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 UNITED STATES DEPARTMENT OF ENERGY 

 + + + + + 

 ENERGY EFFICIENCY AND RENEWABLE ENERGY 

 + + + + + 

ENERGY CONSERVATION STANDARDS FOR RESIDENTIAL 

 FURNACES 

 + + + + + 

 NOTICE OF PROPOSED RULEMAKING (NOPR) 

 + + + + + 

 PUBLIC MEETING 

 + + + + + 

 WEDNESDAY 

 MARCH 31, 2010 

 + + + + + 

 The Public Meeting convened in Room 

8E-089 in the Forrestal Building, 1000 

Independence Avenue, S.W., Washington, D.C., 

at 9:00 a.m., Douglas Brookman, Facilitator, 

presiding. 

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PRESENT: 

DOUGLAS BROOKMAN, Facilitator 

KARIM AMRANE, Ph.D., AHRI 

ASHLEY ARMSTRONG, Navigant Consulting 

DANIEL J. ARNOLD, Nordyne 

TIM BALLO, Earthjustice 

DONALD M. BRUNDAGE, Southern Company 

LANE WESLEY BURT, Natural Resources 

 Defense Council 

DAVID B. CALABRESE, AHRI 

ABIGAIL DAKEN, EPA ENERGY STAR 

ANDREW deLASKI, ASAP 

ROBERT ELLIOT, National Propane Gas 

 Association 

CYRIL E. FOWBLE IV, Lennox International 

TALBOT H. GEE, HARDI 

AARON HERZON, Nordyne 

NATE HILL, American Public Gas Association 

SAMUEL A JASINSKI, Navigant Consulting 

CHRISTOPHER LAU, Navigant Consulting 

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PRESENT (Con't.): 

ALEX LEKOV, Lawrence Berkeley National 

 Laboratory 

JOANNA MAUER, Appliance Standards Awareness 

 Project 

CHARLES McCRUDDEN, ACCA 

KAREN B. MEYERS, Rheem Heating & Cooling 

JEFF NICHOLS, Johnson Controls 

JOHN PROCTOR, Proctor Engineering Group 

JIM RANFONE, American Gas Association 

MIKE RIVEST, Navigant Consulting 

STEVEN J. ROSENSTOCK, Edison Electric 

 Institute 

HARVEY SACHS, ACEEE 

FRANK STANONIK, AHRI 

ROBERT SWILIK, Carrier 

JOHN MICHAEL TALBOTT 

MOLLY TROMBLEY-McCANN, Energy Solutions 

JAMES T. VerSHAW, Ingersoll Rand, Trane 

TED WILLIAMS, American Gas Association 

KARL ZIA, Carrier 

 TABLE OF CONTENTS 

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 Page 

Welcome 

 Michael McCabe................. 6 

Attendee Introductions and 

Agenda Review 

 Doug Brookman.................. 9 

Introduction 

 Mohammed Khan.................. 17 

Brief Opening Remarks from 

Interested Parties 

 Doug Brookman.................. 20 

Rulemaking Overview 

 Mohammed Khan.................. 53 

Scope of Coverage, Regional 

Standards Background, Consensus 

Agreement, and Test Procedures 

 Adam Darlington................ 60 

Market and Technology Assessment, 

Screening Analysis, and Engineering 

Analysis 

 Adam Darlington................ 144 

Markups for Equipment Price Determination, Energy Use Analysis, Life-Cycle 

Cost and Payback Period Analysis 

 Alex Lekov..................... 179 

Shipments Analysis, National Impacts 

Analysis, LCC Subgroup Analysis 

 Alex Lekov..................... 212 

Manufacturer Impact Analysis 

 Rob Carmichael................. 232 

 TABLE OF CONTENTS (Con't.) 

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 Page 

Utility Impacts, Employer Impacts, 

Environmental Impacts, and 

Regulatory Impacts Analyses 

 Alex Lekov..................... 241 

Next Steps and Closing 

 Mohammed Khan.................. 269 

Adjourn.............................. 270 

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1 P-R-O-C-E-E-D-I-N-G-S 

2 (9:03 A.M.) 

3 FACILITATOR BROOKMAN: Let's do get 

4 started. Good morning everybody. Welcome. 

5 My name is Doug Brookman. I am fortunate to 

6 be able to introduce Michael McCabe from the 

7 Department of Energy for welcoming remarks. 

8 MR. McCABE: Good morning. I would 

9 like to welcome everybody to today's public 

10 meeting. There are a lot of familiar faces 

11 here but some who are new. 

12 As a matter of introduction, I am 

13 Michael McCabe and I, as of this week, I am 

14 supervising the Department of Energy's 

15 Applying Standards Building Codes and ENERGY 

16 STAR activities. I have been part of the 

17 program on and off for those who know me, my 

18 sick sense of humor, have been involved with 

19 the program for just a short while since 

20 February of 1979. 

21 For those who are familiar and 

22 recognize welcome the new people. I look 

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1 forward to having opportunities to get to meet 

2 you, talk to you, understand what the issues 

3 are. 

4 This rulemaking is a continuation 

5 of one that had started some years ago, I 

6 think that some folks are aware of, and with 

7 the change in legislation as the result of a 

8 court case, there are a number of new issues 

9 that we are embarking on for our consideration 

10 of the input from folks who have not been part 

11 of this process in the past, such as looking 

12 at HARDI and the air conditioning contractors 

13 are new, from my perspective, to this process 

14 although we have had discussions over the last 

15 couple years, looking at what the effects of 

16 the regional standards and how the product is 

17 marketed and what the impacts are and 

18 considerations will be particularly useful in 

19 this process. 

20 Again, I would like to welcome 

21 everybody, encourage an open and extensive 

22 dialogue. This process is very different than 

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1 what it was when I got started. I think that, 

2 looking at John Proctor, he is relatively new 

3 to this. He has only been associated with the 

4 program for about ten years, as far as 

5 participating in the meetings. But he was at 

6 the tail end of our panel discussion where 

7 five or six DOE employees would sit up at a 

8 panel and ask questions of the speaker, which 

9 wasn't particularly effective. So we went to 

10 this informal process. 

11 And this one we have designed it so 

12 as to encourage and facilitate discussion and 

13 actually for folks to challenge each other 

14 because you guys know the marketplace, the 

15 products a lot better than we do, either 

16 because you manufacture the products, you sell 

17 the products, or in the case of some of the 

18 efficiency advocates, they are getting out 

19 into the industry, into the marketplace a lot 

20 more than we do and have issues and 

21 appreciation of those issues better than what 

22 we do. 

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1 So I would encourage everybody to 

2 participate actively, challenge, add to, or 

3 take away from what others have to say because 

4 that can only make the record better for this 

5 rulemaking. 

6 But again, I would like to welcome 

7 everybody and recognize Mohammed Khan, who is 

8 the project lead for this rulemaking. And I 

9 will apologize in advance that I have got to 

10 leave early for a number of things which have 

11 already been schedule. So I will turn it over 

12 to Doug and to Mohammed. 

13 FACILITATOR BROOKMAN: Thank you. 

14 We are going, as we have done in the past, 

15 provide an opportunity for each person to 

16 introduce him or herself. If you would say, 

17 your name and organizational affiliation. And 

18 I think all of you registered, gave a business 

19 card to Brenda as you came in the door today. 

20 The Department will supply a photocopy of all 

21 those business cards accumulated. So we don't 

22 need to capture everybody's name and 

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1 organizational affiliation on the record. I 

2 will start with you, John. Name and 

3 organizational affiliation around the room. 

4 MR. PROCTOR: John Proctor, Proctor 

5 Engineering Group. 

6 MR. GEE: Talbot Gee, with the 

7 Heating Air Conditioning Refrigeration 

8 Distributors International. 

9 MR. McCRUDDEN: Charlie McCrudden, 

10 Air Conditioning Contractors of America. 

11 MR. FOWBLE: Cyril Fowble, Lennox 

12 International. 

13 MR. ZIA: Karl Zia, Carrier 

14 Corporation. 

15 MR. ROSENSTOCK: Steve Rosenstock, 

16 Edison Electric Institute. 

17 MR. BURT: Lane Burt, NRDC. 

18 MR. SACHS: Harvey Sachs, American 

19 Council for an Energy Efficient Economy. 

20 MR. BALLO: Tim Ballo, 

21 Earthjustice. 

22 MS. TROMBLEY-McCANN: Molly 

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1 Trombley-McCann, Pacific Gas and Electric. 

2 DR. AMRANE: Karim Amrane, Air3 Conditioning, Heating and Refrigeration 

4 Institute. 

5 MR. STANONIK: Frank Stanonik, 

6 AHRI. 

7 MS. MEYERS: Karen Meyers, Rheem 

8 Manufacturing. 

9 MR. VER SHAW: Jim VerShaw, 

10 Ingersoll Rand/Trane. 

11 MS. KOHL: Betsy Kohl, Department 

12 of Energy, Office of General Counsel. 

13 MR. McCABE: Michael McCabe, 

14 Department of Energy. 

15 MR. KHAN: Mohammed Khan, 

16 Department of Energy. 

17 MR. DARLINGTON: Adam Darlington, 

18 Navigant Consulting. 

19 MR. CARMICHAEL: Rob Carmichael, 

20 Navigant Consulting. 

21 MS. ARMSTRONG: Ashley Armstrong, 

22 Navigant Consulting. 

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1 MR. LEKOV: Alex Lekov, Lawrence 

2 Berkeley National Laboratories. 

3 MR. TALBOTT: John Talbott, 

4 consultant. 

5 MR. RANFONE: Jim Ranfone, American 

6 Gas Association. 

7 MR. WILLIAMS: Ted Williams, 

8 American Gas Association. 

9 MR. JASINSKI: Sam Jasinski, 

10 Navigant Consulting. 

11 MR. PEGORS: Mika Pegors, Navigant 

12 Consulting. 

13 MR. ARNOLD: Dan Arnold, Nordyne. 

14 MR. HERZON: Aaron Herzon, Nordyne. 

15 MS. DAKEN: Abigail Daken, EPA 

16 ENERGY STAR. 

17 MS. MAUER: Joanna Mauer, Appliance 

18 Standards Awareness Project. 

19 MR. SWILIK: Robert Swilik, Carrier 

20 Corporation. 

21 MR. NICHOLS: Jeff Nichols, Johnson 

22 Controls. 

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1 MR. BRUNDAGE: Don Brundage, 

2 Southern Company. 

3 MR. SCHEER: Rich Scheer, 

4 Energetics. 

5 MR. LAU: Chris Lau, Navigant 

6 Consulting. 

7 MR. RIVEST: Mike Rivest, Navigant 

8 Consulting. 

9 FACILITATOR BROOKMAN: Everybody, 

10 got a chance? 

11 Okay, I think all of you received a 

12 packet when you checked in. The packet has an 

13 agenda, the PowerPoint slides for today, as 

14 well as comments from interested parties in 

15 today's meeting. 

16 I am going to run through this very 

17 briefly and then we will hear from Mohammed 

18 Khan. Immediately following this agenda 

19 review, as I said, we will hear form Mohammed 

20 Khan. Following that, there is an opportunity 

21 for each person that wishes to do so to make 

22 brief summary remarks. Issues that are of 

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1 interest to individuals in the room and a few 

2 people have already signed up to do that, so 

3 we have you listed. That shouldn't restrict 

4 people. If you want to make a comment here at 

5 the outset, please do so. 

6 Following that, we are going to 

7 have a scope of coverage regional standards 

8 background, consensus agreement, and test 

9 procedures overview. And following that, 

10 market and technology assessment, screening 

11 analysis, and engineering analysis. We will 

12 take a break mid-morning around about 10:30, 

13 10:45 or so. 

14 And then immediately following the 

15 break you can see is listed in your agenda 

16 markups for equipment price determination, 

17 energy use analysis, life-cycle cost and 

18 payback period analysis. Following that, 

19 shipments analysis, national impacts analysis, 

20 LCC subgroup analysis; manufacturer impact 

21 analysis; utility impacts, employer impacts, 

22 environmental impacts, and regulatory impacts 

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1 analyses. 

2 And then there is an opportunity 

3 again at the end of the day today, which we 

4 anticipate will be around about 12:30 or so. 

5 We will see. The Department is trying hard to 

6 make sure these meetings are quite efficient 

7 and so they are pressing the consultants and 

8 everybody to see if they can't not waste 

9 people's time. That is the plan. 

10 So there is another opportunity at 

11 the end of the day today for anybody that 

12 wishes to raise additional comments, 

13 additional issues that they don't think have 

14 been covered fully. And then we will have 

15 closing remarks around about 12:30 and then 

16 adjourn for the day. That is the plan. Okay? 

17 So questions and comments here at 

18 the outset? How many of you are new to these 

19 proceedings? Just a few. Most everybody's 

20 gone through this before. Okay. I would ask 

21 for your consideration of what have emerged as 

22 sensible rules for the conduct of these 

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1 meetings. Please speak one at a time. Please 

2 say your name for the record each time you 

3 speak. You don't need to say your 

4 organizational affiliation again. Your name 

5 is sufficient. 

6 You will need to turn on the 

7 microphone. There is a little green LED 

8 button. It needs to be on. If you expect 

9 that you are going to be participating a lot, 

10 you might as well just leave it on. 

11 I am going to be queuing people as 

12 best I can by name to speak and please try to 

13 observe the queue. I also wish to encourage 

14 follow-on comments. Sometimes the exchange 

15 back and forth can be very, very useful in 

16 elaborating and articulating different points 

17 of view. And that is helpful for the 

18 Department. 

19 Please keep the focus here, turn 

20 off your cell phones, put them on silent mode. 

21 And if you could, try and be concise. Please 

22 share the air time. There is a lot to be 

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1 said. As I said, the Department is trying 

2 very hard to be efficient in these meeting. 

3 And there will be a complete 

4 transcript of this meeting. It will be posted 

5 on the EERE website in the span of a week or 

6 so. 

7 And those that are in the back, if 

8 you wish to speak, please come to one of these 

9 microphones up here. 

10 So that is the general plan. 

11 Questions here before we get going? 

12 So then let me ask Mohammed Khan. 

13 MR. KHAN: Good morning, everyone. 

14 Welcome and thank you for participating in 

15 today's public meeting on the U.S. Department 

16 of Energy's Rulemaking on Energy Conservation 

17 Standards for Residential Furnaces. My name 

18 is Mohammed Khan and I am the DOE Project 

19 Manager for this activity. 

20 I will be summarizing the pertinent 

21 regulatory history and provide a brief 

22 overview of the rulemaking. Details of our 

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1 rulemaking analysis plan will be presented by 

2 the analysts from Lawrence Berkeley National 

3 Laboratory and Navigant Consulting. I will 

4 also hear from interested parties who have 

5 requested to speak, as Doug has already 

6 mentioned. 

7 Okay. The purpose of today's 

8 meeting. There are several purposes of 

9 today's meeting. First we want to present the 

10 Department's methodologies, data sources, and 

11 key assumptions which it plans to use in the 

12 analyses as detailed in the Rulemaking 

13 Analysis Plan. 

14 Second, we want to have a two-way 

15 discussion. So in addition to conveying the 

16 key points and concepts associated with the 

17 rulemaking, we want to hear and listen to your 

18 thoughts and potential concerns as well. 

19 Because your input is very 

20 important in facilitating rulemaking, I 

21 enthusiastically encourage everyone to 

22 participate in today's discussion and also 

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1 follow up with written comments and whatever 

2 supporting data you may have as well. 

3 All right, throughout the 

4 presentation today, we will be seeking your 

5 input on specific issues. This slide provides 

6 an example of the callout boxes that we will 

7 use to highlight certain questions and issues 

8 as we progress through the presentation today. 

