once you read it like 5 

### or 7 15 times, I got it. 16 

### MS. WILLIAMS: Thank you, we can try to 17 

### make this more clear for the next item that you see 18 corning at this. 19 

### MR. ROY: Aniruddh Roy, Goodman. I guess 20 

### I'll take this slide as an opportunity to comment on 21 

### the technology options. I know we discussed that 22 briefly in the screening analysis. So again, I'll

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### ( NOPRForPTACsandPTHPs October29,2014

make the point on the high efficiency compressors. 2 As you saw in the commercial refrigeration and Page 81

3 ice-maker rulemakings, DOE approximated a set of high 4 efficiency compressors using a constant multiplier. 5 That sort of a multiplier is not evident in the 6 screening analysis TSD. In the previous 7 rulemakings, a multiplier assumed a certain 8 percentage reduction in energy consumption with an 9 associated cost premium. 10 I think that's more important in this 11 rulemaking because you are setting the baseline as 12 90.1-2013 so there's a 1.8% efficiency gain that as 13 Don and Laura pointed out, that's just lost in the 14 scope of this rulemaking because the baseline is 15 ASHRAE 90.1-2013 and not the current federal 16 standards which I understand you have to comply with 17 for the statute. 18 But I think DOE needs to somehow account 19 for the options that were used, the technology 20 options that were used for the industry to get from 21 the current federal minimum to 90.1-2013 which I 22 guess compressors would be one of those options.

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### And so it is very important to be able to quantify 2 the percentage efficiency improvements if you see Page 82



### 3 that you might observe and compressors leading up to 4 2019 because that information would be very important 5 you know, to go into your multiplier that you have 6 been using similar you know, for the previous 7 rulemakings and would be able to justify these cost 8 efficiency curves that you have on the screen. 9 Another point that Laura had previously 10 

### brought up was on the increased heat exchanger area II where you are talking about the bent heat exchangers 12 

### and so you also talk about improved air flow and fan 13 

### design so you know, those two are contradictory in a 14 

### way because sometimes when you have bent heat 15 

### exchange you also have to account for the air flow, 16 

### the restrictive path for the air flow and how that 17 

### will impact air flow. 18 

### So I 

### think it's important, if not now, at 19 

### least in the final rule for DOE to elucidate exactly 20 

### what those designs are that can help achieve these 21 

### savings. Because if you are talking about a bent 22 

### heat exchanger, you need to give an example of what

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### kind of a pathway you have in terms of improved air 2 

### flow and fan design to be able to put two and two 3 together as a manufacturer and achieve those energy 4 savings that are you this TSL2. 5 

### MR. WESTPHALEN: I don't know if I'm the Page 83



### 6 right one to answer this, but we generally don't give 7 the design details of what we tore apart in the 8 public information, that's proprietary. 9 

### MS. PETRILLO-GROH: At least

-- Laura 10 

### Petrillo-Groh I'll give it a try. At least in 11 

### terms of some of the other rulemakings there was a 12 

### specific increase in heat exchanger area that was 13 

### associated with the design change. What the 14 

### manufacturers will be able to you know how much they 15 

### would be able to increase without going to a larger 16 

### chassis size. I don't think it's clear whether that 17 

### design option is associated with

-- similar to small 18 

### ice-makers, an increase of heat exchanger size will 19 

### force a manufacturer to put the unit into a larger 20 

### chassis, a larger box. 21 

### MR. WESTPHALEN: This is Detlef again. 22 

### We will consider what we can divulge. It 

### might be

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not quite as specific as you know, here's a 12 EER Page 84

2 unit that had exactly three row condenser this high, 3 this wide and exactly at 10.2 EER compressor but we 4 will think about how we can represent that okay at 5 this level typically you have to use, you know, this 6 suite of design options in order to get to that 7 level. We will consider how we can present that and 8 make it a little bit more clear. 9 MS. PETRILLO-GROH: And I'm not a lawyer 10 so maybe this question is for Sarah. I mean in II terms of the statutory requirement difference that 12 this rulemaking as, we are looking at efficiency 13 levels and energy savings over ASHRAE 90.1-2013 has 14 any different burden of proof than the standard 15 rulemaking process. Is it statutorily written in a 16 separate place and there were clear and convincing 17 evidence I think is what was used but like I said, 18 I'm not a lawyer. 19 MS. BUTLER: Sarah Butler, DOE. The 20 ASHRAE 90.1 triggers an exception to the traditional 21 requirements under EPCA but if we do decide to adopt 22 a more stringent standard then we go back to our

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### (

I \ 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014

normal rulemaking process where we look at what is technologically feasible and economically justified Page 85

and go through the normal max tech and 7 step process that we would with any other rulemaking for the more stringent standard. MS. PETRILLO-GROH: Would you do me a favor and look at the specific language in EPCA regarding this trigger because I do think it does ask for slightly different burden of proof and having numbers associated with these you know, these energy efficiency levels so I think would be important to making the case that you are saving significant energy. MS. BOTER: Sure and can you include that in your written comments? MS. PETRILLO-GROH: Of course, thank you. MS. WILLIAMS: So I just want to add that in the TSD we do show results compared to the federal baseline as well as the results for that ASHRAE level compared to the final baseline so all the analysis starting with the federal baseline has been done and is available but we are just analyzing the increment

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between ASHRAE and the higher levels because we are Page 86

2 required to show significant additional conservation 3 of energy beyond the ASHRAE level. 4 MR. BROOKMAN: Let's look at 15,000 Btu 5 that table, because we are just about due for a break 6 here. Aniruddh? 7 MR. ROY: One quick comment on Detlef's 8 comment. So I'm going back to the commercial 9 refrigeration rulemaking and you know there was a 10 discussion on improved condensing coil design and in II that I believe DOE had done extensive analysis on the 12 normalized UA value, the increased thin-pitched rifle 13 tubing, so there was a lot of analysis done on 14 specific design options and that's something I'm 15 looking for. 16 I know heat exchangers are different but 17 you know I think that level of analysis has been done 18 before in previous rulemakings and is missing in this 19 particular rulemaking and so I think it would be very 20 helpful if DOE would be able to do that, at least 21 present that in the form of okay this is, you know 22 what we see in the heat exchange designs and so I

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### ( NOPRForPTACsandPTHPs October29,2014

don't think this information is proprietary because 2 you know it's been shared before on other Page 87

3 rulemakings, albeit it's for a different

-- it is for 4 a coil design, it's not heat exchanger, but I think 5 that level of detail is important. 6 MR. BROOKMAN: Let's move on now 15,000. 7 MR. RINGO: Thank you slide 34 here 8 represents the cost efficiency results for the 15,000 9 Btu's per hour capacity. It's the same format as 10 the table on the previous slide and I apologize for II the confusion. The first row there is the baseline 12 equal to ASHRAE 90.1-2013. On the incremental costs 13 are incrementing off of that ASHRAE baseline. You 14 see the increase to the first step there is a $3.73 IS and it goes up to the max tech level which according 16 to our estimates would cost $53.42 above the baseline 17 manufacturing costs. 18 Again the cost efficiency curve is plotted 19 on the right. I want to just share some summary 20 results from our engineering analysis before we move 21 on. We observed that the cost efficiency curves are 22 not linear, that is to say that as efficiency goes

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-- the baseline manufacturing costs for a 15,000 Btu per hour unit is greater than the baseline manufacturing costs for a 9,000 Btu per hour unit. And as you saw on the previous two slides, the slope of the cost efficiency curve is steeper for the higher capacity units indicating that the efficiency becomes more costly faster at higher capacity. I want to turn the presentation over to Bingyi. MR. BROOKMAN: We are going to pause now for a break. It's now almost 10:50 by my watch. We are going to take a 15 minute break. I think most of you are familiar with the way this works around here. You must wear this badge visible if you are walking the hallways. So at DOE there are restrooms at both ends of the hall, there's a coffee shop down on the ground floor and we will resume at 5 minutes after 11, we have made good progress already and we will see you back here 5 minutes after 11.

202-347-3700 Ace-Federal Reporters,Inc. 866-928-65092 NOPRForPTACsandPTHPs October29,2014 (Whereupon a 15 minute break was taken.) MR. BROOKMAN: Let's start back up. 3 Welcome back, good to see you. We are going to 4 proceed where we left off with Markups and Analysis 5 and Bingyi. Page89

6 MR. YU: Good morning. Thank you everyone 7 for attending today. My name is Bingyi Yu, I'm from 8 the Lawrence Berkeley National Laboratory. I will 9 be discussing the Markups Analysis, Energy Use 10 Analysis, Life Cycle and Payback Period Analysis, 11 Shipments, National Impact Analysis and some of the 12 other downstream analyses that are to come. 13 Let's start with the Markups Analysis. 14 The purpose of this analysis is to characterize PTAC 15 and PTHP distribution channels as well as the market 16 segments as well as to estimate the customer prices 17 based on the manufacturer's selling price. The 18 methodology DOE used was to derive state level 19 markups based on confidential interviews, economic 20 reports from industry trade groups and U.S. Census 21 data. 22 The markets are derived for each

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distribution channel which we will see now. So Page 90

2 there are 4 distribution channels and we will just go 3 through each one here. Starting from the left, the 4 product will first be sold from the manufacturer to a 5 wholesaler, to a mechanical contractor, to a general 6 contractor then to the customer. 7 The second distribution channel is from 8 the manufacturer to the wholesaler to the 9 manufacturer and then to the customer. The third 10 distribution channel is from the manufacturer to the II wholesaler then directly to the customer. And 12 lastly, what we are calling national accounts 13 distribution channel being directly from the 14 manufacturer to the customer. 15 And the percentages that you see below are 16 the percentage of the sales through each of the 17 distribution channels. 18 MS. PETRILLO-GROH: I have a quick 19 question. Laura Petrillo-Groh, AHRI. Do you look 20 at replacement market versus new construction market 21 because it's different? 22 MR. YU: Yes, yes we do. I actually use

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 91 the percentage at the bottom, or the weighted average 2 of the replacement applications and new construction 3 applications. The split, maybe I'll just go over 4 this now. The split is 14% for new construction, 5 86% for new construction so that is weighted into 6 these percentages. 7 MR. BROOKMAN: Would you repeat that 8 again please, the last statements with the split, say 9 it again. 10 MR. YO: 14% for new construction and 86% 11 for replacements. 12 MR. BROOKMAN: Thank you. 13 MR. BRONDAGE: Don Brundage. Are these 14 numbers specifically to PTACs and PTHPs or are they 15 broader, sometimes specifically on this chart here 16 because if you are talking national accounts for 17 PTACs which are mostly used in hotels and national 18 accounts would be the major hotel chain, 5% just 19 doesn't smell right to me. It would be that low, is 20 this specifically to PTACs or is this a broader part 21 of the HVAC equipment market? 22 MR. YO: I believe this is

-- I don't

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know if I can answer that question at the moment. 2 Yeah 3 MS. WILLIAMS: This is Allison. The 4 intent of this was to be specific to PTAC and PTHP 5 but of course if anybody has data suggesting the 6 national account should be bigger or anything like Page92

7 that please feel free to submit it in your comments. 8 MS. PETRILLO-GROH: Unfortunately I don't 9 have data. I just have another quick question. 10 And I know

-- so because this rulemaking is focusing lion standard size PTACs is all this information 12 related to just standard size PTACs or does this 13 include non-standard size? I don't know at what 14 point in the analysis the decision was made to only 15 go with standard size PTAC's so I was just curious 16 what-- 17 MR. YU: I believe the decision between 18 standard size and non-standard size was presented in 19 the energy use analysis and so for these slides on, 20 they only pertain to the standard size equipment. 21 All right, data sources used to obtain 22 these, the markups for the distribution channels.

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For the manufacturer markups DOE based them on the 2008 final rule, data from that source as well as from confidential manufacturer interviews. Wholesale markups are based on 2010 profit report from the heating, air-conditioning and refrigerator distributors international. Page93

Mechanical contractor markups are based on 2005 financial analysis of the HVAC contracting industry and that's from the Air-conditioning Contractors of America source. General contractor markups are based on 2010 U.S. Economic Census and these data sources were the most recent ones available at the time of the analysis. DOE also obtained State taxes, based on the information from the Sales Tax Clearinghouse. And lastly for national accounts DOE took the weighted percentages of the distribution of the other distribution channels and reduced that total cost by 50% to account for the price savings realized for equipment purchased for national accounts. MR. ROSENSTOCK: Steve Rosenstock, EEI. Did you get that percentage from the actual like some

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2 MR. YU: DOE just took the 50% to be the 3 difference between as a reasonable amount of cost 4 savings that could be obtained through distribution 5 channel. 6 MR. ROSENSTOCK: Steve Rosenstock, EEl. 7 I'm just

-- I think for certain products that might 8 be reasonable again, but I'm just a little, again, a 9 little concerned that it might be for this product 10 that could be overstated for national accounts again II I'm not one of them but if a typical one for a 12 national key account is 30% then this is way 13 overstating the savings. I don't know what the 14 percentage is, it just seems like well it's kind of 15 for some other products so we are just going to use 16 it for this one, this is kind of crucial in terms of 17 the economic analysis, especially if there is going 18 to be a significant portion of the customers buying 19 these products. 20 MR. YU: We appreciate that comment. If 21 there is any data available regarding the 22 distribution of products I just mentioned before

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### through these national accounts as well as the costs 2 associated with the national accounts, I think DOE 3 would really appreciate having that info. 4 So we'll move on to a little bit more 5 detail about these different types of markups. 6 There's two types, baseline markups and incremental 7 

### markups. The baseline markups relates the 8 manufacturer selling price to the customer purchase 9 price and DOE uses these markups to indicate a 10 

### customer price that covers expenses plus profit of 11 

### each segment in the distribution channels. 12 

### The second markup is the incremental 13 

### markup and this relates to the increase of the 14 

### manufacturer selling price of more efficient 15 equipment to the increase in the customer purchase 16 price. Now these expenses, these markups cover only 17 

### expenses that vary with the manufacturers selling 18 price and DOE believes that these costs would be 19 

### considered invariant with respect to manufacturer's 20 

### selling price. For example, labor and occupancy 21 

### costs like rent. 22 While the other operating costs and

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## ( 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 profit, these would vary with manufacturer selling price and these would be the ones considered in the incremental markup. So just coming back to the percentages again of new construction replacement applications, Page96

DOE calculated the base line incremental markups for various distribution channels for the two applications like mentioned earlier in new construction applications and the replacement applications. So lastly the operation performed was that DOE applied the baseline markup to the manufacturer's selling price at the baseline equipment and applied the incremental markup to the incremental difference in the manufacturer's selling price for efficient equipment above the baseline. DOE will now present the results for these markups starting with the baseline and then later on in the next slide for the incremental markups. MR. ROSENSTOCK: Steve Rosenstock, EEl. Looking at this table you are showing, again for national accounts, 1.49 and I guess you are saying

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page97 that includes a manufacturer markup plus their profit 2 margin am I interpreting that correctly? That's why 3 you don't see the 1.27 in the manufacturing row? 4 MR. YU: That's right, it would include 5 all associated costs for that manufacturer to 6 distribute directly to the customer. 7 MR. ROSENSTOCK: And again just looking 8 at this table, maybe it's for national accounts -- 9 shouldn't there be a column in the replacement for 10 national accounts or am I missing something? 11 MR. YU: For replacement DOE considered 12 there to be just these distribution channels. 13 MR. ROSENSTOCK: So national accounts 14 never replaced their equipment? Oh they have to go 15 through a different channel? Okay, understood, 16 okay, thanks. 17 MR. YU: Thank you and the incremental 18 baselines are presented on this slide. 19 MR. HUNT: Marshall Hunt, PG&E so if I had 20 an $8.00 incremental cost, I would multiply it by 21 essentially 2 and it would be a $16.00 incremental 22 cost, thinking of the earlier incremental cost

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### rounding off to 8 and rounding 9.3 off to 2, is that 2 

### the way the calculation works? 3 

### MR. YU: Could you repeat that calculation 4 again, I'm sorry. 5 

### MR. HUNT: Earlier we had incremental 6 costs at about $8.00 and so that was without the 7 

### markup, that's just straight materials. Okay so 8 then it's really $16.00 weighted, 8 times 2 9 essentially. 10 

### MR. YU: Well you would have your II 

### manufacturer markup and then other markups applied to 12 

### that in order to get to the final incremental cost 13 

### associated for that change in the manufacturer 14 

### production cost. So to use your example, you have 15 

### $8.00 to start, you multiply by these factors 16 

### depending on the distribution channel you are going 17 

### through so let's say 18 

### MR. HUNT: I was making -- jumping to 1.93 19 

### just to keep it simple.. 20 

### MR. YU: So weighted everything. 21 

### MR. HUNT: Thank you. 22 

### MR. YU: Sorry about that. We have one

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### ( , 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014

issue for comment and I think this was alluded to Page99

before but DOE wishes to estimate the number and type of distribution channels and the distribution of the shipments through the distribution channels and for that DOE will average the information from the 200B PTAC, PTHP final rule. I think in addition to some of the items discussed before related to the percentages, if there are any other comments that stakeholders would like to provide related to markups, DOE would appreciate that. MS. PETRILLO-GROH: I went searching for some of the 200B PTAC information the other day and I didn't find it in the docket, maybe I wasn't looking in the right place or maybe it's not posted. Could you make that information available to someone who didn't work on this in 200B? MS. WILLIAMS: It looks -- I have a docket number here if you want. MS. PETRILLO-GROH: I checked. MS. WILLIAMS: Okay we'll check and get back to you.