9 Note that the identifying numbers 

10 correspond to those questions and issues 

11 raised in the rulemaking analysis plan. And 

12 again, at these junctures, I encourage 

13 everyone to provide their input. 

14 Okay again, the importance of your 

15 input and also a collection of written 

16 comments. This slide provides the information 

17 for you to submit those to us. In your 

18 comment submittals, please identify the docket 

19 number, RIN number. We do accept them via 

20 email, here is the email address, as well as 

21 ordinary mail. And again I want to point out 

22 the close of the comment period is April 14th. 

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1 Okay as we mentioned, opportunity 

2 for those who want to provide an opening 

3 statement, we will do this at this point. 

4 FACILITATOR BROOKMAN: Thank you. 

5 As I understand it, three individuals or 

6 groups have asked to speak now. And the first 

7 one I have listed is Talbot is it Gee? 

8 MR. GEE: Gee. 

9 FACILITATOR BROOKMAN: Gee. Talbot 

10 Gee. 

11 MR. GEE: Thanks. Thank you. 

12 Throughout the day I will be speaking on 

13 behalf of HARDI, the Heating Air Conditioning 

14 Refrigeration Distributors International. 

15 This statement in particular is a joint 

16 statement that we produced in coordination 

17 with AHRI and ACCA. So that is what this 

18 reflects right here. 

19 Good morning. I am Talbot Gee, 

20 Vice President HARDI. I am speaking today 

21 primarily as the chair of an industry task 

22 force formed with our partners at the Air 

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1 Conditioning, Heating, and Refrigeration 

2 Institute or AHRI, and the Air Conditioning 

3 Contractors of America or ACCA, to consider 

4 how regionalized efficiency standards could 

5 best be enforced. 

6 One of the primary objectives of 

7 our task force is to develop and submit 

8 enforcement suggestions to DOE. Today, we are 

9 presenting the statement solely to address the 

10 Department's request for comments on Section 

11 2(A)(2) Regional Standards Enforcement found 

12 on page 13 of the Rulemaking Analysis Plan or 

13 RAP. 

14 This statement reflects the common 

15 recommendations of the aforementioned three 

16 industry trade associations only as they 

17 pertain to the enforcement of regional 

18 standards for residential furnaces for the 

19 purposes of this rulemaking, under the 

20 assumption that DOE proceeds with regional 

21 standards. 

22 First let me begin by acknowledging 

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1 the daunting task that may lie ahead for DOE 

2 and our industry to attempt to develop an 

3 enforcement policy for regionalized energy 

4 conservation standards. HARDI, AHRI and ACCA 

5 have been considering how regional efficiency 

6 standards would be enforced since the debates 

7 leading up to the enactment of EISA 2007 and 

8 still have been able to find a perfect 

9 solution, though it is our intent to identify 

10 potential enforcement solutions for DOE 

11 consideration. 

12 That being said, however, we are in 

13 agreement that the effective energy saving 

14 establishment of regional efficiency standards 

15 of residential HVAC products is relying on the 

16 development and implementation of a strong 

17 enforcement policy. Effective implementation 

18 of regional efficiency standards will require 

19 a well-funded and responsive enforcement 

20 infrastructure or risk the possible dilution 

21 of intended energy savings or the unfortunate 

22 circumstance of creating a serious competitive 

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1 advantage for those HVAC business that choose 

2 to ignore the law. 

3 In the RAP, DOE outlines eight 

4 potential enforcement measures that are 

5 currently being considered. In our opinion, 

6 seven of these eight considerations fall into 

7 three categories. The first being marketing 

8 educational initiatives, building code 

9 adoption, and inspection, and whistle blowing. 

10 DOE enforcement considerations one, 

11 two, and seven, on page 13 of the RAP suggest 

12 product labeling, enhancement of manufacture 

13 marketing literature and a consumer awareness 

14 program. We agree that are opportunities to 

15 support a robust enforcement policy through 

16 programs such as these but we are skeptical 

17 that any of these measures could be the 

18 cornerstones of a serious enforcement policy. 

19 Labels on furnaces may provide some 

20 compliance benefit for inspection or 

21 verification purposes, if furnaces always 

22 operated by themselves. However, most 

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1 furnaces are intended to be half of a matched 

2 cooling system as well, raising serious 

3 concerns how effective a product-specific 

4 label could be. In fact, the overwhelming 

5 majority of central air conditioner units are 

6 installed with warm air furnaces and 

7 conversely. In addition, the AHRI directory 

8 shows close to six hundred thousand possible 

9 match combinations of outdoor coils with 

10 indoor coils, making product labeling nearly 

11 impossible. 

12 Simply put in a broader context of 

13 a match system HVAC market, we do not believe 

14 the labeling of individual components provide 

15 significant enforcement value. 

16 Considerations three, four and five 

17 attempt to tie regional standards enforcement 

18 to state and local building codes, by having 

19 these regional standards adopted and enforced 

20 like other aspects of building safety and 

21 energy codes. In theory, this could be an 

22 effective enforcement method but we have 

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1 serious concerns about how well this would 

2 work in actual practice because such a 

3 strategy assumes that every state and 

4 jurisdiction has adopted a relatively uniform 

5 building code and more so that every state and 

6 jurisdiction has a robust permitting 

7 inspection and enforcement infrastructure. 

8 Based on experiences in some 

9 markets with inspector-enforced energy codes, 

10 we have concerns whether the complex systems 

11 in our industry can be consistently and 

12 properly inspected by those lacking HVAC13 specific experience or training. 

14 Consideration eight suggest a 

15 whistle-blower policy in which any HVAC 

16 business can report noncompliance businesses. 

17 However, there is no mention of where such 

18 reports would go and how those reports would 

19 be acted on. 

20 First, consideration of a whistle 

21 blower policy which includes manufacturers and 

22 distributors assumes that suppliers can be 

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1 enforcers of regional standards. We do not 

2 agree, since neither manufacturers nor 

3 distributors have any way of knowing or 

4 controlling how these products they sell are 

5 used or where they are installed. 

6 Second, unfortunately, our industry 

7 has not experienced much success with whistle 

8 blower policies. Contractors reporting clean 

9 air act violations to the EPA usually see no 

10 follow-up or action taken and California has 

11 relied on a whistle blower policy for its 

12 building code compliance for years. But code 

13 inspectors will admit that they don't have the 

14 resources to follow up on most reports. 

15 A whistle blowing policy can only 

16 be an effective enforcement strategy if backed 

17 up with appropriate and responsive enforcement 

18 infrastructure. 

19 In conclusion, we agree with DOE 

20 that it will require a matrix of measures to 

21 attempt to enforce regional standards. 

22 However, we strongly advise that DOE consider 

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1 only those strategies that can truly be 

2 implemented uniformly and nationally. 

3 Further, our three organizations agree that 

4 any enforcement policy will need to account 

5 for the complexities of properly matched 

6 systems and should not be viewed during this 

7 furnace standards rulemaking in isolation. 

8 Our ultimate goal and we hope one 

9 that is shared by DOE is to develop an 

10 enforcement policy that adds the least amount 

11 of cost to the industry, federal and state 

12 agencies and consumers, while ensuring a level 

13 playing field in which complying with regional 

14 standards regulations does not create a 

15 competitive disadvantage in the marketplace 

16 for manufacturers, distributors, and 

17 contractors. 

18 We look forward to collectively 

19 working with DOE and other stakeholders to 

20 develop an effective and fair enforcement 

21 policy, should regional standards become a 

22 reality. Thank you. 

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1 FACILITATOR BROOKMAN: Talbot, I 

2 note that you have submitted this for the 

3 record and provided it to the Department in 

4 advance. Correct? 

5 MR. GEE: That's right. 

6 FACILITATOR BROOKMAN: So thank you 

7 for that. 

8 What we hope to do in these opening 

9 remarks is summarize statements, especially if 

10 they are three of four pages of written 

11 remarks. 

12 MR. GEE: But it took so long to 

13 write. 

14 FACILITATOR BROOKMAN: I know it. 

15 Fortunately, you were very efficient. You 

16 read that very quickly. But I would ask if it 

17 is possible, to summarize your remarks, rather 

18 than read them into the record, as these will 

19 be submitted. They will be fully captured in 

20 the Department's record going forward. Okay? 

21 So thank you for that. 

22 Now the next person I had heard 

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1 that wishes to speak is John Proctor. 

2 MR. PROCTOR: Okay? 

3 FACILITATOR BROOKMAN: Yes. 

4 MR. PROCTOR: Hello, folks. I am 

5 John Proctor. I guess you already know that, 

6 because they said. I think I am on. Yes? 

7 So, we appreciate the opportunity 

8 to come and speak with you, based on our 

9 experience, looking at over half a million air 

10 conditioners and gas forced air furnaces 

11 across the country and looking at how things 

12 actually work out in the field, which is a 

13 little different perspective than some of the 

14 other folks around the table. 

15 First of all, we would like to 

16 support the combined rulemaking of the furnace 

17 fan, and the furnace, and the air conditioners 

18 because they actually, as the gentleman from 

19 the distributors said, they actually work 

20 together. Isn't that amazing? So the 

21 standards need to integrate together and the 

22 analysis should be integrated together. 

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1 Are you saying I am being too loud? 

2 Whoever the audio guy is, he might yell at me. 

3 This is an opportunity to get it 

4 right. We can actually have a standard and 

5 standard test procedures that represent sort 

6 of the median of what is out there in the 

7 United States. And as a result, the numbers 

8 which are generated will be meaningful and not 

9 perverse. 

10 Right now, you can actually buy 

11 something you think is a more efficient 

12 machine and find out that it is a less 

13 efficient machine when you put it in the house 

14 and you put it in the real combination with 

15 the real duct system in the house. And by the 

16 way, these are connected to duct systems for 

17 those of you who have never been out there in 

18 your attic or your crawlspace. 

19 Within the context of this we would 

20 like to see consistent standards between the 

21 different components and ones that represent 

22 what is in the field. Also in the context of 

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1 this rulemaking, it is important to understand 

2 that regional standards for air conditioners. 

3 I know we are talking about furnaces here but 

4 we are talking about potentially combining 

5 these. And regional standards for air 

6 conditioning are very important and that there 

7 is a very primary difference between air 

8 conditioners in dry climates and air 

9 conditioners in wet climates. And that has to 

10 do with the amount of latent and sensible 

11 cooling that they do. And until there is a 

12 distinction between those two things within 

13 the standards, it is very, very unlikely, I 

14 would say impossible, that there is actually 

15 is going to be any progress in capturing the 

16 amount of energy efficiency savings we have 

17 available in dealing with those two areas 

18 differently. 

19 I have remarks which you all have 

20 copies of and a few pages after that. And I 

21 will submit additional details to the website 

22 or whatever it is that you all have. Thank 

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1 you very much. 

2 FACILITATOR BROOKMAN: Thank you. 

3 And thanks for submitting those comments in 

4 advance to the Department. That is much 

5 appreciated. 

6 The next group that the Department 

7 heard wishes to comment here at the outset is 

8 a representative from the Air Conditioning 

9 Contractors of America. 

10 MR. McCRUDDEN: Once again, I am 

11 Charlie McCrudden with the Air Conditioning 

12 Contractors of America. In the interest of 

13 efficiency, which is why we are all here 

14 today, I am going to summarize my summary. 

15 FACILITATOR BROOKMAN: Thank you. 

16 MR. McCRUDDEN: As the joint 

17 statement alluded to, we are very concerned 

18 with the enforcement issue with regional 

19 standards. Our members are the last ones 

20 holding the box. And so now what you have is 

21 a double test. You have a test of the 

22 efficiency of the equipment as it leaves the 

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1 factory and you will now have a test of the 

2 efficiency on the jobsite. 

3 One other thing I did want to 

4 mention is we want to urge DOE to seriously 

5 consider the full impact of the installation 

6 cost when contractors must replace a non7 condensing furnace with a condensing furnace. 

8 In a recent survey of our members, 

9 on requiring condensing furnaces in the north 

10 region, the majority of all respondents said 

11 that 15 to 30 percent of furnace installations 

12 would only accommodate non-condensing furnaces 

13 due to vent path issues or concerns about 

14 freezing condensate. 

15 ACCA has begun to survey its 

16 members in response to the 28 questions on 

17 which DOE seeks comment and we appreciate the 

18 opportunity to participate here today. As you 

19 have said, we have not participated in some of 

20 these rulemakings in the past but we do want 

21 to make the concerns of the contractors out 

22 there known. So we plan to be very active 

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1 throughout the rulemaking and on the other 

2 rulemakings. 

3 So, thank you. 

4 FACILITATOR BROOKMAN: Thank you, 

5 Charlie and thanks for your written comments 

6 in advance. It is helpful. 

7 An opportunity for anybody who 

8 wishes to do so to make brief summary remarks 

9 here at the outset. Karim. 

10 DR. AMRANE: My name is Karim 

11 Amrane with the Air Conditioning, Heating and 

12 Refrigeration Institute. 

13 As a signatory to the consensus 

14 agreement on the minimum federal energy 

15 efficient standard for residential furnaces, 

16 air conditioners, and heat pump, which between 

17 AHRI and leading energy efficiency advocacy 

18 organization last October, AHRI strongly 

19 supports the agreement and urges the 

20 Department of Energy to adopt it in a direct 

21 final rule without delay, we believe that the 

22 agreement has several benefits. 

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1 First, it will accelerate the 

2 effective date. The proposed standard will 

3 take effect in 2013 for non-weatherized 

4 furnaces, two and a half years ahead of the 80 

5 percent AFUE standard published by DOE in 2007 

6 and several years ahead of any new standard 

7 that DOE would promulgate under this current 

8 rulemaking. Accelerating the effective date 

9 will help the nation save energy several years 

10 ahead of any standard established under the 

11 current schedule. 

12 The agreement, if adopted, will 

13 save three quads of primary energy by 2030. 

14 This is a significant amount of energy. These 

15 energy savings will result in annual 

16 greenhouse gas emission reduction of 

17 approximately 18 million metric tons of CO2 

18 equivalent in the year 2030 alone. 

19 The agreement will also result -- 

20 is the result of two years of intensive 

21 negotiation. And adopting the agreement in a 

22 direct final rule will free up resources at 

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1 DOE, allowing the Department to speed up other 

2 rulemaking and focus on other products. 

3 The Department of Energy has 

4 encouraged stakeholders in the past to 

5 consider informal discussion which could 

6 result in a consensus agreement. Furthermore, 

7 in 2007, Congress amended the Energy Policy 

8 and Conservation Act to expedite the 

9 rulemaking process by authorizing DOE to issue 

10 direct final rules, establishing new energy 

11 conservation standards upon receipt of joint 

12 stakeholders' proposals. 

13 The consensus agreement satisfies 

14 the criteria of the law and the process 

15 improvement rule. Consequently, we urge the 

16 Department to issue a direct final rule 

17 adopting the agreement as soon as possible. 

18 Thank you. 

19 FACILITATOR BROOKMAN: Thank you 

20 Karim. 

21 Additional comments? Yes, please 

22 Molly. 

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1 MS. TROMBLEY-McCANN: This is Molly 

2 Trombley-McCann. And in this instance, I am 

3 speaking for Pacific Gas and Electric, as well 

4 as Southern California Gas Company, San Diego 

5 Gas and Electric, and Southern California 

6 Edison. 

7 I just wanted to say that we also 

8 want to go on the record as supporting the 

9 consensus agreement that has been submitted to 

10 the Department of Energy and we are all 

11 involved in these negotiations and we believe 

12 the outcome is very positive and we would like 

13 to support the DOE in whatever process they 

14 need to follow, in order to adopt the 

15 consensus agreement. 

16 We also do want to urge the DOE to 

17 hold a combined rulemaking for air 

18 conditioning, heat pumps, furnaces, and 

19 furnace fans. 

20 FACILITATOR BROOKMAN: Thank you. 

21 A display of discipline. 

22 Harvey Sachs. 

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1 MR. SACHS: Harvey Sachs, ACEEE, 

2 was a signer of the consensus agreement and we 

3 very much would advocate adoption of that 

4 agreement by direct rule. It is not a perfect 

5 solution but we think it is by far the best 

6 solution for the country and the industry that 

7 could be adopted. And we appreciate the 

8 Department's consideration. 

9 FACILITATOR BROOKMAN: Thank you, 

10 Harvey. 

11 Yes, Lane. 

12 MR. BURT: Lane Burt with NRDC. I 

13 would just echo what Harvey said. As a 

14 signatory to the consensus agreement, we do 

15 agree that it does meet the requirements of 

16 the statute and should be adopted as quickly 

17 as possible. 

18 FACILITATOR BROOKMAN: Thank you. 

19 Additional comments here at the 

20 outset? Yes, Andrew. 

21 MR. deLASKI: I will just chime in 

22 as another signatory to the joint 

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1 recommendation, ASAP strongly supports 

2 adoption of the recommendation. 

3 And I also just would note that in 

4 our filing with the Department on January 

5 15th, the joint filing of ACEEE, Department of 

6 Energy, ASAP and NRDC, Northeast Energy 

7 Efficiency Partnership and AHRI, we recommend 

8 the Department move forward with a direct 

9 final rule and urge adoption of a direct final 

10 rule not later than August 2010. 

11 Unfortunately, this request was not 

12 responded to in the notice published a couple 

13 of weeks ago. So we are very eager for the 

14 Department of move forward with the direct 

15 final approach for these products. 

16 We also support accelerated 

17 treatment for furnace fans. And to the extent 

18 that there is attention here in addressing 

19 furnace fans and getting this direct final out 

20 within that time frame, we support moving 

21 forward with the direct final rule 

22 expeditiously. 

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1 FACILITATOR BROOKMAN: Thank you. 

2 Jim Ranfone. 

3 MR. RANFONE: Jim Ranfone, American 

4 Gas Association. While we support the intent 

5 of the agreement, we were not signers of the 

6 agreement, by the way, we are concerned about 

7 the replacement market, specifically as 

8 outlined I think by ACCA, that they are 

9 concerned about the availability of product to 

10 -- non-condensing product being replaced by 

11 condensing, that that is going to cause a 

12 burden on consumers. I think they said 15 to 

13 30 percent would not be applicable but I think 

14 it is even more than that. 

15 This rule also includes 

16 manufactured homes and I am not sure ACCA has 

17 taken that into consideration, replacing a 

18 direct vent required manufactured home with a 

19 condensing. That is going to have another 

20 aspect on the end use product line. 

21 So while everybody is urging to 

22 have a direct rulemaking, I think the DOE 

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1 would be prudent to look at this as it impacts 

2 consumers. 

3 When you talk about the major 

4 difference between the 80 percent and the 90 

5 percent, to us of course is the venting 

6 system. When you go to a 90 percent 

7 condensing furnace, you have a positive 

8 venting system. That is not applicable for a 

9 common vented application. The reason 

10 manufacturers designed 80 percent furnaces to 

11 be non-positive so that you could have a 

12 direct replacement. When you go with a non13 positive with a positive vented system, which 

14 a condensing furnace does, you can't have a 

15 direct replacement. So that is a major 

16 consideration for end use consumers. 

17 We think the best policy, if you 

18 are going to go to regional standards, is to 

19 probably require 90 percent for a new 

20 construction, where it could be planned for 

21 but to leave the 80 percent available for the 

22 replacement market. 

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1 On the other issue is, I think the 

2 DOE says it is not including electric furnaces 

3 as part of this rulemaking because there is 

4 not significant energy savings available. But 

5 if you are going to eliminate an 80 percent 

6 furnace anything above 5,000 heating degree 

7 days and still allow an electric furnace to be 

8 installed because they are 98 to 100 percent 

9 based on site energy, then I think that is 

10 counterproductive to energy consumption and 

11 energy uses. And I think the DOE has to take 

12 a look at that as part of this rulemaking. 

13 Some say well, they are not using 

14 electric furnaces. I would urge the DOE to 

15 take a look at how many electric furnaces are 

16 marketed and use that in your comparative 

17 analysis as to what the impact of this 

18 rulemaking is. 

19 Thank you. 

20 FACILITATOR BROOKMAN: Thank you, 

21 Jim. 

22 Additional comments here before we 

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1 launch in to the content? Steve Rosenstock. 

2 MR. ROSENSTOCK: Steve Rosenstock. 

3 I just wanted to thank the Department for 

4 holding this rulemaking and I do note that the 

5 next session for air conditioners is going to 

6 be on May 5th, as I recall. That is going to 

7 be the next, kind of the -- there is going to 

8 be another hearing on May 5th on the 

9 residential air conditioners and heat pump 

10 side. So again, we appreciate the Department 

11 working so efficiently on that. 

12 I do have to say that we were not a 

13 party of the consensus agreement, too. We do 

14 understand the hard work. We are still 

15 getting feedback from our member companies and 

16 we will submit the comments by April 14th on 

17 our thoughts on this consensus agreement. 

18 Thank you. 

19 FACILITATOR BROOKMAN: Thank you. 

20 Additional comments here now that we are about 

21 to move on? Michael McCabe. 

22 MR. McCABE: Thank you, Doug. 

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1 Michael McCabe. I would like to follow up 

2 those remarks with some specific questions. 

3 But before I ask the questions, I would like 

4 to thank everybody for their consideration and 

5 the remarks. 

6 First with regards to the joint 

7 statement from HARDI, AHRI and ACCA, I am 

8 encouraged and would encourage you to work 

9 together and develop a specific recommendation 

10 on enforcement of regional standards. As one 

11 can tell from looking at the amount of text 

12 that we gave to that in the notice, it is an 

13 area that is very important and certainly very 

14 sensitive to us as far as how you do it. And 

15 I would encourage you that if you can, to 

16 provide one, some very specific regulatory 

17 language that you would encourage the 

18 Department to consider adopting. And I would 

19 also open that up, obviously, to everybody 

20 else to offer very specific language. 

21 And second, following up on your 

22 comments from ACCA, the legislation as it is 

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1 currently structured, requires us to look at 

2 the economic impact of standards. But for 

3 regional standards, it directs us to look at 

4 the economic impacts of the regional standards 

5 and it talks about it, the distributors; it 

6 talks about the contractors and the like. 

7 So if anybody offers up some 

8 specific language on regional standards 

9 enforcement, if they have thoughts as to what 

10 the economic impacts would be on the different 

11 cohorts, that would be appreciated or could 

12 provide us with some specific direction where 

13 data might be had, that can enable us to 

14 calculate those impacts. Because when we roll 

15 it all up, at the end of the day, we have to 

16 make a statement as to what is going to be the 

17 economic impact of the regulations on the 

18 nation. And we typically do that in our 

19 calculation of net present value. 

20 So the economic impact and the 

21 specific certification enforcement language 

22 would be greatly appreciated. 

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1 Second, in following up on let's 

2 see where Jim Ranfone from AGA said, following 

3 up on your comments, Jim, the electric 

4 furnaces, EPCA directs DOE to establish 

5 separate classes of products where there are 

6 different energy uses. Electric furnaces 

7 falls within the product type of furnaces, 

8 given that they are electric, as opposed to 

9 natural gas or oil, we end up with a class of 

10 electric furnaces. 

11 I can appreciate your comments and 

12 recognize that in many cases consumers will 

13 weigh whether or not to buy an electric 

14 furnace versus a heat pump. Often the 

15 uniformed will look at the two products. And 

16 particularly if you have a central air 

17 conditioner sitting on top of the electric 

18 furnace, you can't tell the difference between 

19 that and a heat pump. But given how EPCA is 

20 structured, we have to treat electric 

21 resistance furnaces as a separate class within 

22 the product type furnaces. 

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1 If you or anybody has any specific 

2 guidance suggestions on how we can look at in 

3 a different fashion that would be greatly 

4 appreciated. It has been something we have 

5 struggled with over the years. We have, in 

6 our energy forecasting, as we look at the 

7 impact of standards and one of the benefit of 

8 taking and considering furnaces and air 

9 conditioners and air conditioning heat pumps 

10 together in a single rulemaking, we will look 

11 at what is going to be the shift. The fuel 

12 shifting from one fuel type to another and we 

13 capture electric furnaces separate from heat 

14 pumps, separate from gas furnaces, so we can 

15 get some of that fuel shifting. We do take 

16 that into consideration. We have taken that 

17 into consideration in past rules. But I think 

18 that you may, based on my interpretation of 

19 your comments, that you are encouraging us to 

20 go further. And I would encourage you and 

21 anybody else to offer some specifics as to 

22 both one, how we can go further, and two, how 

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1 that can be done under the structure of the 

2 current legislation. 

3 And then third, there were a number 

4 of comments both with regard to the consensus 

5 agreement and John Proctor, while you didn't 

6 talk about the consensus agreement itself, you 

7 were talking about different approaches to 

8 capture the energy savings from efficiency and 

9 that there are some limitations right now. 

10 So I will lump all that together. 

11 The consensus agreement was submitted I 

12 believe on January 15th. There was a 

13 supplement or additional comment that I 

14 consider to be a supplement that was provided 

15 by I think the Appliance Standards Awareness 

16 Project and possibly others had signed on to 

17 it as to that supplement, talked about why 

18 they believed the DOE could adopt the multiple 

19 metrics, and why DOE could adopt the standards 

20 for new construction that go into the building 

21 code. 

22 I would encourage everybody to take 

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1 whatever your position is to offer us some 

2 specific languages. If you believe that we 

3 can adopt multiple metrics, that is for 

4 central air conditioners in SEER and in EER, 

5 for example, why under the structure of the 

6 current legislation do you believe we can do 

7 so? 

8 We have some reservations about 

9 that. We are open to hearing some thoughtful 

10 consideration as to why we can tie to the 

11 legislative language in EPCA as to why we can, 

12 not that it would be a good policy but why it 

13 is legally acceptable. 

14 Second, with the new construction, 

15 we have reservations about adopting a standard 

16 that are applied in new construction. When we 

17 look at, again, looking at the structure of 

18 the legislation, it is a manufacturing 

19 standard not an installation standard. But 

20 the legislation has been amended a number of 

21 times since it was initially written in '75. 

22 There may be something that we are missing in 

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1 our consideration of it. 

2 So, if you believe we can adopt a 

3 standard that applies to new construction, 

4 please guides us through your reading of the 

5 legislation as to why that can be done. And 

6 of course, on the flip side, while everybody 

7 who commented, commented for the consensus 

8 agreement, there may be some who -- There were 

9 strong comments as to why we should adopt the 

10 consensus agreement. There may be equally 

11 strong views as to why we should not. We 

12 would encourage folks to provide comments as 

13 to why we should not, why the legislation 

14 would not allow us so that we, Betsy Kohl and 

15 the General Counsel staff review that, having 

16 some other learned views of the legislation 

17 and why we can or cannot adopt the consensus 

18 agreement, that would be greatly appreciated. 

19 Thank you. 

20 FACILITATOR BROOKMAN: Thank you, 

21 Michael. 

22 Okay so then Harvey Sachs. 

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1 MR. SACHS: I would like to address 

2 my colleague Mr. Ranfone's comments in one 

3 respect. And that is to consider, and I think 

4 it is relevant to Mr. McCabe's comments on new 

5 construction as well. 

6 The expectation in round numbers is 

7 that a new house will last for 100 years. It 

8 is a one percent augmentation of the housing 

9 stock annually. The furnace in that house, 

10 again in round numbers, is likely to last 20 

11 years as is the air conditioner, perhaps a 

12 little bit less, the water heater, ten years. 

13 And in this context, Mr. Ranfone's request has 

14 to be seen as a question of when we are going 

15 to bite the bullet that if existing houses are 

16 exempted from the condensing standard, it sets 

17 a precedent for exempting them in the next 

18 round and the next round, and the next round. 

19 And 30 years from now we will still be asking 

20 the same question, whether a standard that 

21 supports water heaters that inherently waste a 

22 third of their source energy are still 

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1 acceptable. 

2 We have to cross this bridge at 

3 some point to reach greater efficiency for our 

4 residential sector. And I thank Mr. Ranfone 

5 for framing it quite as succinctly. The cost 

6 of doing the retrofit to a condensing furnace 

7 and where required, the flue liner for the 

8 water heater, will not go down in time. The 

9 sooner we lock that in, the longer we will 

10 have the benefits for the remaining life of 

11 that existing house. 

12 Thank you. 

13 FACILITATOR BROOKMAN: I am eager 

14 for us to move into the content for today. 

15 MR. SACHS: We have been doing 

16 content. 

17 FACILITATOR BROOKMAN: Additional 

18 remarks before we move one? 

19 MR. KHAN: Doug, I just want to 

20 make one point. 

21 FACILITATOR BROOKMAN: Yes, please. 

22 MR. KHAN: Mohammed Khan, DOE. 

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1 Just to add to Michael McCabe's point and 

2 request about data and ideas for the 

3 enforcement, the Department has 90 days to 

4 begin its rulemaking or initiating its 

5 rulemaking for enforcement plans after the 

6 final rule for standards has been issued. 

7 So the point is, if we can begin 

8 getting your ideas, data and everything that 

9 would support development of an enforcement 

10 plan, the better, obviously. Thank you. 

11 FACILITATOR BROOKMAN: Thank you. 

12 Then are you ready to -- 

13 MR. KHAN: Yes. 

14 FACILITATOR BROOKMAN: Let's 

15 proceed then. As listed in the agenda, we are 

16 going to hear from Mohammed Khan a rulemaking 

17 overview. 

18 MR. KHAN: Okay, I am going to get 

19 into some regulatory history. Okay, Energy 

20 Policy and Conservation Act of 1975 

21 established the energy conservation program 

22 for consumer products that includes 

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1 residential furnaces. It prescribed initial 

2 standards for furnaces and authorized the 

3 Department to conduct rulemaking to determine 

4 if amendments to standards are necessary. 

5 And more recent is the Energy 

6 Independence and Security Act of 2007. EISA 

7 directs the Department to include standby mode 

8 and off mode energy consumption in its 

9 standards promulgated after July 2010. The 

10 requirement for completion date of the furnace 

11 standard is May 2011 and therefore, it will 

12 reflect standby and off mode energy 

13 consumption. 

14 Now for a standard, DOE must have 

15 an appropriate test procedure in place. EISA 

16 directed the Department to develop a test 

17 procedure for measurement of standby and off 

18 mode by September 2009. 

19 The Department published a notice 

20 proposing a test procedure in July 2009 but 

21 has since had to issue a supplemental notice. 

22 And it is my understanding that today that 

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1 supplementary notice will be over at the 

2 Federal Register and as soon as I confirm 

3 that, we will post it, make it available on 

4 our website for your review. 

5 And the last point I want to make 

6 about EISA, which is an important one, is that 

7 it authorizes DOE to establish up to two 

8 standard levels for furnaces based on 

9 geographic region. Regional standards is new 

10 ground and it is important for the Department 

11 to understand all of the related issues. 

12 As most of you are aware, the 

13 Department issued a final rule for amended 

14 furnace standards in November 2007. However, 

15 this rule was voluntarily remanded following a 

16 lawsuit, asserting that the rule failed to 

17 deliver maximum improvement in energy 

18 efficiency that is both technologically 

19 feasible and economically justified. 