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MS. PETRILLO-GROH: Thank you. Page 100

2 MR. BROOKMAN: And would that information 3 be available in the docket, let's say if it's not in 4 the docket presently? Ron? 5 MR. MAJETTE: Well we can make it 6 available if it's not there, we can make it 7 available. We'll double check. 8 MR. YU: So moving on to the Energy Use 9 Analysis. The purpose of the Energy Use Analysis is 10 to determine the unit average annual energy use for II PTACs and PTHPs so that energy use is called UEC and 12 we use that term for the following slides. So to 13 determine the UEC of PTACs and PTHPs at the 14 considered efficiency levels to find annual energy 15 costs and savings, these costs and savings are used 16 in the lifecycle cost and payback period analysis as 17 well as the national impact analysis. 18 The methodology DOE used was to utilize 19 the post-processed outputs from the previous analysis 20 and that was 2008 final rule. The outputs consisted 21 of total UECs from 50 states and DC, for 6 efficiency 22 levels, for 9,000 Btu/h and 12,000 Btu/h cooling

202-347-3700 Ace-Federal Reporters,Inc. 866-928-6509NOPRForPTACsand PTHPs October29,2014 capacities as well as for PTACs and PTHPs. 2 Now these OEC are determined from 3 simulations, whole building simulations performed Page 101

4 with CBECS's 2003 building characteristics data which 5 was the most recent available at that time and is 6 still the most recent available database at this 7 time. 8 Those simulations were performed over 239 9 climate locations based on TMY2 weather data and 10 lastly aggregated to the state level for use in this 11 analysis. Of course there are changes from 2008 to 12 now and DOE accounted for those changes being these 3 13 sub-bullets. 14 The first one considering weather impacts, 15 the second being equipment efficiency and cooling 16 capacity differences and the third being population 17 changes. 18 MR. ROSENSTOCK: Steve Rosenstock. Just 19 to clarify you used 12,000 Btu's per hour rather than 20 15, OOO? 21 MR. YO: That is correct so in the 22 previous rulemaking the representative cooling

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 102 capacity that was 9,000 and 12,000. The simulations 2 performed in the previous rulemaking at the very 3 least had these two cooling capacities simulated. 4 MS. PETRILLO-GROH: I have to check my 5 ASHRAE years but I believe at a certain point, ASHRAE 6 90.1 incorporated the thermostats on these projects 7 as opposed to just on/off switches on the product 8 itself. I think that might affect the number of 9 operating hours. There are also provisions for 10 these units to turn off from the front desk of the II motel to turn them off and maybe you will be getting 12 to this information but I think that that's another 13 change that happens in 2008. 14 MR. ROSENSTOCK: Steve Rosenstock, EEl. 15 I do think there were also some yeah setbacks, 16 required setbacks for those units for all hotels and 17 motels. I'm pretty sure it got into 2013, the 18 required setbacks as well as occupancy sensors. I 19 think there are certain new controls that are part of 20 2013 that will affect the operating hours of these 21 units. 22 MR. YO: And just to kind of build off of

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### ( 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsand PTHPs October29,2014 Page 103 those questions, were those controls required or were they just I guess suggestions regarding energy efficiency, potential energy efficiency measures? MR. ROSENSTOCK: They are required. MR. YU: Okay. MR. BRUNDAGE: Don Brundage, Southern Company. I'm not sure it's even really relevant whether they are required. What you should be doing is looking at how the equipment is actually going to be operated in real life and whether required or not, it's going to include factors such as vacancy rates on hotels, it's not a residential property if there is nobody in that hotel room, the air is not -- for that day, it is not going to be on and that needs to be reflected in the usage areas. If nothing else, figure at a gross level the average occupancy rate of hotel rooms and reduce the number of operating hours. MR. HUNT: Marshall Hunt, PG&E. And to further complicate things is the defrost cycle and so any time you have a heat pump you bring on existent strips based on the controls and section ASHRAE 90.1-

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2013, Section 6.4.3.5 does require control of the 2 auxiliary heat in a manner similar to unitary split 3 systems. Page 104

4 So it was a simulation doing anything with 5 defrost or did it just use a 47 COP, how did it 6 handle the heating operations heat pump? 7 MR. YU: In the previous simulations, the 8 simulations performed in the previous analysis was 9 actually specifically geared toward buildings that 10 use PTACs and PTHP so in this case we are talking II about hotels and motels, the simulations were 12 specifically geared for those. So in pertaining to 13 occupancy hours and the other controls, there's a 14 potential that those simulations have already 15 included those controls. 16 As to defrost we will have to go back and 17 look at what the previous simulations has performed 18 but given the, yeah given the robustness of the

-- 19 performed in 2008, I'm sorry -- given the robustness 20 of those simulations that were performed in 2008 21 there's a likelihood that the controls that defrost 22 and the occupancy variations in hotels and motels

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would have been considered. MR. HUNT: So we looked at OEM's, four 3 different OEM installation manuals, specifications 4 and essentially all of them turn on and off, the 5 compressor at 40 and switch to resistant strip 6 heating so there's really no defrost cycle as Page 105

7 required in ASHRAE 90.1-2013 so I respectfully submit 8 that the simulations did not do that. They may have 9 taken that COP and applied some kind of standard DOE 10 2 point whatever curve which might have that little 11 dog leg down from defrost, but it doesn't apply to 12 this equipment. I think that's a really significant 13 impact on the unit energy consumption. 14 Whether it's offset by these other 15 considerations, who knows, but we need to get it 16 right, thank you. 17 MS. PETRILLO-GROH: And a question, if 18 these are all strategies that are required to be 19 implemented using ASHRAE 90.1-2013 is DOE required to 20 consider that in the analysis, in terms of energy 21 savings, so operating hours and all these changes 22 that are required, is that part of the burden of

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I'm not sure. Page 106

2 MR. BROOKMAN: So all of these comments 3 which are very useful in detail, in writing will be 4 very helpful to the Department and then they will be 5 able to respond to all of them. 6 MR. YU: And I will also add if since the 7 intent of the simulations is to more or less reflect 8 hotel, motel and other buildings that use PTACs, 9 PTHPs, these buildings in the field if we could 10 obtain data related to how or the persistence of 11 setback requirements, the occupancy sensors defrosts, 12 and other factors and their commonality in the 13 buildings in the field I think that would also help 14 us get an understanding of how persistent some of 15 these controls are versus being a requirement. 16 That's in ASHRAE 2013, ASHRAE 90.1-2013 no 17 doubt but as to their

- yeah, as to the satisfaction 18 of buildings. 19 MS. PETRILLO-GROH: Laura Petrillo, AHRI. 20 Maybe someone who is more familiar with ASHRAE 90.1 21 implementation process could speak to this. I'm not 22 sure that that would even be

-- if right now you

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could look at any units that would reflect the 2 changes in ASHRAE 90.1-2013 in other words I'm not Page 107

3 sure that they have been adopted enough by states or 4 that the levels are required to be implemented yet. 5 I don't know you know the January 1, 2015 date is 6 just tied to the efficiency level or if it is tied to 7 other provisions in there and that even if the 8 manufacturers don't have to meet that new efficiency 9 level for the equipment, they also have to tie these 10 other provisions back in so this is one of the 11 questions for the crowd, would we be able to get that 12 data for you? 13 MR. HUNT: Marshall Hunt, PG&E. So 14 California Building Standards Title 24 does require 15 something very similar to this same requirement in 16 90.1 and it has for years so there is no exemption. 17 MR. BROOKMAN: Okay. 18 MR. BRUNDAGE: Don Brundage, Southern 19 Company. Laura was your questions on state by state 20 implementation of 90.1-2013? 21 MS. PETRILLO-GROH: Somewhat, yes I 22 guess. If a state has adopted those provisions then

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I would assume that the PTACs sold in that market 2 would incorporate the thermostats and setback 3 provisions and if DOE was requesting data on that, 4 then that would help me go find the data for you. Page 108

5 MR. BRUNDAGE: Okay, just speaking off of 6 general industry knowledge, very few locations will 7 actually adopt and enforce 90.1 until at least one 8 year after implementation because all of the 9 supporting documentation user manual software is not 10 caught up with the standard yet, so very few places II will actually be using it before something like 12 January, 2015 and there's some federal legislation 13 that you need to adopt but to be honest it doesn't 14 have a lot of teeth. 15 But starting in 2015 I would think you 16 would start to see quite a bit of adoption and quite 17 a bit more within a year after that, but every state 18 has its own implementation cycle and consideration of 19 local customizations and has its own process. 20 MR. ROSENSTOCK: Steve Rosenstock, EEl. 21 One of my roles is to work with some national key 22 account energy managers and I have had some

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discussions in terms of you know, if they have 2 facilities in multiple states, you know, what is Page 109

3 their -- and for several of them I wish I could give 4 you more statistics, but several of them have said we 5 design for Title 24, that spills over into the other 6 states, because we are Title 24 we can beat anything, 7 anywhere. It's in Southern California so it is 8 strict so again that you know, because economy is a 9 scale you can do it there you can do it anywhere 10 basically so. 11 Again, I don't know how you incorporate 12 that into your analysis but again it's just a matter 13 of that is a practice among certain national 14 multi-site customers is to do it that way. 15 MR. BROOKMAN: Okay. 16 MR. YO: Thank you, so we will discuss 17 the OECs in a little bit more detail. The 2008 18 rulemaking provided total OECs for PTACs and to 19 PTHPs, however, in this analysis DOE analyzed cooling 20 and heating separately for PTHPs -- the heating OECs 21 in this analysis is defined as the heating and fan 22 energy expended during operation in the heating mode

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and the cooling UEC is the cooling and fan energy Page 110

2 expended during operation in the cooling mode. So 3 these were all numbers available at the previous 4 simulations. 5 Now because of the similarity between 6 PTACs and PTHPs beyond just a reversing valve, DOE 7 assumed that the cooling UEC for PTHPs would be equal 8 to the PTAC total UEC. Of course, the PTAC and PTHP 9 using this assumption would have the same efficiency 10 and cooling capacity. So this bullet actually, DOE II would like to request comment on. 12 Should I read the comment? 13 MR. BROOKMAN: I don't think that's 14 necessary, it's brief. 15 MR. YU: Comments here? 16 MR. HUNT: Marshall Hunt, PG&E. If we 17 wanted to do our own analysis to look at this in more 18 detail than we have done in 2008, how do we get hold 19 of the building description language so that we can 20 run the exact same building in the most up to date 21 software? 22 MR. YU: I believe the

-- well the

202-347-3700 Ace-FederalReporters, Inc, 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page III previous simulation used CBEC's 2003 so those are the 2 building characteristic inputs for that simulation as 3 to the data. 4 MR. HUNT: I'm talking about the actual 5 building description file used in DOE 2.1 or energy 6 plus because unless you get the exact same input you 7 can't be sure that you are looking at things the same 8 way. 9 MS. WILLIAMS: This is Allison we can 10 look for that and see what we can do. II MR. HUNT: I appreciate that thank you. 12 MR. BROOKMAN: Thank you. 13 MR. YU: Okay we'll discuss the changes 14 that took place between 2008 and 2013 pertaining to 15 energy use. First of all the weather impacts and DOE 16 compared TMY3 weather data and compared that to TMY2 17 data that was used in the previous simulations and 18 this analysis reviewed that more time spent at higher 19 temperatures. In fact the monthly cooling degree 20 days increased by 5% and the heating degree days 21 decreased by 2%. 22 So DOE took this to mean that the cooling

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 112 GEC increased by 5% and the heating GEC decreased by 2 2% and these were the adjustments made pertaining to 3 weather to the outputs from the previous simulation 4 and DOE applied these weather impacts to the GEC's, 5 to the state lower GECs. 6 The next changes are the efficiency levels 7 and the cooling capacities. So for the 9,000 Btu/h 8 representative cooling capacity in this rulemaking 9 DOE linearly extrapolated the 6 efficiency levels 10 considered in the previous rulemaking to find GEC's II that they considered in the efficiency levels for 12 this rulemaking and I'll go into this figure in just 13 a second. 14 For the 15,000 Btu/h representative 15 cooling capacity in this rulemaking, DOE performed a 16 two dimensional linear extrapolation, I'll explain 17 that in two parts. The first part DOE extrapolated 18 the GECs from the efficiency levels of the previous 19 analysis to the efficiency levels for the cooling 20 capacity considered in this rulemaking, that's the 21 first part. 22 Now the second part is DOE then

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACs andPTHPs October29,2014 extrapolated across the 9,000 and 12,000 Btu/h 2 cooling capacities considered at the previous 3 rulemaking to the efficiency levels for the 15,000 Page 113

4 Btu/h representative cooling capacity considered in 5 this rulemaking. Now if we look at the figure and 6 the yellow dotted circles are not showing very well, 7 but if we look at the squares you can see the first 8 step being the extrapolation towards the left, toward 9 the lower EER's and then the arrows highlighting the 10 second part being the extrapolation upwards or 11 increasing in capacity to the 15,000 Btu/h 12 representative cooling capacity. 13 The next change was in population. 14 MR. HUNT: Excuse me this is Marshall 15 Hunt, PG&E. Go back one slide please, am I correct 16 in looking at that and saying gee whiz it looks like 17 the distance between yellow and blue and the distance 18 between blue and green are the same, therefore 19 implying that the steps in capacity are 3,000 for 20 each one of those so there's no simulation it's just 21 a simple extrapolation is what you are saying? 22 MR. YU: That's right, that's right, yep.