20 DOE and the parties to the lawsuit 

21 have agreed to the voluntary remand but DOE is 

22 required to reissue the final rule by May 

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1 2011. 

2 Okay, a short overview on the 

3 rulemaking. I touched on EPCA earlier. In 

4 this slide, we list seven factors EPCA 

5 requires DOE to consider when promulgating 

6 energy efficiency standards. This table also 

7 shows the corresponding analyses the 

8 Department performs to satisfy each of the 

9 factors. 

10 As an example, the DOE performs an 

11 LCC analysis and a manufacturing impact 

12 analysis to determine the potential economic 

13 impacts on consumers and manufacturers 

14 respectively. And of course, we want to get 

15 your input on the proposed methodologies for 

16 these analyses as we explain them later today. 

17 This slide provides a simple 

18 chevron chart illustrating the phases of the 

19 rulemaking. We are beginning with the 

20 rulemaking analysis plan and we will discuss 

21 the details of the plan, which was made 

22 available through the March 15th notice. 

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1 The plan provides a full overview 

2 of the rulemaking process, details of 

3 analytical methodologies and identifies 

4 certain issues the department seeks input on 

5 for this phase of the rulemaking. 

6 Next we will produce a notice of 

7 proposed rulemaking acknowledging your input 

8 of course. And lastly, we will publish a 

9 final rule based on the revisions to the NOPR 

10 which may result from the stakeholder inputs. 

11 This concludes my overview and at 

12 this point we will proceed to Section 4. 

13 Thank you. 

14 FACILITATOR BROOKMAN: Andrew 

15 deLaski. 

16 MR. deLASKI: Just a clarifying 

17 question, Mohammed. 

18 So, just on the test method for 

19 furnaces, there was a NOPR published in July 

20 of 2009. That hasn't gone final. Am I 

21 correct? 

22 MR. KHAN: No. No, it hasn't. 

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1 MR. deLASKI: And what you said 

2 just a moment ago was that there is a 

3 supplemental NOPR being issued? 

4 MR. KHAN: There is a supplemental 

5 notice, exactly. 

6 MR. deLASKI: Okay. 

7 MR. KHAN: And the purpose of that 

8 is to combine the standby and off mode energy 

9 consumption with AFUE. And we will touch on 

10 that later. 

11 MR. deLASKI: Okay. And so then 

12 the comments are due on that sometime within a 

13 month or so? 

14 MR. KHAN: I'm sorry to say I think 

15 the comment period is only roughly two weeks. 

16 MR. deLASKI: Okay. 

17 FACILITATOR BROOKMAN: We will 

18 double back and make sure we get that comment 

19 period established. 

20 MR. deLASKI: Sure. 

21 FACILITATOR BROOKMAN: Frank? 

22 MR. STANONIK: Frank Stanonik, 

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1 AHRI. Just because we have kind of touched on 

2 it, I just want to make sure of this. If the 

3 Department had decided to do a direct final 

4 rule that got published before July 1, 2010, 

5 DOE would not necessarily be obligated to roll 

6 in the standby mode. Correct? 

7 MR. KHAN: I am going to defer that 

8 to legal. 

9 FACILITATOR BROOKMAN: Elizabeth, 

10 use your microphone and say your name for the 

11 record. 

12 MS. KOHL: Hi. Betsy Kohl, DOE 

13 General Counsel's Office. The statute in 

14 6295(g)(2) -- I'm not exactly sure of the 

15 provision, provides a date after which we need 

16 to incorporate that standby mode. So if it is 

17 before that date, then we wouldn't have to do 

18 it but if it was, then we would. And I am not 

19 exactly sure of the date off the top of my 

20 head but it is a hard cutoff. 

21 FACILITATOR BROOKMAN: Thank you, 

22 Frank. He just said -- 

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1 MR. STANONIK: I said it is on the 

2 slide as the correct date. 

3 FACILITATOR BROOKMAN: Okay, thank 

4 you, Betsy and thank you, Frank. 

5 MR. KHAN: Anybody else? 

6 FACILITATOR BROOKMAN: Thank you. 

7 Okay, let's proceed. We are going to hear 

8 from Adam Darlington on scope of coverage, 

9 regional standards background, consensus 

10 agreement, and test procedures. 

11 MR. DARLINGTON: Good morning. I 

12 am Adam Darlington, Navigant Consulting. As 

13 Doug just said, I will be discussing the scope 

14 of coverage, the regional standards, consensus 

15 agreement, and touch on DOE’s test procedures 

16 for residential furnaces. 

17 So we will start with the scope of 

18 coverage. As we mentioned earlier today, we 

19 are revisiting the November 2007 final rule 

20 for residential furnaces, which DOE determined 

21 that EPCA's definition of a furnace was fairly 

22 broad in its coverage and that it covers the 

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1 different products shown here on the slide but 

2 for various reasons DOE did not address some 

3 of these products. 

4 Additionally, the Independence and 

5 Security Act or the Energy Independence and 

6 Security Act of 2007 has recently prescribed 

7 standards for residential boilers. So DOE 

8 will not be addressing those products in this 

9 rulemaking. And therefore, this rulemaking 

10 will only cover gas furnaces, mobile home 

11 furnaces, and oil fired furnaces. 

12 Now in addition, as Mohammed noted 

13 earlier, the Energy Independence and Security 

14 Act also gives DOE the authority to define 

15 regional standards for residential furnaces. 

16 And in addition to the base national standard, 

17 DOE can establish up to one additional 

18 regional standard. And EISA 2007 also 

19 establishes criteria for defining the regions, 

20 the regional definitions, which are shown here 

21 on the slide. And given the criteria in EISA 

22 2007, DOE is planning to use the regions shown 

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1 here, these are also in the rulemaking 

2 analysis plan, to perform the regional 

3 analysis for residential furnaces. 

4 DOE's regions are basically divided 

5 along the 5,000 heating degree day line. And 

6 this is consistent with the regions defined in 

7 the consensus agreement, which has been 

8 touched on earlier today as well. 

9 Also in the November 2007 final 

10 rule, DOE performed sort of a sensitivity 

11 analysis to analyze the impacts of regional 

12 standards. And these regions are essentially 

13 the same, except that it moves Nevada to the 

14 southern region and West Virginia to the 

15 northern region, as compared to that analysis. 

16 And so DOE is seeking comments 

17 regarding the regional definitions for the 

18 residential furnace analysis. 

19 FACILITATOR BROOKMAN: Steve 

20 Rosenstock. 

21 MR. ROSENSTOCK: Steve Rosenstock, 

22 EEI. Looking at the current eight-zone map 

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1 that is used by ASHRAE and IACC, according to 

2 this map, I would say at least 90 percent, 

3 geographically speaking, 90 percent of the 

4 land mass in Nevada is a climate zone five, 

5 which is for most other states, considered a 

6 northern zone, except for Clark County. What? 

7 MR. DARLINGTON: Yes, these are 

8 population weighted. 

9 MR. ROSENSTOCK: They are 

10 population weighted? Okay. Well that is 

11 important. Well that is good to know because 

12 if you are just looking at it just purely from 

13 a geographical climate, again, you know, 

14 Nevada would kind of fall in the northern zone 

15 in terms of climate. 

16 FACILITATOR BROOKMAN: Adam, say a 

17 few more words about how that is done. 

18 MR. ROSENSTOCK: Thank you. 

19 MR. DARLINGTON: The regional 

20 analysis, I mean it is based on a population21 weighted average. So if there is heavier 

22 population in the southern cities in Las 

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1 Vegas, then that would obviously skew it more 

2 towards the southern region and that would be 

3 the reason why it was included with the 

4 southern region. 

5 FACILITATOR BROOKMAN: That is what 

6 tips the state from northern to southern. 

7 MR. DARLINGTON: Right. It is 

8 basically based on where most of the 

9 population of the state is concentrated. 

10 FACILITATOR BROOKMAN: Steve? 

11 Okay. Harvey Sachs. No? Okay. Additional 

12 questions on this comment box? DOE's regional 

13 definition and how they did it. 

14 Andrew deLaski. 

15 MR. deLASKI: We support the 

16 regions as the slide notes, they were part of 

17 the consensus agreement. And I also wish to 

18 note that we support them for air conditioners 

19 as well. 

20 And one of the things that we heard 

21 throughout our discussions is the importance 

22 of having that border be consistent for the 

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1 products and that helps to reduce some of the 

2 issues that were raised on the outset of the 

3 cost to have a regional standard by having a 

4 consistent border for the product categories. 

5 The issue came up time and time again, as we 

6 discussed regional standards. And the 

7 discussions ultimately led to the negotiated 

8 agreement. 

9 FACILITATOR BROOKMAN: Thank you. 

10 Okay, Harvey. No? 

11 MR. SACHS: Harvey Sachs. In the 

12 development of the consensus agreement, one of 

13 the parameters that was considered was in 

14 addition to the direct climate impacts, the 

15 5,000 degree line, an effort to minimize the 

16 number of metropolitan areas that would follow 

17 the border between northern and southern 

18 climate zones in consideration of the 

19 potential impact on distribution and 

20 contractors. It was not the only factor but I 

21 guess one of the parameters that was 

22 considered in the development of the consensus 

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1 agreement. 

2 FACILITATOR BROOKMAN: Thank you. 

3 Additional comments? Because we are about to 

4 move on. 

5 MR. DARLINGTON: Okay. So along 

6 with the analysis of regional standards, DOE 

7 will need to develop an enforcement plan for 

8 regional standards. Now DOE has not yet 

9 determined that plan will be or the specific 

10 mechanisms but DOE does, in the rulemaking 

11 analysis plan and here on the slide, lists 

12 what DOE believes some components of an 

13 effective enforcement plan. And you can read 

14 through those. 

15 And here DOE is also interested in 

16 comments regarding the mechanisms presented in 

17 the rulemaking analysis plan, as well as any 

18 additional enforcement mechanisms that DOE 

19 should considered. 

20 FACILITATOR BROOKMAN: Frank 

21 Stanonik. 

22 MR. STANONIK: Frank Stanonik, 

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1 AHRI. It is funny how sometimes you read 

2 something and all of a sudden you read it 

3 totally differently. 

4 The first bullet about required 

5 labeling and markings, and I assume that is 

6 marking or maybe it is marketing. I don't 

7 know. I have always been looking at that and 

8 saying well they are talking about the FTC 

9 label. But is DOE actually talking about 

10 requiring a separate DOE required label? 

11 FACILITATOR BROOKMAN: Mohammed 

12 Khan. 

13 MR. KHAN: This is Mohammed Khan. 

14 Frank, that is a very good question. I will 

15 tell you that I have had some initial 

16 conversations with FTC. And so we are 

17 beginning to flesh out what might be 

18 considered an effective approach. So 

19 obviously the FTC label will be changed. They 

20 too have to initiate a rulemaking shortly. 

21 But to answer your question in all 

22 fairness, I guess the answer is I am not 

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1 really sure. So that maybe something that 

2 maybe you have some ideas on and can elaborate 

3 on some comments for us to consider and 

4 possibly go down that way. 

5 FACILITATOR BROOKMAN: Frank. 

6 MR. STANONIK: Frank Stanonik with 

7 AHRI. I mean yes, certainly if this 

8 rulemaking includes the possibility of an 

9 additional DOE label, I will tell you the 

10 initial reaction right now is stop. Okay? 

11 There is already a mechanism existing for 

12 labeling efficiency information for furnaces. 

13 I recognize that Congress in their wisdom 

14 didn't give that responsibility to the DOE 

15 they gave it to the FTC but I think we should 

16 allow that FTC process to determine what label 

17 will be needed based on this whatever changes 

18 come out of this process. You know, whatever 

19 the effective date is, we have some time but 

20 additional labels that might be different than 

21 that wonderful yellow thing we are all used 

22 to, I just think an unnecessary complexity. 

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1 FACILITATOR BROOKMAN: Thank you. 

2 Anything else? Mohammed Khan. 

3 MR. KHAN: Thanks for those 

4 thoughts. 

5 FACILITATOR BROOKMAN: Okay, Karim 

6 Amrane. 

7 DR. AMRANE: Karime Amrane AHRI. I 

8 guess we need some clarification here but it 

9 is my understanding that DOE has to do a 

10 separate rulemaking on enforcement. Right? 

11 Ninety days at least after the final rule is 

12 published? 

13 MR. KHAN: Mohammed Khan. That is 

14 correct. 

15 As I said earlier, within 90 days 

16 after the issuance of the final standards 

17 rule, we have to begin that. 

18 DR. AMRANE: Okay. So the question 

19 you are asking here is not really part of this 

20 rulemaking. It is going to be discussed in a 

21 separate rulemaking. 

22 MR. KHAN: Well, that is sure. We 

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1 are going to get into more details with it in 

2 that separate rulemaking but obviously it has 

3 impacts here. So the more information we can 

4 get up front, you know, the better. 

5 DR. AMRANE: Well I am just saying 

6 it is not the end of it. I mean, it is going 

7 to be discussed eventually. 

8 MR. KHAN: Okay, I understand your 

9 question. Right. No, it is not the end of 

10 it. No. 

11 FACILITATOR BROOKMAN: Thank you. 

12 Thank you for the clarification. Steve 

13 Rosenstock. 

14 MR. ROSENSTOCK: Steve Rosenstock. 

15 Again, looking at that bullet where it says 

16 marketing, was it really meant to say 

17 marketing or marking? Because if it is 

18 marketing, I don't know that DOE has ever 

19 required marketing for any other appliance 

20 efficiency rulemaking. 

21 MR. KHAN: I think it is marking. 

22 FACILITATOR BROOKMAN: Is that a 

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1 yes? Rob Carmichael. 

2 MR. CARMICHAEL: It is markings, 

3 yes. 

4 FACILITATOR BROOKMAN: Rob 

5 Carmichael confirms it is markings. 

6 MR. ROSENSTOCK: Markings, M-A-R-K7 I-N-G-S. 

8 FACILITATOR BROOKMAN: I-N-G-S. 

9 MR. ROSENSTOCK: Thank you. 

10 FACILITATOR BROOKMAN: I saw Talbot 

11 next. 

12 MR. GEE: Yes, Talbot with HARDI. 

13 One note here that I think maybe perhaps we 

14 didn't outline in our joint statement on 

15 enforcement is with the one, two, three, 

16 fourth bullet point regarding warranty 

17 registration. We just simply don't think that 

18 is a possible avenue, just because some states 

19 with consumer protection laws don't allow you 

20 to have any tags, waivers, or compliance 

21 obligations to enforce a warranty 

22 responsibility. So I don't think that is one 

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1 that that can be extended to enforcement of a 

2 regional standard. 

3 FACILITATOR BROOKMAN: Thank you. 

4 So those with detailed written remarks will be 

5 helpful to the Department. I think if you 

6 will site those states specifically 

7 especially. 

8 Yes please, Charlie. 

9 MR. McCRUDDEN: Charlie McCrudden. 

10 Like I said, if we are jumping around on 

11 bullets here; number two, encouraging state 

12 and local entities to adopt and codify, blah, 

13 blah, blah. 

14 How would DOE encourage this type 

15 of requirement? I guess it is not a 

16 requirement but is there a precedent for DOE 

17 encouraging states and locals to do things? 

18 MR. CARMICHAEL: This is Rob 

19 Carmichael. So the precedent, DOE doesn't 

20 have the authority to prescribe building codes 

21 per se to states. It can actually adopt a 

22 model energy code and I believe, Betsy correct 

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1 me if I am wrong, but I believe that in that 

2 situation, states have to either adopt it or 

3 give reason for not adopting it. So it would 

4 be part of that process. 