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MR. BRUNDAGE: Don Brundage. Page 114 Based on 2 all the discussion there's been design consideration 3 of larger PTACs and that it's harder to make it more 4 efficient for larger sizes, it doesn't seem 5 reasonable to a linear extrapolation because that's 6 would imply to me unless I'm misunderstanding 7 something, that it's

-- you're just scaling the 8 energy use upward and not changing the efficiency 9 here, so you are keeping the same efficiencies on the 10

-- but you are, but that's not what you are doing, II you are moving it downward on the EER line. 12 So you are keeping the same trend line but 13 moving it lower? 14 MR. YU: Right, because the previous 15 analysis only provided the UEC's at the efficiency 16 levels for the 9,000 and 12. We need to obtain 17 that for the efficiency levels for the 15,000. 18 MR. BRUNDAGE: Okay. 19 MR. YU: All right and moving on to 20 population change. The state level UEC's were used 21 in the payback period in the Lifecycle Costs Analysis 22 but the national UEC's are used in the National

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## ( NOPRForPTACsandPTHPs October29,2014 Page 115 Impact Analysis so DOE used the state population data 2 from the U.S. Census to scale the state level UEC's, 3 excuse me, to weight the state UEC's to a national 4 level. 5 DOE presents the Energy Use Analysis 6 results for PTACs and PTHPs on a national level. So 7 should I move on? 8 MR. BROOKMAN: Let's take a look at this 9 table here and -- Steve Rosenstock? 10 MR. ROSENSTOCK: Steve Rosenstock, EEl. 11 Make sure you read the footnotes, here we go with the 12 ELs and the numbers again especially for ELs, the 13 footnote is very critical there in terms of what is 14 going on here in terms of the numbers. 15 MR. BROOKMAN: Thanks. 16 MR. BRUNDAGE: Just to comment, to go 17 back to the slide on the state levels. If all you 18 are doing is ratioing to 100% it's probably all going 19 to come out in the wash but I suspect that the UEC's 20 in Alaska with the different weather is going to be 21 radically higher on heating than in Alabama. If all 22 you are doing is just ratioing average weather across

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average population to get the total it may not be Page 116

2 that big a deal, just understand that the individual 3 numbers on energy use are probably going to be 4 nonsensical. 5 MR. BROOKMAN: Additional comments on 6 this Energy Use Analysis results chart, in fact two 7 charts? Okay. 8 MR. YU: All right on to the LCC, the 9 Lifecycle Cost and Payback Period Analysis. The 10 purpose of this analysis was to provide an economic 11 evaluation from the end user perspective. The 12 lifecycle cost is the total customer cost of the life 13 of the equipment and the simple payback period is the 14 time required to recover the increase in purchase IS price of more energy efficient equipment through the 16 reduced first year energy costs. 17 The methodology DOE used are in two steps 18 here, the first one being determining energy and 19 economic inputs and the second being utilizing the 20 Monte Carlo with those inputs. For the energy and 21 economic inputs, DOE determined the total installed 22 costs for each efficiency level, the unit average

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# ( NOPRForPTACsandPTHPs October29,2014



### energy use developed in the Energy Use Analysis as 2 well as determine other inputs such as other Page 117



### 3 operating costs for the first year in the lifetime of 4 the equipment, 5 These inputs were utilized in the Monte 6 Carlo simulation which consisted of 10,000 iterations 7 that select from those inputs that are characterized 8 by a probability distribution to calculate the LCC 9 

### payback period results. So a little bit more detail 10 

### on the LCC and payback period the simple payback 11 

### period was obtained by dividing average increase in 12 

### install cost by the average decrease in first year 13 

### operating cost savings, operating costs. 14 

### Lifecycle cost was obtained by adding 15 

### installed costs and the lifetime operating costs and 16 

### the life cycle cost savings are obtained by 17 

### subtracting the LCC of each efficiency level from the 18 

### LCe of the efficiency level of the equipment that a 19 

### customer would purchase in the absence of the amended 20 

### standards. 21 

### So we'll do a deep dive on these inputs. 22 

### MR. HUNT: Excuse me it's Marshall Hunt

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### , 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 at PG&E. NOPRForPTACs andPTHPs October29, 2014

How could we look further into the Monte Carlo simulations, do you have outputs of how the distributions went? I always get a little nervous when we start doing Monte Carlo simulations it can get a little whacky. Page liS

MR. YU: Yeah, some of the outputs are in the technical support document and the spreadsheet, the LCC spreadsheet is actually provided in the docket so I know you could open it and have a field day. So we'll do a deep dive on these inputs. The total installed cost is the sum of equipment purchase price and installation costs. We'll first talk about the equipment purchase price. This is provided in the Engineering Analysis and utilized with the markups and the Markups Analysis. The price is determined today in 2013 may differ in the compliance year 2019 but DOE used a constant price assumption for the price in 2019. This is based on the price trend based on the historical producer price index data for all other miscellaneous refrigeration and

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### ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsand PTHPs October29,2014 Page 119 air-conditioning equipment that span the time period 1990 to 2013. And because this time period was marked by declines and increases, DOE chose to use a constant price assumption due to the uncertainty of the continuation of those trends. The installation costs, these represent the labor and materials necessary to install the equipment and sources of this cost data was the RS Means 2013 booklets. MR. ROSENSTOCK: Steve Rosenstock. When you say constant pressure are you saying constant real price that the price stays constant with inflation correct? MR. YU: There'd be no external factors that would be affecting how the price would change from 2013 to 2019. MR. ROSENSTOCK: Steve Rosenstock, again but since you know there

-- when you say a constant price, there's constant nominal price and constant real price so I'm just

-- I just want to get clarification that you are really talking about the real price. You are saying that the price stays

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACs andPTHPs October29, 2014 Page 120 constant and since you are not sure about the actual 2 price increase or decrease then you are just saying 3 well prices of all the levels will basically stay 4 level with inflation. 5 MR. YO: I can't answer that at the 6 moment. I will defer that to Alison if we have 7 that information but if not it's in the technical 8 support document for reference. 9 MR. ROSENSTOCK: Okay, the second 10 question I had was you are talking about installation 11 costs. Again, so are you assuming that there is no 12

-- is there any difference in the weight of the PTAC 13 going to a higher efficiency out of curiosity? 14 MR. YO: Yeah I apologize I didn't mention 15 this, but in the last bullet the installation costs 16 they don't change with efficiency, but they do change 17 with the cooling capacity of the equipment. 18 MR. ROSENSTOCK: Okay thank you. Steve 19 Rosenstock, so they kind of increase marginally as 20 the cooling capacity and the install costs increase 21 marginally proportionately? 22 MR. YO: Well there really isn't a

202·347-3700 Ace-FederalReporters,Inc. 866·928·6509NOPRForPTACsandPTHPs October29,2014 marginal price associated with installation costs, 2 because there is only two for 9,000/15,000 but if 3 there were we would use a trend in that case. Page 121

4 We will discuss the annual energy costs. 5 The annual energy cost is the product of the annual 6 energy consumption obtained in the Energy Use 7 Analysis and the energy price. DOE for that energy 8 price, DOE used the electric utility tariff data to 9 develop average and marginal electricity prices. It 10 used the average electricity prices as well as 11 marginal energy and demand prices were developed for 12 the 9 Census divisions as well as for California. 13 Since PTACs and PTHPs are commercial air 14 conditioners and typically consume peak energy, DOE 15 used the annual marginal prices by Census division to 16 calculate the annual energy cost. 17 MR. ROSENSTOCK: Steve Rosenstock, EEI. 18 Again, getting into the weeds of this you know heat 19 pumps are you know when you look at the numbers that 20 you showed on the previous slide, the heat pumps are 21 using you know when you compare the air-conditioning 22 versus annual the heat pumps are 40 to 45% of their

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energy consumption is not air-conditioning, it's Page 122

2 heating so I -- you are saying annual marginal prices 

### 3 but 

### I just wanted to ensure that you are using you 4 know, 12 months of data, not just the summer months 5 for your annual marginal prices that you are showing. 6 MR. YU: That's correct, this tariff 7 method considers both the summer as well as the 8 winter prices. 9 MR. ROSENSTOCK: Okay and again Steve 10 Rosenstock, EEl, you also threw in the word demands 11 so I am also saying that this is also including the 12 demand charges are in there. 13 MR. YU: Demand would be folded in, 14 that's right. 15 MR. ROSENSTOCK: Thank you very much. 16 MR. YU: And lastly related to energy 17 costs for the future years of the analysis DOE 18 projected energy prices based on the annual energy 19 outlook for 2013. 20 We'll go on to Maintenance and Repair 21 Costs. The repair costs are based on an annualized 22 value of an extended warranty contract and DOE

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as manufacturer provided warranty costs. And these 3 repair costs increate proportionately with the 4 manufacturer's selling price of more efficient 5 equipment. 6 For the annual maintenance costs, DOE 7 obtained this information from the RS Means similarly 8 to how it was obtained for installation costs. 9 I will discuss Equipment and the Lifetime. 10 DOE used a weibull distribution to model equipment 11 and lifetime. DOE used data from the previous 12 rulemaking and inputs from individuals experienced 13 with manufacturing to estimate an equipment survival 14 function. This function again is that Weibull 15 distribution and it is modeled off equipment having 16 an average lifetime of 10 years and a maximum 17 lifetime of 20 years and this lifetime function does 18 not change with efficiency level or equipment class. 19 MR. BRUNDAGE: Don Brundage, Southern 20 Company. What I don't see any sign of in here is 21 something that I think is pretty common for this sort 22 of equipment which is a 7 to 10 year redo of hotel

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29, 2014 Page 124 rooms and change out of the equipment, whether it is 2 worn out or not. I don't really see that in that 3 function and I really wonder how many pieces of 4 equipment I mean you show about 50% still surviving 5 after 10 years and I suspect in real life there is 6 again, the mass replacements of that equipment after 7 about 10 years so I think your -- and this is 8 critical to this analysis because I think the 9 practical life, not just what it's capable of making 10 it to before it rusts away is substantially shorter 11 than what you are assuming. 12 The equipment makers may have more to say 13 on this. 14 MS. WILLIAMS: Yoolanda Williams at GE. 15 We are aware that some folks or customers will do a 16 mass redo, I don't have specific numbers on the 17 percentage but we are aware that that does occur in 18 the industry. 19 MR. BROOKMAN: Can you characterize the 20 lifespan of most of these big outfits, do they go 7 21 years -- they go 10 years? 22 MS. WILLIAMS: I couldn't speak to that,

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## ( NOPRForPTACsandPTHPs October29,2014 Page 125 

### the number of years between those redo's, but we are 2 aware that that occurs. 3 

### MR. BROOKMAN: Okay thank you. 4 

### MR. YU: And if manufacturers could 5 provide the persistence of these redo's throughout 6 the hotel/motel chains, or the industry as well as 7 that lifetime, I think that would help us you know 8 get a good understanding of lifetime that would be 9 different than as shown. 10 

### We'll discuss Discount Rates. DOE used 11 

### discount rates to convert streams of annual operating 12 

### costs to the year of purchase which is in the 13 

### compliance year 2019. To obtain these discount 14 

### rates, DOE estimated as the weighted average, the 15 

### cost of using capital asset pricing model. The 16 

### discount rates were estimated for types of firms that 17 

### commonly use PTACs or PTHPs and these would be for 18 

### lodging, office and medical service building types. 19 

### DOE used Damodaran Online as a source of 20 

### information for company as well as equity finance. 21 

### Lastly we will discuss the Energy Efficiency in the 22 Base Case. The Lifecycle Cost and Payback Period

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### Analysis typically analyzes standard levels relative 2 to a baseline efficiency. DOE is aware that not all 3 customers purchase equipment at the baseline levels 4 and customers with equipment at efficiency levels 5 above the baseline must be considered to accurately 6 estimate customer economic impacts. 7 So DOE utilized a base case efficiency 8 distribution sample here shown to the right for 9,000 9 

### Btu/h representative cooling capacity for PTACs to 10 

### characterize the distribution of efficiencies in the 11 

### base case. DOE obtained this data through

-- so 12 

### this slide it says the AHRI Directory of Certified 13 

### Pride Performance and DOE used that as well as 14 

### historical data. 15 

### MS. PETRILLO-GROH: So if you are using 16 

### the AHRI data base was it the model availability by 17 

### efficiency level but it wouldn't get you market 18 

### share? 19 

### MS. WILLIAMS: So this is Allison, we 20 

### often use model availability as a proxy because it is 21 

### difficult to get the actual market share information. 22 I think we'll double check to see if there is any

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historical shipment data used in these, but 2 understand the difference. 3 MS. PETRILLO-GROH: AHRI submitted Page 127

4 comments on the commercial ice-makers, NOPR earlier 5 this year which did have that information for 6 ice-makers and it was very different from the model 7 availability. 8 MR. BROOKMAN: Okay, thanks Laura, quick 9 comments on this slide and then on to the results. 10 MR. YU: Here we have the results for the 11 9,000 Btu/h representative coolant capacity. 12 MR. ROSENSTACK: Steve Rosenstack, EEl. 13 A couple of questions when I look back on the cost 14 efficiency relationship I'll just do two numbers. 15 For EL4, EL5 you are showing an increase in the 16 installed cost of $10.00 but I go back to the cost 17 efficiency relationship, the manufacturer cost 18 increase is $10.00 so if you add a markup of 1.93 19 that would indicate a cost increase of $20.00, how 20 can the incremental cost, installed cost be going 21 from 4 to 5 be $10.00 when the material cost is 22 $20.DO?

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### MR. YU: This is a weighting of PTACs and 2 PTHPs as well as through the entire Monte Carlo 3 analysis so there could be other factors affecting 4 exactly the average increase from efficiency level 4 5 

### to efficiency level 5. 6 I understand that if there is a -- if we 7 are looking at one specific unit right at TSL, excuse 8 me at EL4 and EL5 then we would go ahead and use that 9 markup with that incremental cost. 10 

### MR. ROSENSTACK: Steve Rosenstack, EEl. 11 

### I believe, I think these are TSL's not the EL's, just 12 

### seems like an FYI I think if I am reading that right, 13 

### it just struck me as kind of you know, a kind of 14 

### disconnect there. But the next question I had was a 15 

### simple payback, is it the average or the median value 16 

### in terms of the simple paybacks? 17 

### MS. WILLIAMS: So the simple payback is 18 

### the delta, cost in the delta operating costs from the 19 

### averages in this table. 20 

### MR. ROSENSTACK: Gotcha, thank you. 21 

### MS. PETRILLO-GROH: Is this actually 22 efficiency level or is it TSL? Is this PTACs or

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MR. YO: Neither these are the actual Page 129

3 efficiency levels so in the LCC the max tech would be 4 grouped with the max tech and that would be 5 efficiency level 5, excuse me so this would be 6 reflecting the TSL. 7 MS. PETRILLO-GROH: So this is a TSL not 8 efficiency level? 9 MR. YO: Right. 10 MS. PETRILLO-GROH: So it's for both 11 PTACs and PTHPs? 12 MR. YO: That's right. 13 MS. PETRILLO-GROH: Thank you. 14 MR. YO: I apologize for the confusion. 15 MR. BROOKMAN: So remind me which level 16 is proposed in the rule for adoption on this table, 17 is that 3? 18 MR. YO: That would be 2. 19 MR. BROOKMAN: 2

-- 37% of customers 20 experiencing net costs and receiving no benefits from 21 the rulemaking seems like a pretty high number to me, 22 especially since as we've discussed earlier the

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 130 language is stronger on showing the language in the 2 legislation is stronger going beyond an ASHRAE 3 standard as opposed to a normal rulemaking that is 4 not deferring to ASHRAE and it seems like that's an 5 awful lot of losers out of the total, thank you. 6 MR. YU: The LCC and payback period 7 results for the 15,000 Btu/h representing cooling 8 capacity. 9 MR. BROOKMAN: Final comments on these 10 two tables before we go to lunch? Steve? 11 MR. ROSENSTOCK: Steve Rosenstock, EEl. 12 And again I'm looking at the Federal Register notice 13 and you know I'm seeing median paybacks of the 14 weighted average median payback of 8.2 years and for 15 the larger units it's 9.9 years, smaller units it's 16 8.0 years and then the customer's with the net 17 benefits in all the categories, whether it's weighted 18 or the different sizes, the percentage of customers 19 with net cost is higher than the customer -- or the 20 percentage of customers with the net benefits under 21 TSL2. 22 And then there's this huge number that

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says no impacts because they are already doing it anyway. Other rules have had a lot higher Page 131

percentages of customers with net benefits so I think that's causing some of the concern you are hearing around the table. Other rules in the past have been 80 to 90% customers with net benefits and much lower payback so I think that's why you're -- that's part of the concern, because this seems like it's really kind of on the edge here in terms of being cost effective for a lot of customers, thank you. MR. BRUNDAGE: I think another factor did you do any customer subgroup analysis of severely impacted customers for this rulemaking like you do on some of them? MR. YU: Yeah we did. MR. BRUNDAGE: What were they? MR. YU: Small businesses. MR. BRUNDAGE: To me for an HVAC rulemaking, that's not necessarily the subgroup you need to be looking at. The subgroup you need to be looking at would probably be the PTACs with the pure air-conditioning units in climates with lower cooling

202-347-3700 Ace-Federal Reporters,Inc. 866-928-6509NOPRForPTACs andPTHPs October29,2014 degree days. Page 132 I would suggest that the northern half of the country the subgroup that was a separate group for the residential air-conditioning standards would have absolutely terrible economics with this rulemaking because they don't have enough cooling degree days, thank you. MR. BROOKMAN: Additional comments here? MS. WILLIAMS: Yoolanda Williams with GE Appliances. Just one more statement, I'm just going back to the question or comments about the redo's for hotels, motels, one additional suggestion could be to reach out to hotel/motel industry and they may have a broader or more better view of the percentage of replacements that are redo's or purchases that are redo's. There may be an industry or trade associated issue group for that particular industry that may also be able to provide information too. MR. BROOKMAN: Okay, thank you. MR. ROY: One more comment before we go, Aniruddh. This question is actually for Decker. So regarding the equipment testing just to be clear,

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### the equipment was tested per ASHRAE 16 with the

-- 2 rules right? 3 

### MR. RINGO: Yes I believe so. Page 133

4 

### MR. ROY: Okay, I would just like to make 5 the point that we would you know, and I want to 6 

### reiterate the point that we made the test procedure 7 NOPR comment period and I would like to say that DOE 8 continued to recognize that the testing could be done 9 through psychrometric rooms as well because it's 10 

### obviously something that the manufacturers invested 11 heavily in, it's very cost effective and we have 12 

### actually shared results with DOE suggesting that they 13 

### are comparable in terms of the test results and if we 14 

### were to make a shift or forced to make a shift to 15 

### calorimic rooms that would be very expensive for the 16 

### industry overall so I would encourage DOE to think 17 

### about that and allow manufacturers to you know, 18 

### certify their products based on the psychrometric 19 

### rooms but they can go ahead and do their enforcement 20 

### testing in the calorimic rooms if they see that as 21 

### being fit. So that's my comment on that issue. 22 MR. RINGO: Decker Ringo, thank you for

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsand PTHPs October29,2014 Page 134 your comment and thank you for your data submission on the test procedure rulemaking, MR, ROY: Thank you to Laura. MS. PETRILLO-GROH: Thank you, hopefully this is quick because I don't want to hold up lunch but and I know Steve alluded to it earlier, can you go through what the difference is between the payback period that you are presenting here versus what's in the Federal Register because it's different? MR. YU: The simple payback period shown here is based on the first year operating cost and I believe the content presented in the NOPR is off an average cost. MS. PETRILLO-GROH: Can you go into why you are presenting it differently here, not in the climate, I'm just curious as to what I'm looking at. MR. YU: I think we also presented simple payback in the notice in the TSD as well. MS. WILLIAMS: Yeah I thought we presented simple payback in the notice as well, I don't have it in front of me sorry, but in general we have sort of been moving towards simple payback so this rule was

202-347-3700 Ace-FederalReporters,Inc, 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 135 one of the ones that was sort of caught in the middle 2 between what we have been presenting, so I apologize 3 if there is any inconsistencies between those two. 4 We tried to document clearly which -- like if it says 5 median payback period, that's calculated differently 6 from the simple payback period. 7 MS. PETRILLO-GROH: Thanks for clarifying 8 that. 9 MR. BROOKMAN: Final comments? We can 10 return to these if additional issues bubble forward 11 over lunch. It's now 5 minutes after 12, let's take 12 lunch. A reminder that you will need to wear your 13 badge inside the building, if you go to the big 14 cafeteria as you pass through the security portal you 15 might very well need an ID. This room will be 16 secured so you can leave your stuff here, we will see 17 you back here at 5 minutes after 1. Do you all know 18 where the cafeteria is? Down to the ground floor and 19 20 21 22

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AFT ERN 0 0 N S E S S ION

MR. BROOKMAN: Welcome back. We are 3 going to proceed with the Shipments and National 4 Impact Analyses. 5 MR. YU: I hope everyone had a good 6 lunch. Now we will discuss the Shipments and the 7 National Impact Analyses. The purpose of the 8 Shipments Analysis is to estimate PTAC and PTHP Page 136

9 shipments over the analysis period from 2019 to 2048. 10 And the National Impact Analysis estimates the 11 national energy savings from those shipments at 12 various trial standard levels as well as estimate the 13 net present value to PTAC and PTHP customers of the 14 savings from those shipments at the various trial 15 standard levels. 16 We will first discuss the shipments 17 analysis and go into depth there. Again the purpose 18 is to estimate PTAC and PTHP shipments over the 30 19 year analysis period. The methodology DOE used was 20 to develop a single shipment model for all PTACs and 21 PTHPs. 22 The model is a stock accounting model,

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which assumes that each year existing PTAC or PTHP ages by one year or fails. The PTAC and PTHP Page 137

3 shipments are driven by a construction of new floor 4 space and the replacements of the units that have 5 failed. 6 So in this case for the shipments we have 7 again two applications, new construction and 8 replacement. So for new construction shipments DOE 9 developed projections based on projections of new 10 commercial floor space from the AEO 2013 and the new II floor space and multiplied by a saturation value for 12 new construction that was developed using data from 13 the 2008 rulemaking. 14 Now for the replacement shipments there 15 are two purposes here. First is the DOE built up an 16 initial stock by using the average of the historical 17 shipments from 1998 to 2004 for the years 1993 to 18 2012. DOE developed 19 MS. PETRILLO-GROH: Quick question, Laura 20 Petrillo, AHRI. So it seems that the replacement 21 market is getting larger as the years progress, is 22 the slope of that line consistent with the period

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before that you analyzed or is that just assuming Page 138

2 that all those new buildings will then get replaced? 3 I just don't know if there's a point where it 4 reaches saturation and you can't actually build 5 anymore hotels? 6 MR. YU: I don't believe, at this point 7 we are not analyzing whether there is going to be a 8 maximum limit to the number of buildings that can be 9 constructed yeah we are not analyzing that here. 10 I'm sorry. Maybe I'm not understanding the question. I I MS. WILLIAMS: So this is Alison. 12 Replacements are all based on or start out based on 13 historical data that are being replaced and the new 14 construction is off AEO and so the replacements just 15 continue to replace the historical data and the AEO 16 which actually looks fairly low so I think that

-- I 17 mean we are not specifically accounting for 18 saturation but since the AEO projections of new 19 construction are pretty low, there's nothing crazy 20 going on I think. 21 MS. PETRILLOO-GROH: Thank you. 22 MR. BRUNDAGE: Don Brundage, Southern

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Company. Page 139 Do you have any data points any place in 2 what's available to you on total number of existing 3 PTACs in use? If you had that it would be a good 4 check on your assumptions on lifespan or whether 5 there is pre-failure replacement of units. 6 MR. BROOKMAN: Okay. 7 MR. ROSENSTOCK: Steve Rosenstock. Yeah 8 I'm just kind of curious I know with other types of 9 equipment, you know, shipments went way down during 10 the recession, I'm just kind of curious as to 2013 is 11 this reflecting, is this kind of recovery basically 12 I'll say is this kind of equivalent to what was say 13 2007 or is it still I'll say at a you know, I'll say 14 at a recessionary level if shipments haven't come 15 back yet? 16 MR. YU: We considered data in this case 17 for the initial stock from 1998 to 2004 so we did not 18 include the shipments data or the yeah

-- the 19 shipments data or the new construction floor space 20 data for the years a little bit before, during and 21 after the recession. 22 MR. BRUNDAGE: Don Brundage again. Just

202-347-3700 Ace-Federal Reporters,Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 140 to remake a point, just by the nature of the type of 2 equipment that it is, we know that there is a certain 3 percentage of replacement before failure. It's just 4 inherent with the sort of product and the sort of 5 market that it is in and it's not going to be like a 6 residential single family unit, so I think some sort 7 of assumption for assuming pre-failure replacement, 8 even if we can't find any hard data is realistic to 9 assume some, and based upon what you are presenting 10 here, you are assuming zero. 11 MR. YU: Thank you we will keep that 12 under consideration. 13 MR. ROY: Aniruddh Roy with Goodman so to 14 Steve's point, I think the first bullet under 15 replacement shipments you really need to account for 16 I guess the economic climate, you know between 1998 17 and 2004 the scenario was very different as compared 18 to let's say 2008 to the current situation. So I 19 think that needs to be accounted for somewhere in 20 your analysis. And also any previous, you know 21 recessions that did occur and how that impacted your 22 shipments projection over here.

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MR. YU: Right, for the purposes of building that initial stock, the initial stock was Page 141

just a set up model so that the number of shipments that we had at the start of this announced as being 2013 was relatively close to the last received AHRI shipment which was in 2012. So the shipments were relatively lined up so to speak from historical data to the beginning of this shipments projection. MR. ROY: But you are still using an average between '98 and 2004? MR. YU: That's just for the build-up, for the build-up. MS. WILLIAMS: I think also we have plus the average is really from 1998 to 2012, we might have a small error on there, we will check. But yeah, so the data passed 2004 is confidential from AHRI so that's why we can't show you explicitly what's going on there. MR. ROY: But was it used in the analysis though? MS. WILLIAMS: He's saying that we basically took it into account and made sure that it

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### MR. ROY: Okay, thank you. Page 142

3 

### MR. YU: So to wrap up the second bullet 4 under replacement shipments, the replacement 5 shipments were determined based off of the lifetime 6 function, that's discussed earlier in the lifecycle 7 costs and payback period analysis. 8 The last aspect related to the projected 9 shipments are the stated standards case impacts and 10 

### in this analysis you assume that the standards will II 

### not impact shipments, therefore the standard's case 12 

### shipments equal the base case shipments. 13 

### So next we will disaggregate the 14 

### shipments by equipment class. This was done for 15 

### PTACs and PTHPs based on data so this needs to be 16 

### different. This is based on historical data, it 17 

### carne from AHRI. And based on the same historical 18 

### data set DOE expects that this trend for this 19 

### distribution to stay constant for the projection 20 

### years. 21 

### We have one issue for comment. 22 

### Stakeholders mentioned that a number of shipments are

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not accounted for in the AHRI data base because Page 143

2 certain manufacturers are not AHRI manufacturers and 3 are not subject to reporting to that database. So 4 therefore, DOE requests data for the expected 5 distribution of models that may be unreported to that 6 data base. 7 MR. BROOKMAN: Anything here? Okay 8 thank you. 9 MR. YU: These shipments are used in the 10 NIA and that's what we will discuss next. The 11 purpose of this analysis is to estimate the national 12 energy savings as well as the national economic 13 impact from amended energy conservation standards for 14 the different efficiency levels for that 30 year 15 analysis period. 16 DOE performed the following methodology, 17 calculated national energy savings by multiplying 18 unit lifetime energy savings by projecting by excuse 19 me, by projected shipments and accumulating this 20 projected value over 30 years and for the net present 21 value DOE accumulated the difference each year 22 between energy bills savings and increased equipment

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## ( NOPRForPTACsandPTHPs October29,2014 expenditures for all equipment shipped over the 30 2 year period which was then discounted to those 3 discounted. Page 144

4 The inputs that DOE used for that discount 5 rate is 3% and 7%. Other inputs that are used in 6 this analysis as shown here in this table, as you can 7 see discount rates are already there along with total 8 install costs, repair and maintenance cost, annual 9 energy use, base-case efficiency, standards-case 10 efficiency, the efficiency trend, energy prices, full 11 fuel cycle as well as the present year. 12 So these inputs were used in a national 13 impact analysis to determine the net present value 14 national energy savings for the three equipment 15 classes as discussed in the engineering analysis. 16 Some of these inputs are leveraged from 17 the lifecycle cost and payback period analysis, 18 specifically for the greater than or equal to 7,000 19 Btu/h and less than or equal to 15,000 Btu/h 20 equipment class. DOE used the inputs from the 9,000 21 Btu/h representative cooling capacity from the LCC 22 payback period analysis.

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### For the greater than 15,000 Btu/h 2 

### equipment class, DOE 

### used the inputs for the 15,000 Page 145



### 3 Btu/h representative cooling capacity in the 

## Lee and 4 payback period analysis. However for the less than 5 

### 7,000 Btu/h equipment class, DOE 

### did not analyze 6 representative cooling capacities in the 

## Lee and 7 

### payback period analysis and therefore used the 8 following techniques to obtain the input data for 9 that equipment class. 10 

### Specifically for the manufacturer 11 

### production cost, which is then scaled up with markups 12 

### to determine the manufacturer's selling price, DOE 13 

### used the cost of the 9,000 Btu/h and 15,000 Btu/h 14 

### representative cooling capacities and scaled that 15 

### accordingly with modifications to account for lower 16 

### capacity compressor, fan motors as well as heat 17 

### exchangers. 18 

### For other energy as well as economics 19 

### data, DOE 

### performed the extrapolations across the 20 

### 9,000, 15,000 Btu/h representative cooling 21 

### capacities. 22 

### Preparation for performing the National

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that were presented in the Engineering Analysis that was discussed here. MR. ROY: I'm sorry I have a question on the previous slide. MR. YU: Yes. MR. ROY: So the representative cooling capacity in the LCC and payback period analysis for the second row, why did you not analyze 9,000 and 15,000 together? Because that would be representative of that range, why only 9,000? You could have scaled it accordingly by doing the analysis using both those capacities. MR. YU: The 9,000 Btu/h was the cooling capacity with the highest sales volume and therefore that would be the most fitting for that equipment capacity range. MR. ROY: But one could argue that you also had data for the 15,000 and that would have been representative of all the 20 tests that were conducted and would have given you the best representation across the range of efficiencies.