5 MR. McCRUDDEN: And then a follow6 up I guess on the fifth bullet, educating 

7 consumers on regional standards, what to look 

8 for. Is there a funding mechanism that DOE 

9 has to support educating consumers and doing a 

10 public information campaign? 

11 And I bring it up because I know in 

12 the past there have been congressionally 

13 mandated sort of public information campaigns. 

14 For example, I think there was one in the '05 

15 energy bill encouraging homeowners and 

16 building owners to make clean and checks on 

17 maintenance and things like that and 

18 unfortunately, Congress never appropriated 

19 money. It was one of those as such sums 

20 issues where I don't know the amount that was 

21 set aside but it never got spent. 

22 So if there is something like that, 

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1 I guess my comment would be, and this is often 

2 not something that you control, but if you are 

3 going to do educating of consumers, set some 

4 money aside in the budget so that consumers do 

5 get educated. 

6 FACILITATOR BROOKMAN: Okay. 

7 Thanks, Charlie. Harvey Sachs. 

8 MR. SACHS: Harvey Sachs with a 

9 follow-on to Frank Stanonik's comment on a 

10 separate DOE label. I am to infer from your 

11 remarks perhaps that your members will support 

12 incorporation of information on the FTC label, 

13 referring to perhaps where a product can be 

14 installed as the alternative to a separate DOE 

15 label. We certainly would prefer to see a 

16 single label. 

17 FACILITATOR BROOKMAN: Frank 

18 Stanonik. 

19 MR. STANONIK: Frank Stanonik, 

20 AHRI. Harvey, I won't go so far as to say 

21 "support," because don't necessarily know what 

22 that label would look like. But I would 

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1 certainly feel confident that our members 

2 would agree that if there is going to be some 

3 indication of the regionality and appliance it 

4 should be incorporated into that label. 

5 FACILITATOR BROOKMAN: Good. 

6 MR. SACHS: Thank you. 

7 MR. VERSHAW: Jim VerShaw with 

8 Trane. The labeling marking, like the FTC 

9 label, might work on furnaces, because a 90 is 

10 a 90, an 80 is an 80. But if you get into 

11 split systems, where it depends upon what the 

12 indoor match is, where a 14 SEER might be a 15 

13 somewhere, or a 13 could be a 14 somewhere 

14 else, I don't see how you could label that -- 

15 those combinations. 

16 So that's going to get trickier 

17 when you move to the next set of equipment. 

18 So I would think that labeling might work on 

19 furnaces. It is not going to necessarily work 

20 on split systems. 

21 FACILITATOR BROOKMAN: It's always 

22 helpful for the Department if you raise what 

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1 is going to happen out there in the field. It 

2 is even more helpful if you can tell the 

3 Department how they might approach it, what 

4 the solution might be. So if you have 

5 thoughts on that, any of you, then that would 

6 be especially helpful to the Department to try 

7 and prescribe what the solution might be. 

8 Jim, additional comments? No, 

9 none. 

10 Harvey Sachs. 

11 MR. SACHS: Harvey Sachs with a 

12 follow-on for Jim VerShaw. I am not sure that 

13 I completely understand how the match system 

14 issue differs from today, where it certainly 

15 would be conceivable that someone could take a 

16 SEER 13 -- a condensing unit designed for a 

17 SEER 13 and install it with a mismatched 

18 evaporator, indoor coiled, and get a non19 compliant unit. And this has been a matter of 

20 some concern to AHRI. 

21 What I'm missing is how this issue 

22 differs in kind as opposed to extent, if the 

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1 Department moves to regional standards. 

2 FACILITATOR BROOKMAN: Jim. 

3 MR. VERSHAW: Okay. This is Jim. 

4 If we are thinking about enforcement, and we 

5 are saying that we are going to -- part of the 

6 enforcement is going to be to label the 

7 product, so that they know which area they are 

8 going to go into, a split system air 

9 conditioner or heat pump outdoor unit could be 

10 sold across the country, depending upon what 

11 it's matched with. 

12 And so, therefore, how would you 

13 label the outdoor unit? Since it's labeled 

14 based on its highest sales volume tested 

15 combination match, but it could actually be a 

16 little higher or a little lower depending on 

17 what the indoor system is. 

18 So for an enforcement procedure it 

19 is difficult to say for sure that unit can't 

20 go there or can go there. 

21 DR. AMRANE: Karim Amrane. I would 

22 like to follow up on what Jim just said. We 

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1 are talking about mismatching here, Harvey. 

2 We are talking about today, the way the split 

3 systems are labeled, is that you look at the 

4 highest sales volume combination test in each 

5 matched system, and then you have -- you have 

6 the label made for that. 

7 But then, it says in small frame 

8 that the rating might change, depending on 

9 which -- which indoor coil you have. It was 

10 easier to do it with a national standard, 

11 because you had, you know, 13. You have to be 

12 13. That's fine. But here we are talking 

13 about a region where you have 14 in the south, 

14 13 in the north. That could be an issue, so 

15 that's what Jim was just trying to say. 

16 FACILITATOR BROOKMAN: Okay. 

17 Thanks for that. John Proctor. 

18 MR. PROCTOR: Well, I was just 

19 going to say I don't see it as being any 

20 different than what we have today, which is 

21 you have no idea what's out there. And -- 

22 well, actually, you probably do, and you 

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1 recognize that there are units installed out 

2 there that are not SEER 13 units for a variety 

3 of reasons. And you have units out there that 

4 are called SEER 13 units and they are doing 

5 14. 

6 So it is the same -- you know, 

7 you've got thousands -- hundreds of thousands, 

8 600,000 somebody said, combinations in the 

9 database. I think the labeling will be no -- 

10 it is certainly not going to be any easier 

11 than it is today, and probably will be worse. 

12 FACILITATOR BROOKMAN: Talbot, did 

13 you wish to comment? 

14 Okay. Yes, Karen. 

15 MS. MEYERS: Karen Meyers, Rheem 

16 Manufacturing. A separate label on furnaces 

17 could be very complex, just because furnaces 

18 are required to have several safety labels on 

19 there, and the practical real estate that is 

20 available on a furnace for another label, I 

21 mean, I just -- it is pretty much, you know, 

22 complete labels as it is now. So I don't know 

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1 how another label would even fit. 

2 And to maintain the font size that 

3 is required by law, it would be kind of 

4 impractical to have another label that had all 

5 of the information required for enforcement. 

6 So for that reason alone I think a separate 

7 DOE label would be impractical. 

8 FACILITATOR BROOKMAN: Do you have 

9 a perspective on the FTC label? 

10 MS. MEYERS: If we are going to 

11 include labeling, then we would certainly 

12 advocate it be incorporated onto an existing 

13 label. So the FTC label, in our -- at this 

14 point would probably make the most sense, but 

15 we would have to understand what all those 

16 changes were. 

17 FACILITATOR BROOKMAN: Gotcha. 

18 Okay. 

19 Mohammed Khan. 

20 MR. KHAN: Yes. Mohammed Khan, 

21 DOE. Thanks for that comment, Karen. I have 

22 a question, though. I'm not sure whether or 

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1 not there is a requirement for all of the 

2 labels to be placed on the exterior surfaces 

3 of the furnace jacket, or can they also be 

4 placed on the inside? 

5 I know that there are some labels 

6 that are placed on the inside, such as maybe a 

7 wiring diagram or certain specifications, 

8 about the burner and things like that. So, 

9 you know, again, I understand the concern 

10 about the real estate or space available, so 

11 can we also put such labels on the inside, if 

12 there is not enough space on the outside? 

13 FACILITATOR BROOKMAN: Karen? 

14 MS. MEYERS: This is Karen Meyers 

15 again. I'm not sure how much is even left on 

16 the inside of the furnace doors at this point 

17 as well. So, I mean, we just have to look at 

18 it, because I know that Rheem has labels on 

19 both the outside, where the safety labels are 

20 required to go, and we also have such things 

21 as wiring diagrams on the inside. 

22 So I still think you are going to 

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1 have a real estate issue with a separate DOE 

2 label 

3 FACILITATOR BROOKMAN: Thank you. 

4 Charlie? 

5 MR. McCRUDDEN: Charlie McCrudden, 

6 ACCA. On the last bullet, competitively 

7 driven enforcement, I think this is sort of 

8 commonly called whistle blowing. Our 

9 experience with Section 608 EPA Clean Air Act 

10 rules and whistle blowing violations is pretty 

11 poor. 

12 Our members have called EPA. There 

13 is a hotline or a number that you call when 

14 you see a non-compliant contractor, and it 

15 happens. I get stories from contractors up on 

16 one roof looking over and seeing another 

17 contractor on another roof just going along 

18 and cutting lines. And they have made the 

19 call, and the call goes to a regional office 

20 at EPA three states away. 

21 I just -- the other problem we have 

22 is you could have a disgruntled ex-employee 

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1 who would like to make life for his ex-boss 

2 miserable, and, you know, drop a dime on him. 

3 So, you know, I understand that it 

4 may work at other levels of the supply chain, 

5 and I'm not saying that it should be pushed 

6 off at those other levels of the supply chain. 

7 But, you know, I just -

 - whistle blowing at 

8 this level is fraught with peril. 

9 FACILITATOR BROOKMAN: Yes, please. 

10 So, once again, if what the Department 

11 describes as a possible way of addressing 

12 this, if you can offer what would more likely 

13 work, that would be helpful. Please. 

14 MS. DAKEN: This is Abigail Daken 

15 from EPA's ENERGY STAR, and I want to support 

16 that point. We have -- a lot of our 

17 compliance happens through whistle blowing, 

18 but that is among manufacturers, so we are 

19 dealing with a relatively small number of 

20 players and not so much trouble geographically 

21 as well. We don't have to have somebody on 

22 the ground. 

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1 So I wish I could offer a better -- 

2 and as we look forward to, you know, where our 

3 specifications are going, similar questions 

4 are arising. So we would be interested in 

5 hearing -- we will be following this 

6 discussion with great interest as well. 

7 FACILITATOR BROOKMAN: Thank you. 

8 Jim. 

9 MR. VERSHAW: This is Jim VerShaw 

10 with Trane. We were talking earlier about 

11 bullets on the handout. Item 1 says labeling 

12 and marketing. Now, if you go to the RAP, it 

13 is item number 2 says, "Requirements that 

14 marketing literature for systems clearly 

15 indicate in which regions a product can be 

16 installed." 

17 So actually the suggestion there I 

18 believe is that our -- the literature that we 

19 -- we don't handle, but the contractors -- 

20 (Laughter.) 

21 We create it; you guys buy it. But 

22 it shows what regions it would go into. So I 

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1 think that the comment earlier about marking 

2 off the ET, that's not right. I think that 

3 was actually -- two in the RAP was suggesting 

4 that the marketing literature show that. 

5 FACILITATOR BROOKMAN: Okay. Thank 

6 you for that clarification. 

7 MR. VERSHAW: Secondly, I am not so 

8 sure how good in general -- we will come back 

9 with written comments on this -- how good the 

10 labeling in itself is going to help. I mean, 

11 boxes usually disappear before the contractor 

12 shows up at the house. 

13 The homeowner, the purchaser, 

14 usually doesn't see the product before he buys 

15 it or she buys it, if the label is on the 

16 inside. Most homeowners are afraid of 

17 furnaces in most respects, you know, so I'm 

18 not sure how well labeling is going to work at 

19 all. 

20 I mean, it is possible, so I think 

21 it is going to have to be a combination of 

22 local codes, the willing to be good citizens 

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1 of all of the people who buy and install them 

2 to make sure that we're following the rules, 

3 and local codes and other things like that. 

4 So I'm not sure we're -- labeling by itself is 

5 really going to work at all. 

6 FACILITATOR BROOKMAN: Okay. Thank 

7 you. Andrew deLaski. 

8 MR. DELASKI: I will just make a 

9 couple of comments. 

10 FACILITATOR BROOKMAN: Hey, Andrew, 

11 let's let a few of the other manufacturers 

12 follow-on and then I'll return to you. 

13 MR. DELASKI: Sure. 

14 FACILITATOR BROOKMAN: Talbot. 

15 MR. GEE: Maybe one day I'll grow 

16 up to be a manufacturer. 

17 (Laughter.) 

18 FACILITATOR BROOKMAN: I should say 

19 those representing the interests of 

20 manufacturers. Go ahead. Go right ahead. 

21 Talbot, you're next. 

22 MR. GEE: Yes. Well, I just wanted 

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1 to reiterate the fact that the industry has 

2 been thinking about enforcement alternatives 

3 since 2007, and so it is not that we are kind 

4 of holding off and hoping this never really 

5 happened, and we are going to just ignore it 

6 and think it might go away. 

7 I want to just make sure it is very 

8 clear that we have tried, and continue to try 

9 very hard, to find an enforcement policy for 

10 this that could actually work, and are just 

11 really having a very difficult time finding 

12 it. 

13 So every intention to give DOE 

14 suggestions on enforcement policy is what 

15 we're seeking, but it is a very steep climb 

16 for us. 

17 I would suggest, too, that we have 

18 interests here who have a lot of experience in 

19 California. We are also part of a task force 

20 that is trying to help increase building code 

21 or energy code compliance in California, and 

22 they, too, have wrestled for several years on 

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1 enforcement policy for that compliance, which 

2 is a very similar issue, frankly, to this kind 

3 of thing. 

4 So I would just point out that it 

5 is not through lack of effort that we are not 

6 getting specific recommendations here. 

7 FACILITATOR BROOKMAN: Thank you. 

8 John, please. John Proctor. 

9 MR. PROCTOR: John Proctor. I 

10 would say putting it in the model energy code 

11 is a good idea, and I think it is a way that 

12 makes it available. 

13 The second thing is that -- that 

14 the people in the field have to be able to 

15 determine what a particular unit is rated at. 

16 And, therefore, easily assessing the ratings 

17 of these units on the internet, without secret 

18 passwords and back doors into the system, is 

19 absolutely essential if you want this to be 

20 enforced. 

21 FACILITATOR BROOKMAN: Okay. Thank 

22 you. Andrew deLaski, thanks for being 

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1 patient. 

2 MR. DELASKI: Sure. So I just want 

3 to support the Department's continued 

4 consideration of each of these points, you 

5 know, taking into consideration the -- make 

6 sure that they are legal, as the point Talbot 

7 made earlier about the warranty item. 

8 I also want to just comment on a 

9 couple of them. With respect to education, I 

10 agree with the comment made earlier that some 

11 sort of federal funding for education 

12 containment makes a lot of sense. I also 

13 think that it won't be just the feds. 

14 I think there will be a significant 

15 role for utilities, a significant role for the 

16 states and other stakeholders who care about, 

17 you know, good efficiency conformance to spend 

18 resources and encouraging good compliance. 

19 And that is going to be outreach to 

20 contractors, it is going to be outreach to 

21 consumers, there's going to be a whole set of 

22 things in terms of education, but it won't 

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1 fall all on the U.S. Treasury. 

2 The other comment I would make is 

3 with respect to the labeling issue, I just 

4 checked the statute -- the FTC is required to 

5 do a rulemaking once DOE promulgates final 

6 standards that are regional standards. So FTC 

7 will do a rulemaking. They've got to. And 

8 that is actually done 90 days after this 

9 rulemaking is complete, if it promulgates 

10 regional standards. 

11 And in that forum, this is where we 

12 will all get together again and talk about 

13 what is the label going to look like. But 

14 there will be a label of some sort. You know, 

15 it is going to have to be hashed out. It is 

16 going to have to be something -- it is a 

17 complicated question, which is why I think 

18 Congress kicked it to FTC, particularly for 

19 the air conditioners, but less so for the 

20 furnaces. 

21 I agree with the comment that a 

22 label on a box is of minimal use. Therefore, 

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1 a label on the product I think is important. 

2 So when the homeowner goes down to the 

3 basement and looks at the furnace, if they got 

4 a furnace from a contractor and say, "This one 

5 doesn't belong in my state," they can call 

6 that contractor back and say, "You installed a 

7 product that is illegal in my state." 

8 When they go to sell that house, 

9 it's going to be a problem for them. So I 

10 think you need to put it on the product. 

11 That is going to create better compliance, 

12 because the consumer will come back to the 

13 contractor and say, "You installed an illegal 

14 product." And that is going to be the biggest 

15 detriment or the biggest thing that is going 

16 to discourage the contractors from selling 

17 illegal products is when -- is going to be the 

18 callback from their consumers. 

19 So let's make sure that the 

20 consumer knows or can easily look at the 

21 product on the -- you know, on the product 

22 itself to see that they got a product that's 

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1 legal -- 

2 FACILITATOR BROOKMAN: Thank you. 

3 MR. DELASKI: -- for their 

4 location. 

5 FACILITATOR BROOKMAN: Charlie. 

6 MR. McCRUDDEN: I was going to 

7 follow up on your comment about education. 

8 What I was going to say is that I guess one of 

9 the things you do control on that in terms of 

10 funding is you probably will be making your 

11 budget requests sometime soon for FY I guess 

12 '12. So my encouragement there is to put a 

13 little buffer in there for the education. 

14 On the contractors and the labeling 

15 and the boxes, I don't -- I didn't -- I don't 

16 know if we were talking about labeling on the 

17 box, the cardboard box, or, as Mohammed said, 

18 the jacket of the -- and I think that's what 

19 Karen was saying is that the real estate on 

20 the jacket, on the metal part, is limited. 

21 Certainly, on our end we want to 

22 make sure that the label -- that the homeowner 

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1 who is afraid of his furnaces is as clear as 

2 possible. I mean, we have a stake here, 

3 because what we don't want to see is the 

4 moonlighter, is the illegal, unscrupulous 

5 contractor who goes out, you know, and tries 

6 to avoid it, and undercuts the legitimate 

7 guys. 

8 But I don't know how -- I think 

9 that still gets to the -- we have to make sure 

10 it's clear, and we have to make sure that it 

11 doesn't limit I think the ability of the 

12 product to move around in some ways. And 

13 then, this is way deeper in the weeds than I 

14 can get to, but, yes, this is going to be a 

15 thorny issue. 

16 FACILITATOR BROOKMAN: Talbot. 

17 MR. GEE: Yes. To follow on that, 

18 the second part to that is the bigger 

19 enforcement concern here is the consumer who 

20 simply doesn't want what the federal minimum 

21 might be. In other words, the market starts 

22 demanding non-compliance, which, if it's an 

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1 unenforced standard, has a precedent of 

2 happening already. 

3 So the label doesn't address that. 

4 And without the real enforcement it encourages 

5 low bidders who are non-compliant with the law 

6 and gives them an advantage in the 

7 marketplace, because you have homeowners who 

8 may not want a condensing-only furnace, for 

9 example. 

10 FACILITATOR BROOKMAN: I want to 

11 take final comments on these enforcement 

12 issues, because otherwise we are not going to 

13 be out of here by late afternoon. 

14 MR. GEE: Well, one last point on 

15 that, Andrew did mention the utilities, which 

16 I think could perhaps play a role in this. 

17 However, we might want to have some 

18 consideration about what interaction or 

19 guidance there is to regulatory commissions 

20 who right now would probably not look kindly 

21 on utilities devoting many resources to help 

22 an enforcement measure. 

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1 Perhaps there needs to be some part 

2 of this that would extend to regulatory 

3 commissions to give them some incentive to 

4 support what we need to do with the products. 

5 FACILITATOR BROOKMAN: Steve 

6 Rosenstock. 

7 MR. ROSENSTOCK: Steve Rosenstock, 

8 Edison Electric Institute. In terms of 

9 utility roles, that would be kind of a new 

10 role for utilities, because the utility 

11 programs in the past has been for DSM programs 

12 for going above and beyond what the minimums 

13 are. 

14 And so the utility programs are 

15 designed to make sure that the rebate to the 

16 residential customers for a, you know, 95 AFUE 

17 or a 15 SEER unit, it is not about the minimum 

18 standards. So it would be kind of a different 

19 role, and, again, there would be -- have to be 

20 regulators that would have to approve any sort 

21 of new role in that regard. 

22 Thank you. 

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1 FACILITATOR BROOKMAN: Okay. Thank 

2 you. 

3 Adam, let's press on here. 

4 Slide 24. 

5 MR. DARLINGTON: Okay. So DOE is 

6 also considering the impacts of regional 

7 standards on market participants. And DOE has 

8 performed some preliminary analysis of these 

9 impacts, which is in Chapter 17 of the Central 

10 Air Conditioners and Heat Pumps TSD. And DOE 

11 has identified impacts on the three major 

12 categories of market participants, which were 

13 identified as distributors, general 

14 contractors, and contractors. And DOE divided 

15 the impacts of the market participants into 

16 two categories -- the non-enforcement related 

17 impacts, which DOE did -- analyzed in the TSD 

18 chapter, and these mainly deal with the 

19 increased inventory to meet the needs of 

20 multiple regional standards, as well as the 

21 enforcement-related impacts, which DOE has 

22 still not analyzed directly, because, as I 

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1 mentioned earlier, DOE has not yet determined 

2 what the enforcement mechanism will be. 

3 And the preliminary conclusions in 

4 Chapter 17 were that distributors -- for 

5 distributors, the regional standards would 

6 require additional inventory, which would 

7 cause adverse impacts, whereas for general 

8 contractors and contractors the impacts would 

9 be confined mostly to the border areas and 

10 would be mostly enforcement-related. 

11 And so DOE is seeking any kind of 

12 data or information to assist us in the 

13 identification and the analysis of the impacts 

14 of regional standards on the market 

15 participants. 

16 FACILITATOR BROOKMAN: Comments? 

17 No comments on these issues? Talbot. 

18 MR. GEE: Confirm that we do agree 

19 that there will be inventory cost impacts with 

20 the regional standard. And then, depending on 

21 what other -- you know, there will be probably 

22 some level, some degree of enforcement-related 

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1 costs as well. 

2 And then, you know, I think the 

3 other consideration is if we have any type of 

4 lost opportunity cost, too. If, for example, 

5 we see any type of decline in equipment 

6 replacements, because of a higher standard, 

7 then we'd have to try to factor something like 

8 that in. But that's kind of a hard one to 

9 quantify, because you're projecting forward, 

10 but absolutely on the inventory side. 

11 And then, if we are talking -- 

12 well, it's a little premature for the AC side, 

13 but if, again, we start talking about larger 

14 pieces of equipment, there is just basic 

15 carrying costs, transportation costs, that 

16 will increase, too. 

17 FACILITATOR BROOKMAN: Okay. Thank 

18 you. Mohammed Khan. 

19 MR. KHAN: Mohammed Khan, DOE. 

20 Talbot, I appreciate that. You and I, we have 

21 discussed those same points before. 

22 But I’m wondering -- and, you know, 

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1 you made clear in those conversations that, 

2 you know, these are issues that are likely to 

3 have cost impacts. But I don't think we were 

4 every really able to talk about those cost 

5 impacts in real numbers, or projected numbers. 

6 So I guess I would appeal to you at 

7 this point to, in your written comments, if 

8 there is any way that you could generate a 

9 range of values, that would be very helpful to 

10 us. 

11 FACILITATOR BROOKMAN: Andrew, 

12 anything you want to add here? 

13 MR. DELASKI: I want to bring us 

14 back a little bit, because I am -- in the case 

15 of furnaces, the market today supplies a 

16 pretty wide range of efficiency -- 80 percent 

17 up to 96 percent or so, with the equipment at 

18 90 percent and higher having, you know, a 

19 significant market share on a national basis. 

20 I am curious -- what is it -- and 

21 your first bullet under Preliminary 

22 Conclusions isn't about the change that the 

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1 Department found would impose adverse 

2 financial impacts. 

3 FACILITATOR BROOKMAN: Rob. 

4 MR. CARMICHAEL: This is Rob 

5 Carmichael with Navigant. So the -- while the 

6 impacts were minimal in terms of increased 

7 inventory, DOE's analysis did show some 

8 increase in inventory and that was a result of 

9 having a larger distribution of product for 

10 those contractors that were serving, or for 

11 those, excuse me, distributors that are 

12 serving along the border region. 

13 So whereas they had a higher 

14 concentration of product at one efficiency 

15 level, under a regional standard where there 

16 are certainly two different markets, that 

17 would become more bi-modal, and, in that 

18 sense, they need a larger safety stock, 

19 because it is all about being able to meet 

20 customer's demand when they come into the 

21 distributor's site. 

22 So that's where that increase in 

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1 inventory, although relatively small in our 

2 analysis, did come into play. 

3 FACILITATOR BROOKMAN: Thank you. 

4 Andrew, go ahead. 

5 MR. DELASKI: Now, you've looked 

6 obviously more closely at the data than I 

7 have, and of course Talbot has as well. But 

8 it would strike me that -- you know, that the 

9 inventory today is already bi-modal. We're 

10 seeing in border states -- I would think in 

11 some border states, maybe not in all, but we 

12 are seeing, you know, a relatively high market 

13 share of equipment at 90 percent, for example. 

14 So it strikes me that you are shifting that 

15 mix as opposed to creating a whole new mode. 

16 The other question I have for you 

17 is: did you consider or have you begun to 

18 consider the impact on distributors in the 

19 northern regions, say away from the border? 

20 It strikes me that their inventory costs -- I 

21 mean, their situation may become simpler. 

22 You have just gotten rid of the 80 

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1 percent, and now they have to offer a 

2 collection of products that are 90 percent and 

3 higher. So they may actually have a simpler 

4 situation than they have today in terms of 

5 projecting. 

6 I also would comment that is a 

7 somewhat transitory situation, as they figure 

8 things out, as they get -- and that can happen 

9 with any new standard. They have to figure 

10 out: how is the market going to react? And 

11 that is going to impose costs that are 

12 specific to the standard as opposed to 

13 specific to the regional nature of it. 

14 FACILITATOR BROOKMAN: Harvey 

15 Sachs. Rob, go ahead. 

16 MR. CARMICHAEL: Rob, Navigant. 

17 Yes, we did look at those in the northern 

18 region as well as in the southern region, and 

19 so these impacts were isolated to those in the 

20 border regions. So your point is well taken 

21 on that front. 

22 And in terms of it being transitory 

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1 and not necessarily permanent, these were 

2 highlighted as more of a short-term impact, as 

3 the market does adjust to -- and they become 

4 -- distributors become better at forecasting 

5 the demand. 

6 FACILITATOR BROOKMAN: Harvey. 

7 MR. SACHS: Harvey Sachs. And, 

8 certainly, I am not a distributor and don't 

9 have that level of understanding, so I really 

10 phrase this as sort of a declarative question. 

11 But in my experience, distributors have other 

12 options to increasing inventory. One of them 

13 is substitution -- for example, the next 

14 larger unit being shipped in response to a 

15 customer need when the desired unit is out of 

16 stock. 

17 So there is an incremental cost to 

18 the distributor in shipping a slightly larger 

19 unit at the same price as the one the 

20 contractor had ordered, but that may be a 

21 lower cost than increased inventory. And if 

22 the analysis does not consider substitution, I 

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1 would think it to be incomplete. 

2 FACILITATOR BROOKMAN: Final 

3 comment from Talbot? 

4 MR. GEE: Yes, two points. First 

5 of all, especially the larger distributors, 

6 their inability perhaps, while maybe a little 

7 bit more mitigated in a furnace setting, but 

8 obviously a larger issue with air 

9 conditioning, is the portability of the 

10 product. 

11 Shifting around from stronger -- 

12 from weaker markets to stronger markets as 

13 need be. That becomes a cost issue, because 

14 you essentially create multiple demand curves 

15 without portability of the product. So that 

16 adds risk. That adds carrying cost. That 

17 adds financing cost. 

18 The other part of it is, just kind 

19 of anecdotally, is there was a similar 

20 argument made to how it should actually lean 

21 the channel to have, you know, more stringent 

22 duct insulation requirements, and things like 

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1 that. However, in actual practice in some 

2 cases where it is not well enforced, we found 

3 that our members have still ended up having to 

4 go back and stocking lower R-value duct 

5 insulation, because that's what the market 

6 continues to demand. 

7 So point being is, unfortunately, 

8 you can't get too far away from the 

9 enforcement side of this. In a perfect world, 

10 yes, in the far northern region you would just 

11 stop stocking 80s, but in actual practice, if 

12 we don't have a strong enforcement policy, 

13 there is going to be a market for 80s, and you 

14 are still going to have to deal with the 

15 fulfillment side of it. 

16 FACILITATOR BROOKMAN: Thank you. 

17 Okay. We're going to move on, then. 

18 MR. DARLINGTON: So as mentioned 

19 earlier, DOE received a consensus agreement 

20 from many interested parties, including many 

21 of you here today. This consensus agreement 

22 contains proposed standards for both central 

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1 air conditioners and heat pumps and 

2 residential furnaces. 

3 The consensus agreement was also 

4 submitted to Congress for consideration as a 

5 law. And here on the side it says, "If 

6 approved, would become effective in 2013." 

7 That effective date is for non-weatherized gas 

8 furnaces, whereas the effective date for gas 

9 weatherized furnaces is 2015, and I will get 

10 to that in a second. 

11 As you can see here, the map on the 

12 side shows the north versus the south. The 

13 south and southwest regions are for the 

14 central air conditioners rulemaking. For the 

15 purposes of the furnaces rulemaking, those two 

16 regions would be combined into a single 

17 southern region. 

18 And then, the map that is shown 

19 there are the same -- the states are the same 

20 as what's -- what was shown there in the table 

21 for each of the regions. 

22 FACILITATOR BROOKMAN: Frank 

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1 Stanonik. 

2 MR. STANONIK: Frank Stanonik, 

3 AHRI. Just a quick connection -- correction. 

4 On your map, West Virginia, as was noted in 

5 your other slide, does move into the north. 

6 So it should be that pea green, or whatever it 

7 is. 

8 (Laughter.) 

9 MR. DARLINGTON: Thanks, Frank. 

10 FACILITATOR BROOKMAN: Just 

11 checking to make sure you're paying attention. 

12 (Laughter.) 

13 MR. STANONIK: Always. 

14 FACILITATOR BROOKMAN: Always. 

15 Okay, thank heavens. Yes. 

16 MR. PROCTOR: John Proctor. I 

17 wonder what that little state is between 

18 Oklahoma and Colorado there? 

19 PARTICIPANT: It's in Ohio, New 

20 York. They've annexed Buffalo. 

21 (Laughter.) 

22 FACILITATOR BROOKMAN: Okay. No 

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1 more comments on the graphic. We're moving 

2 on. 

3 MR. DARLINGTON: All right. This 

4 slide shows the proposed levels for 

5 residential furnaces in the consensus 

6 agreement. As I mentioned, non-weatherized 

7 gas and oil furnaces have a compliance date of 

8 May 1, 2013, whereas gas-packs, which are also 

9 known as weatherized furnaces, would have an 

10 effective date of January 1, 2015. 

11 And you can see the levels there on 

12 the slide, and DOE is just seeking comment on 

13 the aspects of the consensus agreement, 

14 including the proposed regions, the proposed 

15 levels, and the compliance dates. 