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### MR. YU: I would see that to be an Page 147



### 2 alternative way of performing this, but in this case 3 where you have a greater than 15,000 Btu/h equipment 4 capacity class, you would have to use some sort of 5 

### input data right? And if you but then in that 6 case required that data, it's probably better to use 7 the 15,000 Btu/h representative cooling capacity 8 inputs than take those inputs, combine them with the 9 9,000 to use them for other equipment classes. 10 

### MS. WILLIAMS: So this is Alison. All 11 

### the results are weighted averages from all 3 

### of the 12 

### 7, 9 and 15 so it's being accounted for in that NIA, 13 

### it's just attributed to a different bin so they are 14 

### all taken into account. 15 

### MR. ROY: Okay. 16 

### MR. YU: Here are the efficiency levels. 17 

### Before grouping these efficiency levels into the 18 

### trial standard levels, DOE wanted to estimate market 19 

### shifts in efficiency and it performed two key 20 

### operations. The first operation was a roll up 21 

### scenario to establish the shipment weighted 22 

### efficiency for the year that the standards are

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## ( 2 3 4 5 6 7 8 9 10 I I 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 expected to become effective, which is 2019. Page 148

So this roll-up scenario is applied to the base case, efficiency distribution, and just to review again, those are based on AHRI data for the year 2013 and was increased from 2013 to 2019 or scaled rather at a rate of 1 EER every 35 years. The standards-case efficiency distribution again is based on that roll-up scenario and efficiency below a standard level are considered rolled-up or summed to the market of the efficiency level being considered. Efficiency above the standard level, however are not affected. The second operation DOE performed was to account for technological improvements in equipment it shifts to higher efficiency equipment. Again that is the one EER every 35 year trend. And this is used in commercial air-conditioner rulemaking. So projected efficiency distribution of shipments can be seen on the right for the equipment class PTACs greater than or equal to 7,000 Btu/h and less than or equal to 15,000 Btu/h. One issue for comment, DOE requests any comment regarding end data

202-347-3700 Ace-FederalReporters, Inc. 866-928-65092 NOPRForPTACs and PTHPs October29,2014 supporting the efficiency trend. MR. ROSENSTOCK: Steve Rosenstock, EEl. 3 On the heat pump side or the COPs do you have any Page 149

4 sort of

-- what was your assumption in terms of COPs 5 because the headroom is a lot smaller. 6 MR. YU: The COPs were scaled with the 7 EER based on the Model Availability Analysis from the 8 AHRI data base. So that was the regression that the 9 Engineering Analysis had talked about. 10 MR. ROSENSTOCK: Steve Rosenstock, EEl. II Is the slope the same as this or is it lower? 12 MR. YU: We didn't project the efficiency 13 of the COP for the future. 14 MR. ROSENSTOCK: Thank you. 15 MR. YU: Sorry. 16 MR. ROY: Aniruddh Roy, Goodman. So a 17 question on the repair costs, excuse me, so is that 18 lumped into the maintenance cost? 19 MR. YU: It wouldn't be lumped into the 20 maintenance. The maintenance would be your typical 21 preventative maintenance actions that you could take 22 on a unit. The repair would be a more heavy change,

202-347-3700 Ace-FederalReporters, Inc. 866-928·6509NOPRForPTACsandPTHPs October29,2014 Page 150 or heavy repair to your equipment, being maybe a coil 2 change or a compressor change. 3 MR. ROY: Because I'm looking at the TSD 4 in Chapter 8 and it doesn't specify a dollar value 5 for the repair cost. Do you happen to have that? 6 MR. YU: Yes we definitely have that. 7 MR. ROY: I don't need the answer now, if 8 you can just look into it and let me know what that 9 is. 10 MR. YU: Okay it's definitely in 11 MS. WILLIAMS: It's actually in Chapter 12 10 we must have missed it in Chapter 8 but yeah. 13 MR. BROOKMAN: Is there any comment on 14 issue number 5? Comment regarding and data 15 supporting the selected efficiency trend? 16 MR. YU: Let me go back a slide. So for 17 the efficiency levels as mentioned in the previous 18 slide, DOE grouped them into the TSLs as described in 19 the Engineering Analysis. So here are the TSLs. 20 Again, we discussed before lunch that there would be 21 some nomenclature inconsistencies here with the 22 percentages as presented, the 1.8 and the 4% as an

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2 

### In this case the baseline here presented 3 

### is the ASHRAE 90,1-2013 minimum and TSL would be in 4 this case 2,2% and is based off that baseline. 5 

### MR. ROSENSTOCK: Steve Rosenstock, EEl. 6 I'm looking at the Federal Register Notice table V.25 7 and I'm looking at the industry net present value and 8 you know you show ranges and at TSL2 it goes from 9 negative.7 to a positive .3 in terms of the change 10 

### and then percentage negative 1.3 to .5 so again I 11 

### don't know where the median or the average of those 12 

### you know, that range is but you are saying the 13 

### maximum industry net present value but I am looking 14 

### and it kind of

-- it seems like it's at least 15 

### negative compared to the other choices. 16 

### I don't know in terms of other rulemakings 17 

### whether it's been like that or not but I'm just

-- it 18 

### just seems like there is a range of impacts but you 19 

### know if you look at the average it's still slightly 20 

### negative so I think

-- I know we are just doing this 21 

### for the table but it still could be negative for the 22 

### industry, it's just

-- it's not -- they're still a --

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 152 even at TSL2 there's a possibility of a negative 2 change to the industry NPV and I think it's, again I 3 know it's a summary table but it is not telling the 4 story correctly. 5 It's the least amount of negative change 6 to the industry NPV and I know this is a summary 7 table, but I think that

-- I think it's a key 8 difference that it's the least amount of impact, 9 thank you. 10 MS. PETRILLO-GROH: I was also hoping 11 that you would speak a little bit more to the fact 12 that TSL1 has a negative industry impact and TSL2 may 13 have a positive impact. 14 MS. WILLIAMS: This is Alison. I think 15 they are going to do a whole presentation on the 16 industry net present value, he just has a couple more 17 slides to finish the national, we are just showing 18 these to set up the TSLs for the results so they will 19 go into a lot more detail on the industry stuff. 20 MS. PETRILLO-GROH: Thanks Alison. 21 MR. ROY: Aniruddh Roy, Goodman. So 22 Alison thank you for referring me to Chapter 10. I

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### was just looking at the repair costs in table 10.4.3 2 average repair costs across the equipment classes and 3 

### across all the efficiency levels and they seem to be 4 

### consistent across the board which tome intuitively 5 does not make sense because I know in some of the 6 efficiency levels you have analyzed PSE motors, some 7 of them have been permanent magnet motors and so I am 8 assuming that there would be a cost difference to 9 change out those you know, motors in a repair 10 

### scenario. 11 

### So there would be a cost differential but 12 

### it just looks like you know the price per unit, the 13 

### repair cost per unit is linear in this table and is 14 

### not reflective of what actually happens in the 15 

### marketplace. 16 

### MR. YO: Those repair prices again are 17 

### from a warranty contract so true certain types of 18 

### motors, or certain types of compressors might be more 19 

### expensive to source than you know other types. 20 

### Those would be faced by the supplier of that warranty 21 

### contract so the price of the repair for the customer 22 

### themselves are actually not the same as what a

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3 MS. WILLIAMS: Sorry, we weren't talking 4 about it the repair cost is scaled with

-- is it 5 scaled with equipment costs? Yes, so we will take a 6 look at your comments, it is scaled with 7 manufacturers selling price which theoretically 8 accounts for the different whatever they are using to 9 achieve the different efficiency levels, but we will 10 take a look at that. 11 MS. PETRILLO-GROH: Laura Petrillo-Groh, 12 AHRI. I was also interested in based on Aniruddh's 13 comment and your response was that it was based on 14 warranty information? Would it be typical for this 15 equipment to have a warranty that span its entire 16 lifetime? 17 MR. YO: No. Typical warranties that we 18 found for this analysis range from 1 year up to 5 19 years. 20 MS. PETRILLO-GROH: So if this equipment 21 was replaced after 5 years, then is there a different 22 price of the component?

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### MR. YU: If a piece of equipment was 2 replaced or repaired after the warranty contract 3 ended, yes the price would be different from the 4 price that is paid for the warranty contract. Page 155

5 

### MS. PETRILLO-GROB: But that hasn't been 6 taken into account in this? 7 

### MR. YU: No, that hasn't been taken into 8 account. 9 

### MS. WILLIAMS: This is Alison. I think 10 

### we will have to go back and look at this again, but II 

### the assumption generally is that or the assumption 12 

### that can be made as what you are paying for a 13 

### warranty contract to manufacturer spread out over 14 

### everybody it would be somewhat equivalent to your, 15 

### the repair costs on average, across the population 16 

### but we will take a look at that. 17 

### MS. PETRILLO-GROB: Thanks I would 18 

### appreciate that. 19 

### MR. BROOKMAN: Additional thoughts here? 20 

### Questions? 21 

### MR. YU: Bere are the groupings of the 22 efficiency levels into the trial standard levels as

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 156 well as the results for the National Impact Analysis, 2 MR, ROSENSTOCK: Steve Rosenstock, EEl. 3 I'm going back to the Shipment Analysis where it's 4 basically saying you know the vast majority of the 5 shipments, again based on your data are 7 to 15,000 6 Btu's per hour, it looks like about 88% of the 7 shipments are within that range. 8 I go to the Federal Register document, 9 consumer means LCC savings for standard size 10 equipment 15,000 Btu's per hour negative $2.11 and II then for 9,000 Btu's positive 40 cents. I'm just 12 kind of surprised that

-- I'm trying to make a 13 connection because it just seems like and then it 14 says a weighted average but I guess that's of all 15 sizes is positive, it just seems that if a bulk is 16 between 7,000 and 15,000 has a negative means savings 17 I'm just surprised that there's a positive net 18 present value, just to me there seems to be a 19 disconnect in terms of you know, the customer is 20 seeing negative savings and then there's somehow a 21 lifetime net present value or positive net present 22 value.

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I'm trying to think what am I missing Page 157

3 MS. WILLIAMS: So Steve I'm trying to look 4 at the numbers but I think because they are weighted 5 averages in the LCC and the NIA's also is this PTAC 6 and PTHP yes, sorry. Yeah, so I think that is a 7 result of the weighted averages between the different 8 components. And there's also some other differences 9 between the LCC and the NIA that can make differences 10 between them when you are not, you know way far out lIon the scale of savings and that kind of thing. 12 MR. YO: If there are no more questions 13 we'll switch presenters. 14 MS. PETRILLO-GROH: Just one, Laura 15 Petrillo-Groh, AHRI. There is one more. I still 16 would like to know a little bit more about how that 17 difference comes about when you are looking at the 18 bulk of the shipments having a negative LCC and then 19 you know, stated that there is a benefit to the 20 consumers. I'm with Steven I'm confused. 21 MS. WILLIAMS: Yeah so the PTHP has 22 positive LCC savings at 9,000 that are sort of

202-347-3700 Ace-Federal Reporters,Inc. 866-928-6509NOPRForPTACs andPTHPs October29,2014 outweighing the slight negative PTAC savings. I think yep MR. BROOKMAN: Are you referring to a slide? Page 158

MS. WILLIAMS: No, sorry they are not in the slide, they are in the documents so yeah, so there's a weighting of the PTHP which is positive PTAC which is very slightly negative at the 9,000 so MR. BROOKMAN: The weighting is based on the shipment? MS. WILLIAMS: It's on shipments yeah, the slide that someone was referring to earlier where the vast majority of shipments are between 7 and 15 and the PTHP savings outweigh the slight PTAC negative in the LCC and so the weighted average is positive and that you know, and in the NIA we find the same thing. MS. PETRILLO-GROH: Did that use the model availability or did that use actual shipments? MR. YU: This is describing capacity, if it is for capacity then yes. It's the AHRI shipments, the circle shipments. MS. PETRILLO-GROH: So that used

--

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### 2 data. 3 NOPRForPTACs andPTHPs October29,2014



### MS. WILLIAMS: Yes it's the shipments

MS. PETRILLO-GROH: The shipments data 4 not the model availability. 5 

### MS. WILLIAMS: Yeah the model 6 

### availability I believe is for the efficiency Page 159



### 7 distributions and the capacity distributions are by 8 shipments. 9 

### MS. PETRILLO-GROH: Thank you. 10 

### MR. BROOKMAN: We're moving on to II 

### Manufacturer Impact Analysis. 12 

### MS. LEWIS: Hi I'm Jessica Lewis from 13 

### Navigant and I'll be discussing the Manufacturer 14 

### Impact Analysis or MIA that was conducted as part of 15 

### this NOPR. The main purpose of the MIA is to assess 16 the impact of proposed standards on manufacturers of 17 

### PTACs. A second purpose is to identify subgroups of 18 manufacturers that may be more severely impacted by 19 

### proposed standards and to evaluate the potential 20 

### impacts of standards on those subgroups. 21 

### In the slides that follow I will discuss 22 impacts on two manufacturer subgroups, small

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## ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 Page 160 businesses and manufacturers with production assets.

Finally the MIA addresses direct employment impacts, manufacturing capacity and other federal regulations that affect PTAC manufacturers and take effect around the compliance date for this rulemaking. The primary tool DOE uses to evaluate impacts on manufacturers is a discounted cash flow model called the Government Regulatory Impact Model or the GRIM. The major output of this model is the industry net present value or INPV which is a metric used to represent the financial impacts of amended standards on manufacturers. As part of the MIA we also conducted interviews of manufacturers. These interviews helped us refine inputs to the cash flow model and also to understand the qualitative impacts of standards on manufacturers. In general the MIA process takes place in 3 phases. In the first phase we develop an industry profile using publicly available information such as Securities and Exchange Commission filings and corporate annual reports.

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### In the second phase we develop an Page 161



### 2 interview guide to gather targeted information from 3 manufacturers, and we also prepare the cash flow 4 spread sheets used to estimate financial impacts on 5 the industry. 6 In the final phase we conduct interviews 7 with manufacturers and use manufacturer feedback to 8 further develop the analysis, finalize inputs to the 9 cash flow model and examine the potential 10 

### qualitative impacts of the standard. 11 To build the cash flow model for the 12 industry we rely on content from several of the 13 

### analyses already discussed today. These upstream 14 

### inputs include financial and product information from 15 the Market and Technology Assessment, manufacturer 16 

### production costs from the Engineering Analysis and 17 

### annual shipment projections from the Shipments 18 Analysis. 19 

### We also develop two key pieces of 20 

### information as part of the MIA. First we develop 21 multiple manufacturer markup scenarios which allow us 22 to model a range of potential impacts on the

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### 866-928-6509NOPRForPTACs andPTHPs October29, 2014 Page 162 

### industry. We also develop a conversion cost model 2 that allows us to account for various one-time costs 3 manufacturers may face in order to comply with the 4 requirements of amended standards. 5 On the qualitative side of the MIA, one of 6 the primary outputs is a set of key issues that 7 manufacturers raised during the course of interviews. 8 To outline those briefly, manufacturers first raised 9 concerns regarding their ability to increase the 10 

### efficiency of the products while maintaining strict II 

### physical dimensions. 12 

### Second, manufacturers indicated that PTACs 13 

### are often purchased on a first cost basis and that an 14 

### increase in the equipment costs could lead to falling 15 

### sales and a decline in profitability. 16 

### And third, manufacturers indicated that 17 

### increasing efficiency can create challenges related 18 

### to noise and humidity control. They also indicated 19 

### setting standards too high could lead them to 20 

### discontinue higher capacity models. 21 MR. ROSENSTOCK: 

### Hi, Steve Rosenstock, 22 EEL 

### I always appreciate the information but in

202-347-3700 Ace-FederalReporters,Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 163 terms of the customer utility when it says humidity 2 control, was that associated with any certain I'll 3 say certain EER level at certain areas where if you 4 reach that certain EER that they could do it but they 5 would meet the efficiency under the test but in real 6 world conditions with humidity that it wouldn't meet 7 the

-- it wouldn't get rid of the latent heat. I'm 8 just kind of curious. 9 MS. LEWIS: It's a good question and we 10 did not get information that precise. It was kind of 11 a general comment that as efficiency increases that 12 can be a challenge. 13 MR. ROSENSTOCK: Okay, Steve Rosenstock, 14 EEL Thank you because especially in the more humid 15 climates if that is happening, people are going to 16 react by lowering the dryable temperature if it gets 17 humidity, there could be a loss of energy savings as 18 people try to get the humidity out of the room. 19 The second one is also very interesting is 20 you know in terms of higher capacity models again 21 without associating with any particular EER I know 22 you went through TSLI through 5 but again did they

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### say if you increase the EER by X percent over the, 2 I'll say the ASHRAE level that they might not be able 3 to make those units anymore, let's say 15,000 Btu's 4 per hour? 5 

### MS. LEWIS: Yeah and we did not get 6 

### comments that precise and are very open to data. I 

### 7 think and Decker spoke to this a bit also but it 8 tends to be more complicated to increase the 9 efficiency of these products at higher capacity while 10 

### maintaining fixed dimensions. But based on a review II 

### of product literature there seem to be models on the 12 

### market that meet the proposed standard. 13 

### MR. ROSENSTOCK: Thank you. 14 

### MR. BRUNDAGE: Don Brundage, Southern 15 

### Company. Just a comment I'm not sure anything can 16 

### be done about it but the way to provide better 17 

### humidity control is to go to variable speed 18 

### operations, instead of regulating EER in the standard 19 

### there's no incentive to go to variable speed 20 

### operation. 21 

### If you -- some of the larger equipment is 22 

### going toward IER for measuring that would help but

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### the complexity of doing that for rulemaking might IPage 

### 165

2 don't know if that's even an available option, thank 3 

### you. 4 

### MS. LEWIS: Okay. Moving on to the next 5 few slides we will walk through the Quantitative 6 

### Analysis in more detail. First as I mentioned, one 7 of the key inputs to the cash flow model is a set of 8 

### markup scenarios. The markup is a multiplier 9 applied to the manufacturer production costs that 10 

### captures all non-production cost. So R&D selling II 

### general administrative expenses, interest expenses 12 

### and also profit. By varying the markup we are able 13 

### to model multiple sets of financial impacts on the 14 

### industry. In this case we modeled two markup 15 scenarios. The preservation of gross margin 16 percentage markup scenario represents an upper bound 17 

### or less severe set of impacts and the preservation of 18 operating profit markup scenario represents the lower 19 

### bound or most severe set of impacts. 20 

### The preservation of gross margin 21 

### percentage scenario assumes manufacturers maintain 22 their gross margin percentage after the standard

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### This scenario implies that as 2 production costs increase with efficiency, 3 manufacturers are able to raise their prices and Page 166



### 4 increase their operating profit in absolute dollars 5 on a per unit basis. 6 

### As a contrast, the preservation of 7 operating profit scenario assumes manufacturers 8 

### cannot maintain the same gross margin percentage 9 

### after standards take effect. Instead the scenario 10 

### assumes manufacturers preserve the same operating II 

### profit per unit in absolute dollars before and after 12 

### standards, but must reduce their markups to do so. 13 

### The other key input we developed as part 14 

### of the MIA is a set of conversion cost estimates. 15 This table shows estimated converted costs for the 16 

### industry at each trial standard level broken down 17 

### into two categories, product conversion costs and 18 capital conversion costs. 19 

### Capital conversion costs are one-time 20 

### investments in equipment, tooling and other physical 21 

### assets and product conversion costs are one-time 22 

### investments in R&D, 

### testing, certification and other

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costs required to bring products into compliance. 2 The conversion costs estimates rely heavily on 3 feedback obtained from manufacturers during Page 167

4 interviews and also draw on the engineering analysis. 5 As you can see from this table, total 6 estimated converted costs for the industry at the 7 proposed level are 7.6 million dollars. After 8 developing the conversion cost estimates and markup 9 scenarios, we use the cash flow model to estimate a 10 range of potential impacts on industry net present 11 value. 12 This table summarizes those impacts at 13 each TSL analyzed. The lower INPV estimates are 14 derived from the preservation of operating profit 15 markup scenario and the higher estimates reflect the 16 preservation of gross margin percentage markup 17 scenario. As you can see the proposed standard will 18 lead to an estimated change in INPV in a range of 19 negative 1.3% to 0.5%. 20 MR. ROSENSTOCK: Steve Rosenstock, EEl. 21 And again I appreciate you know all the explanations, 22 it just

-- I'm looking at the jump in all the

202-347-3700 Ace-FederalReporters, Inc. 866·928·6509NOPRForPTACsandPTHPs October29,2014 Page 168 conversion costs you know, almost well not going up 68% from TSLl to TSL2 and then doubling from TSL2 to TSL3 and I'm looking at you know and I know about the profit margin, it just seems kind of interesting that it's always negative at 1 and it can be positive at 2 then it's always negative at 3 then it can almost be breaking even at 4. I'm just MS. LEWIS: It's a fair question and it's kind of counterintuitive looking at it. What you are seeing take place here is an inter-play of the manufacturer selling prices, the shipments and the conversion costs. So as the manufacturer production costs rise with more efficient products the manufacturer selling price also increases and combined with the shipments produced as part of the Shipment Analysis, you are seeing an increase in industry revenue that's interacting with various conversions costs to kind of create the dynamic that you just pointed out. So it's an increase in projected industry revenues at TSL2 relative to conversion costs that's causing a more favorable

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### scenario at TSL2 for manufacturers than at TSL1. MS. PETRILLO-GROH: Thank, so you mentioned that the INPV interaction was between selling price, shipments and conversion costs, is that correct? MS. LEWIS: That dynamic yes. MS. PETRILLO-GROH: So the shipments should be the same across the board because it is based on building stock correct? MS. LEWIS: The shipments are steady. The shipment assumption is steady shipments. Page 169



### MS. PETRILLO-GROH: And the conversion costs go up? MS. LEWIS: Correct. MS. PETRILLO-GROH: According to the current slide. So this is really due to selling price? MS. LEWIS: Which has to do with the manufacturer production costs which Decker outlined in the Engineering Analysis and then we apply a markup to the production costs to arrive at the manufacturer selling price.

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MR. ROY: Aniruddh Roy, Goodman. Page 170 So assuming that the manufacturer selling price goes up across the board for all manufacturers, what is the guarantee that the behavioral pattern of consumers will not change and they will not just simply choose to repair net products and stop buying you know, new PTACs? Does the study account for that in any way? MS. LEWIS: It's a good question and it's a concern we did hear from manufacturers also and kind of noted in the key issues a concern that sales can decline. I think that to the extent you are able to provide any data to help us model that and quantify that would be very valuable, but right now the shipments that they discussed assume steady volumes year to year. MS. PETRILLO-GROH: Can you point me to the production costs that you mentioned from Decker's analysis? Are those on earlier slides? MS. LEWIS: They would be the manufacturer production costs. I would have to scroll through those. They are at slides 33 and 34. The spreadsheet model is also published along with

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### the technical support document. Page 171

2 

### MS. PETRILLO-GROB: So just to make sure 3 I completely understand this looks at for the 4 conversion costs looks at the cost efficiency curves? 5 

### MS. LEWIS: No, the conversion costs are 6 separate from the manufacturer production costs. 7 

### MS. PETRILLO-GROB: I thought you said it 8 was based on the. 9 

### MS. LEWIS: The manufacturer selling 10 

### price is based on the manufacturer production costs II 

### so there's a markup applied to the manufacturer 12 

### production costs to reach the manufacturer's selling 13 

### price. The conversion costs are developed based on 14 

### a combination of manufacturer feedback and data 15 obtained through the course of the Engineering 16 Analysis, the teardowns and those costs try to 17 capture the investment that manufacturers will have 18 to make in everything from you know, physical assets 19 

### to design engineering in order to bring their product 20 

### lines into compliance with the new standard, so those 21 

### are separate from the material cost and selling 22 

### price.

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 172 MS, PETRILLO-GROH: Thanks, I misspoke, 2 The selling price had to do with the production cost. 3 MS. LEWIS: Exactly. 4 MS. PETRILLO-GROH: So on slide 33 and 34 5 the selling price has an increased incremental cost 6 for each of the efficiency levels. So if the 7 conversion costs are going up for energy efficiency 8 level, the shipments are remaining constant across 9 each efficiency level and the selling price is going 10 up for each efficiency level, why is the INPV lower II in trial standards 2 than in trial standards I? 12 MS. LEWIS: I think it really just has to 13 do with the extent to which revenues are rising, 14 projected revenues are rising relative to the 15 conversion costs. 16 MR. LAO: This is Chris Lau from Navigant. 17 So conversion costs are costs that manufacturers 18 have to invest to stay in the game and so it's a 19 trade off on INPV right? The higher conversion 20 costs are the lower industry net present value gets 21 in general. 22 Balancing that is, let's take an example.

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### So I'm looking at slide 80 and I look at TSL2, you 2 

### will see the INPV range is from 57.7 to 58.8 and the 3 lower bound is less than base case value and the 4 upper bound is above the base case value. All right, 5 

### the upper bound that's 0.3 million more than base 6 

### case. What's happening is the manufacturer 7 production cost is going up but we are assuming that 8 manufacturers keep the same gross margin percentage. 9 In other words, as their prices go up, 10 

### they're increasing the cost to the customer right and 11 

### making the same profit margin. So they are actually 12 

### making more profit than they would have than in the 13 

### base case. 14 

### In the lower bound we are assuming that 15 

### that cannot happen. Manufacturers are not able to 16 

### pass on all their costs and the result once you 17 

### subtract out the conversion costs the INPV is below 18 

### the base case value. 19 

### MS. PETRILLO-GROH: Thank you for the 20 

### additional explanation. I'm still hopefully a few 21 

### short questions. If I'm a manufacturer and I'm 22 

### going to implement a design option, I changed my line

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 174 in order to increase the efficiency I would want to 2 do it for the lowest cost option. So for me it 3 doesn't, I'm still a little unsure of why you are 4 looking at implementing for the design options to get 5 more efficiency and you have taken a low-hanging 6 fruit first, why there is suddenly that how that 7 goes from negative to positive in terms of the upper 8 bound and also can you confirm what the base case is 9 I'm looking at here? 10 MR. LAU: So to answer the first part of II that question, Chris Lau from Navigant. It is 12 unclear how much of your conversion costs you can 13 pass on to the market, like what your customers would 14 bear so we model our range of markups to show that 15 there's a level of uncertainty right. If you cannot 16 pass on -- if you can pass on all costs, that's upper 17 bound. 18 If you can pass on part of the cost, 19 that's the lower bound, that's what that represents. 20 It's not saying -- the upper and lower bound aren't 21 different design options, it's just saying given a 22 design path, there's uncertainty in terms of how the

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 175 pricing in the industry will change and so we model a 2 range of manufacturer's selling prices. Can you 3 repeat the second half of that question? 4 MS. PETRILLO-GROH: Sure the base case at 5 58.5 is that

-- 6 MR. LAU: That assumes manufacturer's move 7 to the ASHRAE level. ASHRAE 90.1-2013. 8 MS. PETRILLO-GROH: Thank you. 9 MR. ROY: Aniruddh Roy, Goodman. I 10 think it's impractical to assume that the same profit II margins would be maintained once you move to higher 12 efficiencies. I think it's pretty clear with the 13 appliance industry, you know the household goods like 14 refrigerators, you know we have reached a point I 15 guess in those products and I can't comment for the 16 industry but the general observation is that they 17 have been commoditized to an extent and so the profit 18 margin is not the same for let's say a premium 19 product versus a commoditized product. 20 And so now you are going to a higher 21 efficiency so it's very I think impractical to assume 22 that manufacturers will be able to maintain the same

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2 costs that you are mentioning here will affect that 3 in a way and also I would like to ask the question 4 over here, like in summary of TSL2 on slide 80 I see 5 expected conversion costs of a total of 7.6 million 6 dollars. 7 At what point do you make a judgment call 8 that it's too much for the industry? I mean you 9 know is one million too much, 10 million too much, 15 10 million too much? What exactly is I guess the 11 breaking point for our industry because you know 7.6 12 to me is a very big number. 13 MR. LAO: So I can't fully speak for DOE 14 but I think generally the consideration is that you 15 know conversion costs reduce INPV so INPV tends to be 16 the factor that DOE looks at, at least at first 17 blush. In the end it's a 7-factor rule, they take 18 into account all the costs versus all the benefits so 19 I don't know if there is a single conversion cost 20 value or a single percentage that has been defined as 21 a cut-off. It's a weighting. 22 MR. ROY: Thank you.

202-347-3700 Ace-FederalReporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page 177 MS, LEWIS: And to your first point just 2 to add that when you see these two numbers, consider 3 them bounds, They represent a range and we model 4 the two scenarios and one does take into an account 5 the prospect that manufacturers would not be able to 6 maintain the same margins and so this is just sort of 7 trying to define a range of potential impacts. 8 MR. ROY: I understand that but and this 9 is Aniruddh Roy, Goodman. I understand that but I 10 think this model is assuming that the operating 11 profit margin stays constant, is that correct? I 12 don't think it's assuming that it would vary, it 13 would go down. 14 MS. LEWIS: Well there are the two markup 15 scenarios I was talking about a couple of slides back 16 and in the preservation of gross margin percentage 17 scenario, it assumes the same gross margin percentage 18 in the preservation of operating profits scenario it 19 assumes that the gross margin percentage falls and 20 that manufacturers are only able to maintain the same 21 absolute dollar profit per unit sold. 22 MR. ROY: Is there a scenario where there

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## ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 Page 178 is absolutely no profit? MS. LEWIS: We did not model a scenario like that. We selected these scenarios based on kind of the feedback we received from manufacturers during the course of interviews. If you feel that you know, we should be considering a different lower bound, that's definitely something we would welcome in the comments. MR. ROY: Thank you. MS. LEWIS: Thank you. MR. BROOKMAN: Are we ready to move on? MS. LEWIS: So these overall impacts reflect our estimated impacts on the industry in aggregate, but to try to better capture some of the nuance DOE also evaluates impacts on subgroups of manufacturers that may be differently impacted by a standard. This next slide addresses the subgroup of manufacturers with production assets. During the course of analysis DOE identified 22 manufacturers of PTACs and PTHPs however most manufacturers import and distribute equipment produced by original equipment

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manufacturers overseas. 2 DOE identified a subset of domestic 3 manufacturers that own their own PTAC production Page 179

4 lines and analyzed these manufacturers as a distinct 5 subgroup. Part of the rationale for analyzing these 6 manufacturers separately is that they would be 7 expected to incur capital conversion costs or 8 one-time investments in equipment, tooling and other 9 physical assets that their competitors without 10 production assets would not face. 11 And they would also be expected to 12 experience a heavier R&D burden. This table presents 13 the lNPV results for manufacturers with production 14 assets compared with the industry as a whole and at 15 TSL2 manufacturers with production assets would be 16 expected to experience a change in lNPV in the range 17 of negative 2.3 % to negative 0.5% and to incur 18 conversion costs of 6.8 million dollars which is 19 equivalent to 89% of the industry total. 20 MR. ROSENSTOCK: Steve Rosenstock, EEl. 21 Again, I appreciate the slide but I think you know 22 again this is my interpretation is that it's