16 FACILITATOR BROOKMAN: Thank you. 

17 In opening remarks, we heard a lot on this. 

18 So any additional comments, or maybe any 

19 counterpoints, that would be heard at this 

20 point. Harvey? Let me go to John Proctor 

21 first. 

22 MR. PROCTOR: Yes. I know you guys 

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1 worked really hard on this, and I'm sorry that 

2 I wasn't part of it. I'm not sure you're 

3 sorry that I wasn't part of it. 

4 But I will make some additional 

5 comments, primarily in the area of the air 

6 conditioning stuff, which is the area that we 

7 have a lot of data in on what actually happens 

8 out there in the field and the need for 

9 something that represents what you actually 

10 have in the field, as opposed to what we 

11 developed a number of years ago as a test 

12 procedure. 

13 So I'm not a signatory to the 

14 agreement, and think that there are some 

15 things that should be changed. 

16 Thank you. 

17 FACILITATOR BROOKMAN: Okay. Thank 

18 you. Harvey Sachs. 

19 MR. SACHS: This is Harvey Sachs. 

20 Just a note on the compliance dates. For many 

21 of us, the thought going into the consensus 

22 discussions was that simultaneous compliance 

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1 dates for all equipment classes, not just 

2 weatherized and non-weatherized, but also 

3 furnaces and air conditioners, would be 

4 desirable from the perspective of 

5 implementation and enforcement. 

6 And there were tradeoffs made in 

7 the conversations, and in particular other 

8 parties at the table felt very strongly that 

9 engineering resource constraints made it 

10 desirable to accelerate the two at different 

11 rates for furnaces and air conditioners. And 

12 that is why we wound up with the 2013 and 2015 

13 separate implementation dates for different 

14 product classes. 

15 In a perfect world, we might have 

16 been able to do the cutover simultaneously. 

17 It might have made some aspects of customer 

18 information and implementation easier, and 

19 that's the way we wound up. 

20 FACILITATOR BROOKMAN: Okay. Thank 

21 you -- an explanatory note. 

22 Additional comments that the 

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1 Department is seeking on the consensus 

2 agreement? Okay. 

3 MS. KOHL: I just have one -- 

4 FACILITATOR BROOKMAN: Betsy. 

5 MS. KOHL: -- thing. This is Betsy 

6 Kohl from DOE. Just to echo what Michael -- 

7 FACILITATOR BROOKMAN: Get close, 

8 Betsy. 

9 MS. KOHL: -- what Michael McCabe 

10 was saying about seeking comments on the legal 

11 issues, this is another one that we had 

12 reservations about, the compliance date and 

13 the provisions of 6295(f) that we are 

14 operating under. So if you guys have input on 

15 that, we would appreciate that as well. 

16 FACILITATOR BROOKMAN: Thank you, 

17 Betsy. That's helpful. Harvey Sachs. 

18 MR. SACHS: This is Harvey Sachs. 

19 I don't understand law, and I'm glad there are 

20 those who claim to. But is the standing such 

21 that the Department's obligation to seriously 

22 consider consensus agreements, are you 

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1 suggesting that this might be overridden by a 

2 statutory provision that affects these 

3 implementation dates? 

4 MS. KOHL: Yes. I mean, we are 

5 required, as we said, to consider -- this is 

6 Betsy Kohl -- these consensus agreements. But 

7 we have to also follow the law in adopting 

8 that as a potential standard. So all of the 

9 legal provisions in the statute that would 

10 still be applicable to any consensus agreement 

11 that is given to us. 

12 MR. SACHS: Will you elaborate on 

13 how these implementation dates affect that? I 

14 didn't catch the cite you gave. 

15 MS. KOHL: Sure. It's 6295(f). 

16 And Congress has given us in that provision 

17 certain lag times, required lag times. So, 

18 you know, we want to make sure that we adhere 

19 to whatever one is applicable, and we are 

20 still considering that issue. 

21 MR. SACHS: Harvey Sachs again with 

22 follow-up. This is a very important issue, 

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1 and my sense is that these lag times for the 

2 effective dates after the proposed rule goes 

3 into effect were designed to allow the 

4 manufacturers time to reengineer their 

5 products and their production facilities. 

6 And it would seem to me the common 

7 sense observation that if the manufacturers 

8 have said, "We've got enough time under the 

9 consensus agreement, and we have some 

10 tradeoffs in terms of longer time 

11 predictability of our standards," that we 

12 accept this, that this would be something to 

13 be seriously considered by the Department. 

14 MS. KOHL: Yes. Yes, we understand 

15 that. I mean, we understand the 

16 manufacturer's point of view, but we still 

17 have legal requirements that we have to 

18 consider. And we're still thinking about the 

19 issue. So, you know, if you have analysis of 

20 these statutory provisions that would help 

21 support your position, that would be helpful. 

22 MR. SACHS: So you can't do what 

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1 makes sense, if the law prevents it. 

2 MS. KOHL: We are bound by 

3 Congress. 

4 MR. SACHS: Thank you. 

5 FACILITATOR BROOKMAN: Let's hear 

6 from Andrew and Tim. I'm coming to you Jim. 

7 Andrew? 

8 MR. DELASKI: So we'll respond to 

9 you, Betsy. We'll work up some specific -- 

10 MS. KOHL: Thank you. 

11 MR. DELASKI: -- comments on this 

12 topic. 

13 FACILITATOR BROOKMAN: Tim as well. 

14 MR. BALLO: We'll do written 

15 comments. I think the states, in their brief 

16 in the Second Circuit case that challenged the 

17 furnace standards, also discussed this issue. 

18 And I think to summarize that very briefly, 

19 those deadlines in EPCA are long since passed, 

20 and the Department has a lot of discretion to 

21 adopt what makes sense, as Harvey said. 

22 FACILITATOR BROOKMAN: Thank you, 

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1 Tim. Jim Ranfone. 

2 MR. RANFONE: Yes. Jim Ranfone, 

3 American Gas Association. Just a quick 

4 question I guess on the mobile home -- I guess 

5 we call them manufactured home -- gas 

6 furnaces. Now, that is going to require a 90 

7 percent condensing furnace in both new and 

8 replacement market, if I understand the 

9 agreement. 

10 And I believe the manufactured 

11 housing safety standard or requirements in 

12 there already require that the gas furnace be 

13 in a closet, combustion air from outside. Is 

14 DOE going to look at that aspect in terms of 

15 the replacement market and how that would 

16 impact consumers that would -- the only 

17 product available to them in that 5,000 

18 heating degree days is going to be a 90 

19 percent AFUE. 

20 Will you evaluate that impact on 

21 consumers in terms of, first, cost? I know 

22 you did some evaluation earlier on the 

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1 minimums, but now this is a replacement issue 

2 also. 

3 FACILITATOR BROOKMAN: Mohammed. 

4 MR. KHAN: Mohammed Khan. Thanks 

5 for that comment. Department of Energy does, 

6 in its modeling, take into account a variety 

7 of different kinds of installations that would 

8 be required, looking at where "major" 

9 reconstruction or remodeling might be 

10 necessary in case of the different kinds of 

11 venting systems that would be required going 

12 from non-condensing to condensing, for 

13 example. 

14 So the point about manufactured 

15 homes, as well as, you know, something that we 

16 would also be looking at. 

17 FACILITATOR BROOKMAN: Let's move 

18 on. 

19 MR. DARLINGTON: Okay. So DOE is 

20 also considering a combined rulemaking 

21 approach for residential furnaces, residential 

22 central air conditioners, and heat pumps, and 

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1 furnace fans. DOE, in such a rulemaking, 

2 would be able to examine the interaction 

3 between the three products. And if DOE 

4 pursues this approach, DOE would issue a final 

5 rule for all three by May 1, 2011, which is 

6 the date required in the furnace remand 

7 agreement. 

8 And also, DOE also is seeking 

9 comment from interested parties relating to 

10 the possibility of the combined rulemaking 

11 approach for these three products. 

12 FACILITATOR BROOKMAN: Don 

13 Brundage. 

14 MR. BRUNDAGE: Don Brundage, 

15 Southern Company. I was very confused by the 

16 statement on this. Are you looking at any 

17 issues other than coordination of 

18 implementation dates? Because to try to look 

19 at combining economics between the 

20 rulemakings, I can see a lot of potential 

21 problems with them. And can you elaborate on 

22 how far you are talking about combining? Is 

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1 it just the implementation and rule dates? 

2 MR. DARLINGTON: I don't think -- 

3 the implementation dates would still be 

4 separate. I mean, the final rule would be 

5 issued, but the actual compliance dates for 

6 each product would be separate. And the 

7 standard would also be set separately for each 

8 different product type. 

9 Basically, they would just be able 

10 to interact -- examine how the different 

11 products interact I guess in terms of the 

12 energy savings between the products, since, I 

13 mean, as many of you know, the efficiency of a 

14 central air conditioner is heavily dependent 

15 on the furnace fan that it is installed with, 

16 the air handler. 

17 FACILITATOR BROOKMAN: Let's hear 

18 from Ashley. 

19 MS. ARMSTRONG: Yes. I mean, Adam 

20 kind of just summarized it. I think that's 

21 the issue. From an analytical standpoint, 

22 when DOE does its models, if we were to look 

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1 at a combined rulemaking, combining all three 

2 components, we'd look at the interactive 

3 effects. 

4 So if one component affects the 

5 efficiency of another one, we would capture 

6 that as DOE deems appropriate in its models. 

7 Does that make sense? Does that help? 

8 MR. BRUNDAGE: Yes. Obviously, you 

9 need to consider the competitive impacts and 

10 fuel switching that is always done as part of 

11 the analysis, and that would be appropriate. 

12 MS. ARMSTRONG: Okay. Thank you. 

13 FACILITATOR BROOKMAN: So we heard 

14 some from you earlier on combined rulemaking. 

15 Karim first, then to Charlie. 

16 DR. AMRANE: Karim Amrane, AHRI. 

17 Of course, as you heard me, we were part of 

18 the consensus agreement, so we support DOE 

19 combining the furnace efficiency and central 

20 air conditioner rulemaking together. 

21 However, we don't believe it will 

22 be appropriate to combine -- to include the 

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1 furnace fan within that rulemaking, because I 

2 don't think to do justice to that -- to the 

3 furnace standard efficiency. It will give DOE 

4 less than a year to basically look at that, 

5 and we think, since DOE has more time, we feel 

6 that it should be separate. So -- 

7 FACILITATOR BROOKMAN: Is that a 

8 part of your consensus agreement? Did you 

9 specify that? 

10 DR. AMRANE: No. The consensus 

11 agreement was -- just addressed the AFUE and 

12 SEER, whatever, I mean, for, you know, 

13 efficiency levels, but not the fan efficiency. 

14 And that's what we would like DOE to adopt 

15 right away, as soon as possible. 

16 FACILITATOR BROOKMAN: Thanks very 

17 much. Charlie. 

18 MR. McCRUDDEN: So you have -- and 

19 I don't know if this question has been asked 

20 yet or not, but you have a final publication 

21 date for these three rules. What would be the 

22 effective dates or the compliance dates, then? 

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1 Would they be the same? 

2 MR. DARLINGTON: I'll defer to 

3 Betsy. 

4 MR. McCRUDDEN: Okay. 

5 MS. KOHL: Betsy Kohl, DOE. Could 

6 you clarify a little bit what you're asking? 

7 MR. McCRUDDEN: Well, if you 

8 combine them -- I mean, I think what this 

9 chart here is showing is the final publication 

10 dates when you combine them. Or are those the 

11 effective dates? 

12 MS. KOHL: That's -- go ahead. 

13 MR. DARLINGTON: This is the -- 

14 what is shown on the slide here is what the -- 

15 if DOE were to pursue separate rulemakings, 

16 this is the publication date that each final 

17 rule would be published by. 

18 FACILITATOR BROOKMAN: And you also 

19 said earlier, what would happen if they were 

20 combined? 

21 MR. DARLINGTON: If they were 

22 combined, DOE would publish a single final 

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1 rule for all three by May 1, 2011. 

2 MR. McCRUDDEN: And then, there is 

3 this lag time. 

4 MS. KOHL: Yes. 

5 MR. McCRUDDEN: So where do we -- 

6 if we were to have a third column -- 

7 MS. KOHL: I gotcha. 

8 MR. McCRUDDEN: -- what would the 

9 -- 

10 MS. KOHL: The third column -- 

11 MR. McCRUDDEN: -- The third column 

12 and the heading was Effective Dates -- 

13 MS. KOHL: Yes. 

14 MR. McCRUDDEN: -- what is that 

15 saying? 

16 MS. ARMSTRONG: This is Ashley at 

17 Navigant. The effective dates would still all 

18 be different, and they would be based on the 

19 statutory provisions for each product 

20 separately. 

21 MR. McCRUDDEN: Okay. 

22 MS. ARMSTRONG: I don't know the 

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1 exact date off the top of my head, but, you 

2 know, whatever lead time is provided, or date 

3 is provided, in the statute for each product 

4 would be the ones that we would be considering 

5 at this point. 

6 FACILITATOR BROOKMAN: Mohammed? 

7 MS. KOHL: Oh, sorry. This is 

8 Betsy. So we would have to hit the earliest 

9 issuance state for the rules, and then from 

10 that date is actually set -- the compliance 

11 dates would be there. 

12 MR. McCRUDDEN: Mohammed, yes. 

13 MR. KHAN: Yes, Mohammed. I was 

14 just going to add that the effective dates of 

15 course, as Ashley indicated, you know, would 

16 be as they would be. But to Harvey's point 

17 about possibly changing or expediting the 

18 effective dates, whether or not there is that 

19 legal wiggle room, if you will, to be able to 

20 do so is something that still we would 

21 consider. 

22 FACILITATOR BROOKMAN: Steve 

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1 Rosenstock. 

2 MR. ROSENSTOCK: Steve Rosenstock, 

3 EEI. Again, with that third invisible column 

4 on effective date, for residential furnaces, 

5 since this is a reconsideration, would the 

6 effective date still be the same? Again, if 

7 for some reason you don't use the consensus 

8 agreement, and you decide just to go with the 

9 current rulemaking the way it is, for 

10 residential furnaces, would the effective date 

11 be the same? November of 2015? 

12 FACILITATOR BROOKMAN: Betsy? 

13 MS. KOHL: Betsy Kohl, DOE. Steve, 

14 we are still considering that issue. It is 

15 kind of wrapped up in this -- 

16 MR. ROSENSTOCK: Okay. And then, I 

17 guess -- and also as a follow-up, since the 

18 furnace fans -- this would be the first 

19 rulemaking for furnace fans, what is the 

20 suggested, I'll say, lead time? Would it be 

21 three years or five years for furnace fans? 

22 MS. KOHL: I'm not sure whether 

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1 that one is specified in the statute or not. 

2 MR. ROSENSTOCK: I can't remember 

3 if it was specified in ISSA 2007 either. I 

4 can't remember. 

5 MS. KOHL: We'll look it right here 

6 and get back to you. 

7 MR. ROSENSTOCK: Okay. I'm just 

8 kind of curious if it's -- 

9 FACILITATOR BROOKMAN: Tim Ballo. 

10 MR. BALLO: This is Tim Ballo. 

11 It's not specified in the statute. It just 

12 says that not later than December 31, 2013, 

13 the Secretary shall dah, dah, dah, dah, 

14 standards for -- 

15 FACILITATOR BROOKMAN: Do you have 

16 the cite there, Tim? 

17 MR. BALLO: It's 42 U.S. Code 

18 6295(f) or (d). 

19 FACILITATOR BROOKMAN: Thanks very 

20 much. Frank. 

21 MR. STANONIK: Frank Stanonik, 

22 AHRI. Just one comment on this effective date 

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1 issue. What Steve Rosenstock was alluding to 

2 was that when the rule that came out in 

3 November of '07, I believe it had an effective 

4 date that provided a five-year lead time? 