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# ( 2 3 4 5 6 7 8 9 10 11 12 13 14 IS 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 Page 180 basically, the manufacturers that are importing are the ones that have a chance at a positive INPV but domestic manufacturers it's all negative. So the way I'm looking at this is it seems to me, appears to me at this table that the only way to get a positive INPV is to outsource, import from overseas, so you don't have all those costs or am I missing something? MR. LAU: Chris Lau, Navigant. I could see how you would interpret it that way however keep in mind that these manufactures with production assets are competing today against foreign imports at levels both at baseline and above baseline today. MR. ROSENSTOCK: Steve Rosenstock, EEl. I appreciate that but again what this is saying is that the ones that are basically outsourcing are going to have a competitive advantage. MR. LAU: So what its saying is that manufacturers with production assets are having to make capital conversion investments and those that outsource will not, however I would expect that those that outsource would see those conversion costs come

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### back in the form of price increases. 2 MR. ROSENSTOCK: How would that be 3 possible? Page 181

4 

### MR. LAU: Because even if you are buying 5 from a foreign manufacturer and you are buying at 6 price today and tomorrow you need a more efficient 7 product, you will likely be paying a different price 8 for that product. 9 

### MR. ROSENSTOCK: Steve Rosenstock, EEl. 10 

### But if it's well now we are getting into 11 

### international economics here but if the foreign 12 manufacture-- 13 

### MR. BROOKMAN: And it's speculative 14 

### exchange rates or something? 15 

### MR. ROSENSTOCK: Well I didn't want to 16 

### talk about exchange rates or dumping of materials. 17 

### My wife works at an international law firm that's 18 

### what they handle is dumping of products and materials 19 

### into the U.S. It's very complicated but you know 20 

### let's face it with other appliances, you know 21 production has been outsourced as a way to reduce 22 prices and to keep their NPV's, that's been a trend

202-347-3700 Ace-Federal Reporters, Inc, 866-928-6509NOPRForPTACs andPTHPs October29,2014 Page 182 over 30 years for a significant number of appliances 2 so. 3 Again I know this is a summary table but 4 this is kind of what it appears to be leaning towards 5 and that to me, that is concerning, thank you. 6 MS. PETRILLO-GROH: How many manufacturers 7 did DOE identify with production assets? 8 MS. LEWIS: The subgroup includes 3 9 manufacturers. 10 MS. PETRILLO-GROH: 3 of 22 II manufacturers? 12 MS. LEWIS: Correct. 13 MS. PETRILLO-GROH: Do any of those 3 14 also qualify as small businesses? IS MS. LEWIS: No. 16 MS. PETRILLO-GROH: Did DOE conduct the 17 same analysis in 2008? 18 MS. LEWIS: I do not believe so no. 19 MS. PETRILLO-GROH: Did DOE identify 20 foreign and domestic manufacturers in 2008? 21 MS. LEWIS: I can't speak to that, I 22 don't know.

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### MS. PETRILLO-GROH: I see. Page 183

2 

### MR. MAJETTE: Why don't you submit that 3 as a comment because we can't, we just won't be able 4 to answer that on the fly right now. 5 MS. PETRILLO-GROH: So my concern is that 6 we have got a significant portion of the industry 7 total conversion costs being borne by 3 

### of the 22 8 manufacturers and as Steve mentioned it looks much 9 more favorable for those manufacturers who do not 10 

### produce units domestically. 11 

### MS. LEWIS: I think that's precisely why 12 

### DOE looked at this subgroup as distinct from the 13 

### industry as a whole. 14 

### MS. PETRILLO-GROH: Looked at the 15 

### subgroup but still is proposing the level? Is this 16 

### also broken out in the TSD perhaps for the other 17 

### trial standards levels? 18 

### MS. LEWIS: I'm sorry what is that 19 

### question exactly

-- have what broken out? 20 

### MS. PETRILLO-GROH: The subgroup. 21 

### MS. LEWIS: The subgroup analysis is 22 

### discussed in the technical support document in

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MS. PETRILLO-GROH: For the other TSLs? MS. LEWIS: Correct. Page 184

4 MS. PETRILLO-GROH: Could we just look at 5 that really quickly, I'm just interested to see. 6 MS. LEWIS: It's not in the slide deck, 7 sorry. 8 MS. WILLIAMS: Feel free to review the 9 two and please submit those comments to us, I don't 10 think we are going to be able to answer anything else II about that policy decision right now. 12 MS. PETRILLO-GROH: Thanks the TSD was 13 posted a little late to the docket. 14 MS. WILLIAMS: I apologize, I was not 15 aware. 16 MS. LEWIS: Any other question on that? 17 All right, finally DOE looks at the impacts of 18 standards on small businesses. Of the 22 PTAC 19 manufacturers identified, DOE identified 12 as small 20 businesses. This classification is based on the 21 Small Business Administration's small business size 22 standards which set a cap of 750 employees for a

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### manufacturer in the PTAC industry to be considered a 2 small business. 3 DOE used publicly available information to 4 research small businesses, contacted small businesses 5 directly and also asked other manufacturers for 6 information about small business during the course of 7 

### interviews. Based on this research, DOE did not 8 identify any small businesses that are original 9 equipment manufacturers of standard size PTACs and 10 

### PTHPs. II 

### Instead small businesses primarily import, 12 

### rebrand and distribute equipment manufactured 13 

### overseas, primarily in China. Because of this, DOE 14 

### does not expect small business to incur capital 15 

### conversion costs related to this rulemaking, however 16 

### small business can potentially experience an increase 17 

### in product purchase price from overseas original 18 

### equipment manufacturers if those manufacturers raise 19 

### prices to reflect their own conversion costs. 20 

### Small businesses could also incur testing 21 

### and certification costs for models redesigned to 22 comply with an amended standard and these costs were

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factored into overall industry conversion costs. Any questions? Page 186

Before turning it back to Bingyi I would like to request comment on the number of small business manufacturers identified on the potential impacts of amended standards on those small businesses and on the severity of those impacts and if there are any other comments related to the Manufacturer Impact Analysis, please feel free to raise those now. MR. BROOKMAN: Any other comments, we can start on some of the concerns that have been raised by industry members. Nothing additional? Okay, moving on. MR. YU: I promise this is the last time you will see me at this

-- now we will go into the Downstream Analyses. First were the 

## Lee Subgroup Analysis. The purpose of the 

## Lee Subgroup Analysis is to analyze the impacts of efficiency standards on small businesses, particularly independently operating lodging businesses. As mentioned in the previous analysis, the Small Business Association has

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### this definition of small business and for this 2 analysis we used the same definition to group 3 businesses into what they would consider small 4 businesses. 5 And for these businesses it applied a 6 discount rate premium to separate them from the Page 187

7 

### typical lodging business. The outputs, the LCC and 8 payback period results show that the effect of higher 9 PTAC and PTHP standards on small businesses is 10 

### similar to the effect on the full sample of 11 

### commercial customers. 12 

### For the Emissions Analysis the purpose is 13 

### to report emission impacts resulting from amended 14 

### energy conservation standards, including changes in 15 power plant emissions and full fuel cycle emissions. 16 DOE used the National Energy Modeling System to 17 

### derive emissions factors for carbon dioxide as well 18 

### as other gases. 19 

### The results you will see presented on the 20 

### next slide, this one. Here we show the cumulative 21 

### emissions reductions for PTACs and PTHPs. 22 MR. ROSENSTOCK Steve Rosenstock, EEI.

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### 866·928-6509NOPRForPTACsandPTHPs October29,2014 Page 188 Did these projections take into account the MATS Rule 2 that goes into effect next year, that's for the 3 Mercury and Air Toxic Standard that was finalized in 4 2011 I believe and takes effect next year basically 5 next April, that's part one. 6 Part two I'm sure the TSD was written 7 before the EPA's Clean Power Plan, you know the Clean 8 Power Plan calls for a 30% reduction in the C02 9 emissions from power plants, you know between now and 10 2030 basically. Is there a possibility of doing a 11 sensitivity analysis with the projection of that 12 rule, that's a two part question. 13 MR. YU: As to the mercury, I don't know 14 if we have that information handy at the moment 15 however that's something that we can definitely take 16 a look at if it's not included and include that in 17 the Emissions Analysis. 18 MS. WILLIAMS: This is Alison, MATS is 19 included in this. 20 MR. ROSENSTOCK: So this is Steve 21 Rosenstock, EEl. So this is after I'll say at least 22 50% reduction that's going to happen next year right?

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MR. BROOKMAN: Is it that much, 50 Page 189

2 really? So if it's in statute, then you would think 3 the Department would consider that right. 4 MR. ROSENSTOCK: The other one is more 5 speculative. Steve Rosenstock, EEl. The EPA rule 6 right now just announced in June they are going to 7 finalize it next year but again since the compliance 8 period for that EPA rule would start under the 9 schedule basically states have to submit their plans 10 in 2016 to implement, starting in 2016 so that's well II within the

-- before the starting period of this 12 supply standard. 13 MS. WILLIAMS: This is Alison. As 14 people have stated before DOE does not include 15 proposed rules in its analyses and typically does not 16 consider those until they become final because 17 obviously with this rule, especially among others you 18 never know what's going to happen between the 19 proposal and the final. 20 MR. ROSENSTOCK: Again Steve Rosenstock, 21 thank you, but again looking ahead when you see the 22 numbers in terms of the value of the benefits it can

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be a -- it's significant just because of the fact 2 that the estimated value of the benefits that you Page 190

3 will see in a couple of slides is in many cases a lot 4 higher than the benefits that the consumer is going 5 to see so in this case in particular, it's such a 6 massive number that could be seen as a benefit that 7 for some policy makers it could make a difference, 8 thank you. 9 MR. BROOKMAN: Okay thank you, yes Sarah. 10 MS. BUTLER: Sarah Butler, DOE. I just 11 want to reiterate first what Alison said that we 12 can't speculate on proposed rules, we can only look 13 at what the facts are at the time. But DOE does have 14 a provision known as exception relief, it's under 42 15 USC 7194, if the facts change. You will have to look 16 at the provisions under that law. You can go to the 17 Office of Hearing and Appeals and ask for it in an 18 instance where the facts analyzed at the time of the 19 rulemaking change. 20 So if EPA issued a rule that completely 21 changed the circumstances that's something that you 22 could look into but we can't speculate what EPA might

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### ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014

do in the future years down the line while we are doing a rulemaking. MR. ROSENSTOCK: Steve Rosenstock, EEl. I understanding that completely. I am just saying Page 191

that for future rules it wouldn't be bad to have that as a part of a Sensitivity Analysis especially when the number shown is a benefit for the C02 or show much larger than the other numbers being shown in the proposed rule. MR. BROOKMAN: Yeah okay, we got it. Any comments here? We are about to talk about Emissions Monetization. MS. PETRILLO-GROH: I have one question. Okay, so I'm just looking at C02, see an increase for each of the trial standards levels. Should

-- is that, I mean I don't actually know how the carbon dioxide is tracked with respect to the equipment, is it probably very complex. So simplistically can you tell me if I'm on the right track? DOE implements a standard. The standard is X percent more efficient than the baseline. If you are looking at all of the trial standards levels,

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-- the number of carbon dioxide track linearly between the increase in efficiency. So increase in efficiency of you know, going from the trial standard 1 to trial standard 2 is that just based on the efficiency increase of the equipment? MS. WILLIAMS: It's specifically tied to the energy savings which mayor may not track exactly with efficiency increase depending on what the jumps are between the levels. So in general you would see in the emissions a similar trend to the energy savings, the emissions are yearly factors so I'm trying to think through this. I don't think there's anything between the standard levels that would change like where in time the savings occur so yeah, are they

-- MR. BRUNDAGE: I'll give it a shot at my interpretation. Don Brundage. When you run NEMS these are drops in the ocean compared to the total energy use of the country when you are on the NEMS model so in theory it would vary, but in reality I think you would see proportional if you have four

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### times as many kilowatt hours savings you will have 2 

### four times as much C02 savings. Page 193

3 

### Because these when you run the change 4 

### cases on NEMS it's going to -- it's not going to 5 change the total character of the energy use. I 6 guess this is such a small percentage of the total 7 country's energy use. Is that close? 8 

### MS. WILLIAMS: Thank you, yeah I would 9 agree it would be a proportional effect, yeah. 10 

### MS. PETRILLO-GROH: So since you are 11 

### looking at an efficiency increase of I guess 4%, 8%, 12 

### 12% you know what that's based on, but the 13 

### differentials will be the same between 2 and 3 right. 14 

### Why would you look at different numbers going from, IS 

### if the

-- trial standards level 2 to trial standards 16 

### level 3 if you are looking at the same net gain in 17 

### efficiency? 18 

### MR. BROOKMAN: The Department is doing 19 

### their diligence there. They wanted to present their 20 

### results. 21 

### MS. WILLIAMS: Are you just asking like 22 

### for example the energy savings at TSL2 are .06 

### and at

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## ( NOPRForPTACsandPTHPs October29,2014 Page 194 TSL3 they are .12, the emissions for carbon from 4 to 2 8 so they are approximately doubling in both cases, 3 is that where you are going with this or no? 4 MS. PETRILLO-GROH: Yes, they are 5 approximately doubling, but it seems like that's just 6 from 2 to 3, wouldn't it go from 3 to 4 the same? 7 MS. WILLIAMS: I mean so 3 to 

### 4 on energy 8 savings goes from .12 to .15 and here it's 8.6211, 9 I'm not doing the exact math but it looks roughly 10 somewhat 11 MS. PETRILLO-GROH: Isn't it .8 to .12 12 for that? 13 MS. WILLIAMS: Sorry. 14 MS. PETRILLO-GROH: 4%, 8%, 16%. 15 MS. WILLIAMS: Oh, so I mean again I'm 16 looking at the energy savings, not the percent 17 efficiency increase and so those may not be actually 18 tied together. 19 MS. PETRILLO-GROH: Thank you that helps. 20 MR. BROOKMAN: Okay. 21 MR. YU: Thank you. For the Emissions 22 Monetization the purpose of this analysis is to

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estimate the potential monetary benefit of reduced Page 195

2 power plant emissions resulting from the considered 3 standard levels. Methodology used is utilizing the 4 social cost of carbon as intended to be a monetary 5 measure of the incremental damage resulting from 6 greenhouse gas emissions. 7 DOE used the most recent U.S. government 8 interagency estimates of the SCC for emissions in 9 2015 in per metric ton. SCC is in constant dollars 10 and it increases over time. 11 MR. BRUNDAGE: Don Brundage, Southern 12 Company. It's important to note that the social 13 costs of carbon is not allowed to be included within 14 the operating cost of performance metrics benefit to 15 the consumer. This is another benefit to society 16 because the cost benefit of the efficiency 17 improvement is specifically required to be operating 18 cost to the consumer. I just want to make that 19 clear. 20 MR. YU: Thank you. Here are the results 21 of the Emissions Monetization Analysis. We will move 22 on to the Utility Impact Analyst.

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MR. ROSENSTOCK: Page 196 Steve Rosenstock, EEl. 2 If we could go back again, I'm sorry. Again, on my 3 previous point you know we were talking about net 4 present value to customer benefits of a TSL2 of 10.7 5 to 69 million and here we are showing the C02 values, 6 numbers of 28 to 412 million so I mean that's another 7 reason is

-- I have seen where sometimes those 8 numbers get combined in the customer benefits and the 9 C02 values get combined in certain tables and so I 10 think that's why we are stressing that things are 11 dramatically changing in the power sector. 12 And so as emissions go down these values, 13 the total values, the cumulative values especially 14 are going to go down significantly as well and you 15 know the MATS rule and other rules, you know the 16 level of MATS is going down 75% over the last 20 17 years in terms of actual emissions. 18 MR. BROOKMAN: You would like to find 19 some way for the Department to consider these things? 20 MR. ROSENSTOCK: Well let me put it this 21 way, it's a matter of just

-- you know the natural is 22 final, the Cross State Air Pollution Rule has now

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### , \ \ 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014

been reauthorized that could be implemented again Page 197 starting January 1st. That has to do with regional ozone, S02 and NOX, it's just a matter of there

-- there can be with these numbers, you are showing a range but they can be also, there's also the sensitivity of just what's happening with the EPA rules they are going to have dramatic impacts on the actual physical emissions which also corresponds to the monetized options. MR. BROOKMAN: Okay, Don? MR. BRUNDAGE: Don Brundage. I agree that you can't include things that are not -- that haven't actually been passed and aren't final. However, that does not prevent you from including in your intangible considerations just the fact that the whole based DOE study because it operates under the same rules of not doing anything final tends to be higher energy use and higher emissions it is likely to actually occur. Because EIA operates under the same rules you do so it needs to be understood that this is a pessimistic view or it is a high view of the amount

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of C02 savings compared to what's likely to occur. Page 198

2 It's procedurally correct but it needs to understand 3 that this is probably a higher C02 savings that's 4 likely to actually occur and that's one of the 5 intangibles I think you are allowed to include in 6 your consideration for future rulemakings, thank you. 7 MR. BROOKMAN: Thank you. 8 MR. YU: The next analysis is the Utility 9 Impact Analysis. The purpose of this analysis is to 10 estimate the changes in the electric utility, II electric installed capacity and generation that 12 results for each TSL. Methodology used here is the 13 National Energy Savings is used to provide a stream 14 of energy savings over the analysis period and it 15 utilizes the NEMS National Energy Modeling System 16 modified to represent the impacts of the DOE 17 standards program. 18 Outputs are reductions in total 19 electricity generation. Reductions in primary fuel 20 consumption, changes to the mix of electricity 21 generation by fuel type as well as changes to total 22 installed capacity and these outputs can be found in

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### the Chapter 15 of the technical support document. Page 199



### 2 DOE also performed an Employment Analysis 3 to estimate the number of jobs created or eliminated 4 nationally as a consequence of the amended national 5 

### standards. The methodology DOE used was utilizing 6 the ImSET model or the impact of Sector Energy 7 Technologies for the evaluation of indirect 8 employment impacts as well as direct employment 9 impacts to the commercial air-conditioning industry. 10 

### Changes in equipment and energy 11 expenditures are taken from the national Energy 12 

### Savings Analysis. And the outputs which can be 13 

### found in Chapter 16 of the TSD represent change to 14 

### commercial and energy sector employment again as a 15 

### consequence of amended standards. 16 

### DOE also performed another analysis as 17 

### well as the last analysis discussed today the 18 

### Regulatory Impact Analysis. The purpose is to 19 

### investigate the national impacts of non-regulatory 20 

### alternatives to mandatory amended conservation 21 

### standards. 22 MS. PETRILLO-GROH: I'm sorry I have a

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### ( 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014 Page200 question on the previous slide, the Employment Analysis. If memory serves correctly, looking at the NOPR, it looks like at one bound, it's given as a range right? At one end of that range is -- you have 170 in parenthesis which I assume are 170 jobs lost at and that's being considered for each TSL? MS. LEWIS: This is Jessica with Navigant. So there are a couple of different employment analyses and there's an indirect employment analysis and a direct employment analysis.

What I think you are referring to is the direct employment analysis conducted as part of the Manufacturer Impact Analysis. And there we do present a range and it's that negative 170 you are talking about. So the upper end of the range for the direct employment impacts which refers to people employed directly in the production of this equipment, the upper boundary range assumes a slight increase which says that if all production stays in the U.S. in these, you know the efficiency increases and there is a little potentially greater labor

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### demand you might see a slight gain in jobs and then 2 the lower bound that negative 170 or something right 3 along those lines assumes that all direct employment 4 is eliminated and potentially all production shifts 5 overseas. 6 

### MS. PETRILLO-GROH: I'm just curious how 7 DOE got to that upper limit if 89% of the industry 8 conversion costs are going to be performed by the 3 9 

### manufacturers that employ those 170 people and we saw 10 

### a significantly different picture for manufacturers II 

### that are overseas, thank you. 12 

### MS. LEWIS: That is an upper limit so 13 

### it's definitely not saying either/or so much as 14 

### here's a range and the likely impact will be 15 

### somewhere in there. And then the way that's 16 

### calculated is based on data acquired from the annual 17 

### survey of manufacturers and it's factored into the 18 

### analysis and projected out over a period of years. 19 

### MR. BROOKMAN: Chris do you want to add 20 

### here? 21 

### MR. LAU: Yes just one quick clarifying 22 comment I probably should have made earlier sorry,

202-347-3700 Ace-Federal Reporters, Inc. 866-928-6509NOPRForPTACsandPTHPs October29,2014 Page202 Chris Lau, Navigant. When we looked at the subgroup manufacturers of production assets, not all of those production assets are in the U.S. It's just to clarify it's not domestic versus foreign, it's manufacturers actually that own tooling. MR. YU: So that covers the analyses performed for this rulemaking. MR. ROY: Just a question on slide 88 so the social costs of carbon numbers, those are the 2013 values right? MR. YU: That is correct. I started the Regulatory Impact Analysis so I'll go ahead and finish that. We were discussing the methodology. DOE modified NIA spreadsheet of National Impact Analysis spreadsheet, to represent the following non-regulatory alternatives. No new regulatory action, customer rebates, customer tax credits, manufacturer tax credits, voluntary efficiency targets, as well as bulk government purchases. MR. BRUNDAGE: Don Brundage, Southern Company. It should be noted that pushing efficiency standards, this and others all the way to the cost

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effectiveness limit really removes most of the 2 non-regulatory alternatives from consideration. 3 There's no reason to have customer rebates, tax 4 credits, manufacturer tax credits for something 5 that's already mandatory to do. 6 And voluntary efficiency targets and Page203

7 programs such as Energy Star really don't have a lot 8 of room to operate when you push standards all the 9 way to the cost effectiveness limit. That just 10 needs to be understood that it's happening. There's 11 very little room left for Energy Star or other 12 voluntary energy programs when the mandatory minimums 13 are set so high, thank you. 14 MS. PETRILLO-GROH: Chris thanks for 15 clarifying the manufacturers with production assets. 16 I just have another question on that. So 3 of the 17 22 manufacturers have production assets that are held 18 in the United States, what is the case for these 19 other 19, do they have private brand or rent 20 facilities or I don't know if there is a combination 21 of the two. 22 MR. LAU: Generally they are purchasing

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### off the shelf products from overseas, they are 2 importing them under their own brand. 3 

### MR. BROOKMAN: And they are assembling 4 them? 5 

### MR. LAU: They are generally already 6 assembled as far as I know. 7 

### MS. PETRILLO-GROH: Is commercial 8 equipment typically purchased off the shelf? 9 

### MR. LAU: We're talking standard PTACs 10 

### right? My understanding is that these are -- my 11 

### understanding and I welcome data otherwise is that 12 these are being made sorry, these are imported 13 

### products that are being manufactured by overseas Page204

14 

### manufacturers. My understanding is that most of the 15 

### standard product is. There's a minimum amount of 16 

### specification that goes into them, they are sort of 17

-- 

### there may be some customization of a standard 18 

### model. 19 

### MS. PETRILLO-GROH: So I guess my 20 

### question is what's the difference between a 21 manufacturer with a production asset and a foreign 22 manufacturer without production assets?

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### MR. LAD: The differentiation we are 2 making is a manufacturer that has no capital Page205



### 3 investment so as the standard increases they are not 4 paying for any new tooling, or production line 5 changes versus manufacturers actually own the tooling 6 which in that scenario they incur a much higher 7 capital conversion cost. 8 

### MS. PETRILLO-GROH: So a manufacturer 9 that doesn't own its own tooling isn't essentially 10 

### manufacturing these units? II 

### MR. LAD: That's correct. 12 

### MS. PETRILLO-GROH: So of the 3 13 

### manufacturers that do produce these units, almost 90% 14 

### of the conversion costs will be borne by them? 15 

### MR. LAD: They're the only manufacturer's 16 

### capital conversion costs. 17 

### MS. PETRILLO-GROH: Do those 3 18 

### manufacturers sell to the other 19? 19 

### MR. LAD: I don't believe so. 20 

### MS. PETRILLO-GROH: Let me think on that 21 

### some more and follow up with a question because it 22 still isn't making sense to me but I don't want to

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### take up any more time, thanks. MR. BROOKMAN: We were just about to 3 finish with Regulatory Impact Analysis. Page206

4 

### MR. YO: The National Energy Savings and 5 the Net Present Value for these non-regulatory 6 alternatives are an output of this analysis and the 7 impact of non-regulatory alternatives on purchase 8 price and the use of energy efficient equipment is 9 also an output and these outputs can be found in 10 

### Chapter 17 of the technical support document. 11 

### We will summarize what the proposed 12 

### standard is. The proposed standard is trial 13 

### standard level 2 for packaged terminal 14 

### air-conditioners and packaged terminal heat pumps. 15 

### On the table you will see for the different equipment 16 

### types, equipment classes, the proposed levels. 17 

### MR. ROSENSTOCK: Steve Rosenstock, just a 18 

### very quick comment. I just want to say I just want 19 

### to thank you for keeping the EER's for the PTACs and 20 

### the heat pumps the same, I think that will lead to 21 

### some economies that scale, that's what ASHRAE's done, 22 

### that's what DOE has done with other rules, so I know

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we are not at the final rule yet, but keeping those 2 levels the same, I think is a very good

-- is the 3 right way to go in my view, thank you. 4 MR. BROOKMAN: Okay thanks. 5 MR. YU: Here is the summary of the 6 impacts of the amended standards. At TSL2 the Page207

7 lifetime energy savings

-- I'm going to go ahead and 8 read this off the slide. The lifetime energy 9 savings for PTACs and PTHPs purchased in the 30-year 10 period that begins in the year of expected compliance 11 with the amended standards 2019-2048 amounts to 0.06 12 quadrillion British thermal units. 13 The cumulative net present value of total 14 customer costs and savings of the proposed standards 15 for PTACs and PTHPs ranges from 10.7 million dollars 16 at a 7% discount rate to 69 million dollars at a 3% 17 discount rate. This NPV expresses the estimated 18 total value of future operating cost savings minus 19 the estimated increased equipment cost for equipment 20 purchased in 2019 to 2048. 21 And the last slide is information as to 22 how to submit written comments. Should I be the one

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2 MR. BROOKMAN: Just leave that up there 3 for now. 4 MR. YU: Okay, I'm sorry, thanks. 5 MR. ROY: Aniruddh Roy, Goodman 6 Manufacturing. A question on slide 95, so you say 7 .06 quads what exactly constitutes significant in 8 terms of energy you know quads saved, is there a 9 specific number that DOE has in mind when you make 10 the determination that .06 over a 30-year period is II significant? Because one could argue that even .001 12 quads might be significant from you know ASHRAE 13 90.1-2013 so what constitutes a significant in DOE's 14 books? 15 MS. BUTLER: Sarah Butler, DOE. 16 Significant is not defined in the statute. I said 17 significant is not defined under the statute so we 18 just have to look at the facts of each individual 19 circumstance and make a determination according to 20 the appropriate burden to determine what significant 21 is. 22 MR. BROOKMAN: Additional comments?

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### Okay let's take it to that final slide and as we had 2 promised first thing this morning now is another 3 opportunity for anybody who wishes to make closing 4 remarks to raise any additional issues that haven't 5 been raised sufficiently during the course of the 6 

### day. I see yes please, Marshall? 7 

### MR. HUNT: Marshall Hunt, PG&E. I have 8 prepared a little power point presentation I would be 9 happy to forward it will be in our comments that 10 

### covers the 90.1 ASHRAE 90.1 requirement and Title 24, II 

### what's the best way of proceeding to get that out to 12 

### people? 13 

### MR. MAJETTE: Just go ahead and send that 14 

### out as a comment. 15 

### MR. HUNT: Will others be able to see it 16 

### before? 17 

### MR. MAJETTE: Yes, we will add it to the 18 

### documents, so it will be there to be seen. 19 

### MR. HUNT: Okay I'll put that in there so 20 

### people can find it. 21 

### MR. BROOKMAN: And Marshall it's in the 22 form of power point slides?

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## ( 2 3 

### 4 quickly. NOPRForPTACsandPTHPs October29,2014



### MR. HUNT: Yes. MR. BROOKMAN: Okay. MR. HUNT: Just to summarize it real Page210

5 

### MR. ROSENSTOCK: Steve Rosenstock, EEl. 6 Just to follow-up it won't be on the docket until the 7 day after you submit it or so. We won't get to see 8 it until you submit it and then it gets on 9 regulations.gov so none of us will be able to see it 10 

### that way until it gets closer and then they post it II 

### on the you know, on the website. 12 

### MR. HUNT: I'll try to get it in next 13 

### week. I want to have a little more double-checking 14 

### to make sure I'm right so I project next week I'll 15 

### get it in there. 16 

### MR. BROOKMAN: Okay so yes, Don Brundage? 17 

### MR. BRUNDAGE: I don't have a lot of 18 

### quantitative information to go with it, but I would 19 

### suspect that the setting of standards, that slide 20 

### particularly, for the smaller units with the higher 21 

### EER is likely to have some potential humidity control 22 impacts in warm, humid climates.

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# " 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 NOPRForPTACsandPTHPs October29,2014

If you look at, I'm just looking at Page211 comparisons to the air-conditioning -- to the single family air-conditioning standard and these numbers PTAC under 7,000 Btu/h per hour EER of 12.6, that's even higher EER than the 12.2 for smaller equipment for California and New Mexico and Nevada and Arizona.

And that was determined based on analysis there that it was not a good idea to do in Southern states because of the impact on humidity control. Some of these issues would go away if you had any incentive to do variable speed operation for this type of equipment, but you don't have that with EER. Going to variable speed will hurt your EER, other things being equal because of the additional power usage of the variable speed unit. But it would definitely save energy. It may be something that's beyond the scope of what you can do for this rulemaking but I think it would serve the interests of energy efficiency and energy conservation in real-life maybe not as much through modeling of it if you went to something like an IER performance metric for this class of equipment, thank

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MR. BROOKMAN: Thank you Marshall? Okay so I think that covers the content that we set out to cover this morning, I'll turn it back to Ron Majette to review this final slide and for my part thank you we covered a lot of ground today. MR. MAJETTE: I just want to thank everybody for corning out. I appreciate the interactive role play we had today. And again if you have more follow-up questions just go ahead and submit those as comments. If you send comments directly to my email address I'll try my best to answer for the most part, it has to be viewed as being a public comment, so just make sure that any questions that would be beneficial to everybody I would have to place that into the docket file, all right. So I'm not saying I'm not your buddy, or I'm not your friend or anything, you can't call me, but make sure the comments that are germane to this rulemaking and it's for public use and we will be putting those into the docket, thanks.

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### P ,m, ) 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22

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### Safe travels, Page213 

### (Whereupon the meeting adjourned at 2:46

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## CERTIFICATEOFCOURTREPORTER

I,

## GAYNELLT. CATHERINE, CourtReporter,do hereby certifythatthetestimonycontainedhereinis atruerecord ofthetestimonygivenby saidwitness, andIfurthercertify thatIamneitherattorneynorcounselfor, relatedto, or employedbyanyofthepartiestothe actioninwhichthis statementistaken; and, further, thatIamnotarelativeor anemployeeofanyattorneyorcounselemployedbythe partieshereto,orfinanciallyinterestedintheaction. 241