5 Eight-year lead time. Eight-year lead time. 

6 Okay. Well, I want to make the 

7 point, because it is significant to the 

8 significance of the consensus agreement. 

9 Okay? Clearly, we have some difference of 

10 opinion. But if DOE just goes through and 

11 does a final rule that is different than the 

12 consensus agreement, okay, we would still 

13 maintain the effective date specified by the 

14 law is eight years. 

15 FACILITATOR BROOKMAN: Thanks for 

16 that clarification. 

17 Okay. Additional comments on this 

18 -- these issues related to the combined 

19 rulemaking approach? 

20 (No response.) 

21 Okay. I think -- are you going to 

22 continue with test procedures? 

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1 MR. DARLINGTON: Yes. 

2 FACILITATOR BROOKMAN: You are? 

3 MR. DARLINGTON: Yes. 

4 FACILITATOR BROOKMAN: Pretty soon 

5 here I think we are going to take a break, but 

6 maybe at 11:00. And let me note that we are 

7 on Slide 29, and there are approximately 80 in 

8 this packet. The last 10 to 15 go pretty 

9 rapidly in my experience, so maybe we're not 

10 so far off the mark. But we need to -- I 

11 don't want to truncate any comment, but we 

12 need to keep going efficiently. 

13 MR. DARLINGTON: Okay. So I will 

14 quickly touch on the test procedures for 

15 residential furnaces. The current test 

16 procedures for residential furnaces are in the 

17 Code of Federal Regulations at 10 CFR Part 

18 430, Appendix N to Subpart B. And those 

19 heavily reference the ANSI/ASHRAE Standard 

20 103, 1993. And these test procedures fully 

21 account for the standby and off mode fossil 

22 fuel energy consumption of gas and oil-fired 

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1 furnaces. 

2 As Mohammed mentioned earlier, DOE 

3 is also conducting a rulemaking to include the 

4 measurement of standby and off mode energy 

5 consumption, and DOE has proposed to measure 

6 standby and off mode energy consumption using 

7 the IEC Standard 62301. 

8 Now, the Energy Independence and 

9 Security Act also requires DOE to modify the 

10 efficiency metric, which in the case of 

11 residential furnaces is AFUE, to incorporate 

12 the standby and off mode energy use, if it is 

13 technically feasible, so DOE is planning to 

14 modify the AFUE descriptor to include the 

15 standby and off mode energy consumption. 

16 And the resulting descriptor would 

17 be AFUE sub I, which is integrated -- an 

18 integrated annual fuel utilization efficiency 

19 metric, which also includes the standby and 

20 off mode electrical energy consumption. And 

21 DOE is addressing this in a separate 

22 rulemaking for which I believe Mohammed stated 

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1 this morning that the SNOPR has gone to the 

2 Federal Register today. So more details about 

3 that should be forthcoming very soon. 

4 Now, in measuring the standby and 

5 off mode energy consumption, DOE assumes that 

6 furnaces operate on standby mode during all 

7 non-active mode hours. And so essentially 

8 standby mode and off mode energy consumption 

9 could be defined as being the same. 

10 And so DOE is welcoming comments on 

11 that assumption, as well as the comment that 

12 -- on DOE's assumption that manufacturers 

13 typically don't provide an off switch that 

14 would allow for a furnace to just be turned 

15 off, basically. 

16 And then, DOE is also seeking 

17 comment on the approach to using the 

18 integrated AFUE metric, AFUE sub I, to amend 

19 the standards for residential furnaces. 

20 FACILITATOR BROOKMAN: Harvey 

21 Sachs. 

22 MR. SACHS: Harvey Sachs. Based on 

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1 work published in 2003 by Scott Pigg at 

2 Wisconsin Energy Center, a field study of some 

3 31 furnaces, we expect the average furnace to 

4 have standby power of eight watts. Eight 

5 watts is in the range of 75 kilowatt hours per 

6 year. Some are much more, some are much less. 

7 There is technical potential for 

8 improving that. The problem we have with AFUE 

9 I, sub I, is that it completely masks the 

10 potential, because the standby power, even 

11 though it's high quality electricity, works 

12 out to be in the range of a half a percent of 

13 the total annual site energy use. And, in 

14 fact, it is only a few percent of the fan use. 

15 So in the context of other devices 

16 in the house, that 75 kilowatt hours a year is 

17 significant. There is significant potential 

18 for improvement. But in the context of the 

19 potential improvement, the opportunities will 

20 be completely masked in this case, if an 

21 integrated measure is used. Even if you save 

22 two-tenths of a percent of the total use, it 

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1 just doesn't show up as a design constraint 

2 for any rational manufacturer. 

3 FACILITATOR BROOKMAN: Harvey, how 

4 would you suggest they address that? 

5 MR. SACHS: First of all, we 

6 recommend that we proceed to the direct final 

7 rule. And if we have to do it now with the 

8 integrated, we will -- we will have to eat 

9 that. But we believe that furnaces are one 

10 product category, one of the few perhaps, for 

11 which a separate measure of standby power is 

12 appropriate, is feasible, and is justified. 

13 FACILITATOR BROOKMAN: Thank you. 

14 Yes, please. 

15 MS. DAKEN. Abi Daken. I just have 

16 a clarifying question. So with this metric, 

17 AFUE I, the -- so furnaces are generally 

18 listed with an AFUE, and also with an annual 

19 electrical consumption. And it sounds like 

20 the AFUE sub I, and the annual electrical 

21 consumption, would both have -- take account 

22 of the standby mode power. Is that correct? 

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1 FACILITATOR BROOKMAN: Ashley? 

2 MS. ARMSTRONG: The manufacturers 

3 or AHRI can correct me if I'm wrong, but I 

4 think the annual electrical consumption only 

5 is the active mode. So it's the furnace fan 

6 blower, and it is not the standby and off mode 

7 electrical consumption that we are speaking of 

8 here. So the AFUE_I would only have the 

9 standby and off mode electrical consumption in 

10 it, whereas the furnace fan blower would still 

11 be separate. 

12 FACILITATOR BROOKMAN: I see 

13 manufacturers nodding their head yes. Is that 

14 correct? 

15 MS. ARMSTRONG: Thank you. 

16 FACILITATOR BROOKMAN: Yes. He's 

17 nodding his head. 

18 Okay. Karim? 

19 DR. AMRANE: Karim Amrane, AHRI. I 

20 guess as far as -- it seems to us that DOE has 

21 already decided that the only way to move 

22 forward with standby losses is to have -- is 

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1 to account that those losses inside the -- 

2 within the AFUE metric encourage AFUE I. 

3 And I don't -- we don't have the 

4 same interpretation of ISSA. And, actually, 

5 we would like -- we don't have an official 

6 position today as to whether the standby 

7 losses should be part of AFUE or separate. 

8 But I think we -- DOE in our opinion should be 

9 open to both options. And I think as an 

10 industry we will come back to DOE with some 

11 recommendation, and also with the joint 

12 stakeholders, will have a discussion on this 

13 -- on the standby losses and come back with 

14 some recommendations. 

15 FACILITATOR BROOKMAN: Okay. 

16 Mohammed Khan. 

17 MR. KHAN: This is Mohammed with 

18 DOE. Thank you for that comment, and I also 

19 want to maybe revisit a little bit on the 

20 comment or the points that Harvey made about 

21 the -- I guess the potential for improvements 

22 in standby and off mode energy consumption 

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1 savings being I guess characterized as maybe a 

2 loss in the noise of AFUE I -- AFU -- AFUE sub 

3 I total. Excuse me. 

4 So I think it would be very helpful 

5 if we could have some follow-up comment, 

6 written comments, and data, that provides very 

7 good example to that point, to perhaps 

8 substantiate maybe some of the reasons why it 

9 should be separate or not. 

10 FACILITATOR BROOKMAN: Steve 

11 Rosenstock. 

12 MR. ROSENSTOCK: Steve Rosenstock, 

13 Edison Electric Institute. I would hope that 

14 there are technologies that reduce the 

15 standby, but I have a -- just a thought about 

16 this. Suppose an AFUE -- a furnace has an 

17 AFUE of 80, but you do the AFUE I and it's 

18 79.8 once you do it, if you do it with some 

19 sort of number. 

20 It is the same furnace, same amount 

21 of gas consumption, same amount of electric 

22 consumption, same amount of standby 

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1 consumption, but to a consumer that "sub I" 

2 might be kind of invisible. And it hasn't 

3 really -- and there might be the old furnaces 

4 out there that just show AFUE. 

5 So I think I am going to make 

6 Harvey faint and say I think I agree with him. 

7 Why not just do it separately and keep it 

8 easier, and then it is just much more 

9 straightforward for the consumer and the 

10 marketplace. 

11 Thank you. 

12 FACILITATOR BROOKMAN: Frank 

13 Stanonik. Do you want to -- Betsy, do you 

14 want to -- please. 

15 MS. KOHL: I just wanted to pipe in 

16 for a second. This is Betsy Kohl from DOE 

17 D.C. When you guys are looking at this issue 

18 and providing us with comments and analysis, 

19 if you can look at the statutory provision 

20 that requires us to integrate them, if 

21 technically feasible, that would be helpful as 

22 well. 

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1 FACILITATOR BROOKMAN: Thank you. 

2 Okay. Frank Stanonik. 

3 MR. STANONIK: Well, actually, that 

4 was -- my first point is that in considering 

5 feasibility, I guess I want to ask or suggest 

6 that the Department consider also what is 

7 involved in implementing it, because if you do 

8 -- again, I have read this to assume that AFUE 

9 I would replace AFUE. If that's done, the 

10 Department then becomes obligated to what -- 

11 I'll say translate all efficiency requirement 

12 to the new descriptor. 

13 We went through that in the early 

14 1990s with water heaters when the test 

15 procedure changed. It was an abomination. 

16 (Laughter.) 

17 Okay? Now, we're potentially 

18 talking about something that, again, on paper 

19 looks easy for the sake of whatever it was, 75 

20 kilowatts. Let's say it's 100 kilowatts a 

21 year, okay? 

22 PARTICIPANT: Kilowatt hours. 

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1 MR. STANONIK: Oh, I'm sorry, 

2 kilowatt hours. Okay. Kilowatt hours, okay. 

3 But you would have to -- you would have to 

4 change the federal minimum standard to reflect 

5 this AFUE sub I. Okay? 

6 Every program out there in the 

7 United States that in any way incentivizes 

8 people to buy more efficient furnaces, or have 

9 to change their descriptor at some point, 

10 there will be rampant confusion. Okay? 

11 But no, the point is, for the sake 

12 of these small number of kilowatt hours, I 

13 would argue feasibility says it isn't really 

14 feasible. Okay? 

15 But the other point I wanted to in 

16 fact make sure is we are -- my assumption was 

17 correct. We are talking about an AFUE I that 

18 would replace AFUE, correct? 

19 MR. KHAN: That's correct. 

20 MR. STANONIK: Okay. 

21 FACILITATOR BROOKMAN: Mohammed 

22 Khan, thank you. 

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1 Okay. So other -- yes, Talbot. 

2 MR. GEE: Yes. This is Talbot with 

3 HARDI. I was -- I am not an engineer, don't 

4 ever want to be one, and was kind of looking 

5 forward to checking out during this part of 

6 the discussion. However -- 

7 (Laughter.) 

8 -- the Edison Electric Institute 

9 comment that a change in the test procedure 

10 could end up down-rating existing equipment is 

11 something that I don't think you want 420 

12 distributors pounding on your door complaining 

13 about, because that is an unacceptable 

14 outcome, if that is what happens to all of 

15 this. So I hope that's not what happens. 

16 FACILITATOR BROOKMAN: Harvey 

17 Sachs. 

18 MR. SACHS: Harvey Sachs. I must 

19 be in the wrong place if I'm having agreement 

20 with HARDI, Edison Electric, and AHRI. 

21 (Laughter.) 

22 FACILITATOR BROOKMAN: Thanks for 

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1 noting that for the record. 

2 (Laughter.) 

3 Final comments on this segment? 

4 Frank Stanonik. 

5 MR. STANONIK: I apologize, but I 

6 do have one comment, because I want to 

7 clarify. Otherwise, Andrew threatened to 

8 pummel me. 

9 (Laughter.) 

10 Clarify my comment on the test 

11 procedures. AHRI certainly is committed to 

12 the consensus agreement, and I want everybody 

13 to recognize -- as part of that agreement, as 

14 part of the package, we agreed to earlier 

15 effective dates with those levels. 

16 My point was that if DOE is going 

17 to come out with a final rule that perhaps is 

18 different than those levels, they should not 

19 assume the industry is still willing to these 

20 earlier implementation dates. 

21 FACILITATOR BROOKMAN: Okay. 

22 MR. STANONIK: That was the essence 

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1 of that. 

2 FACILITATOR BROOKMAN: Okay. Final 

3 comments now? Harvey, yes. 

4 MR. SACHS: Let me see if I can 

5 take what Frank and Steve and HARDI have been 

6 saying, and carry it to the logical extreme, 

7 which is establishes why this is not feasible 

8 to maintain the same safety factor relative to 

9 the testing methods with which they are 

10 challenged. 

11 If this indeed was half a percent, 

12 the manufacturers might feel the need to 

13 redesign all products that are today barely 

14 compliant, to reengineer those products in 

15 some respect or another to assure that they 

16 remain compliant with this decrement from the 

17 AFUE sub I. 

18 And darn it, if I want to ask for a 

19 redesign, I would like it to be for 

20 significant energy gains and not just for half 

21 a percent. 

22 FACILITATOR BROOKMAN: I see Betsy. 

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1 MS. KOHL: Yes, I just -- I know 

2 you are wrapping up. The SNOPR that is going 

3 out on this metric integration issue, as 

4 Mohammed said, the comment period is 15 days, 

5 because we had a big comment period on the 

6 NOPR and this was a discrete issue. But it 

7 was -- should be in the Federal Register 

8 shortly, so please give us comments on the 

9 issue and the technical feasibility aspect as 

10 well. 

11 FACILITATOR BROOKMAN: Molly. 

12 MS. TROMBLEY-McCANN: Molly McCann. 

13 I just want to comment that in the NOPR, if I 

14 recall correctly, there was a statement that 

15 AFUE would not be affected by the measurement 

16 of the standby losses. So shortening the 

17 comment period to 15 days when we were told 

18 that this wasn't going to happen in the NOPR, 

19 which had a long comment period, is a little 

20 bit frustrating. 

21 MS. KOHL: If you get into the 

22 SNOPR and find that you need more time to 

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1 comment, you can request an extension, and, 

2 you know, given what time constraints we have, 

3 if we are able to do it, we will look at it. 

4 Thank you. 

5 FACILITATOR BROOKMAN: Thanks for 

6 that. Thanks for the clarification. 

7 Okay. We really actually I think 

8 covered a lot of ground, made very good 

9 progress this morning. We are going to need 

10 to make more if we are going to end by around 

11 about 1:00. 

12 It is now five minutes after 11. 

13 I'm going to suggest we break now. 

14 We are going to keep going through 

15 the lunch hour and try and finish. So that's 

16 1:00. If it's 1:30, that's my plan for us, 

17 and to release you early if at all possible. 

18 So if that means you need a snack to tide you 

19 over, during the break do it. 

20 It's now 11:05. We're going to 

21 resume at 11:20. Everybody knows where the 

22 coffee shops are and everything? Go quickly, 

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1 because they're not very efficient downstairs. 

2 (Laughter.) 

3 Yes, go quickly. We'll resume at 

4 11:20. 

5 (Whereupon, the proceedings in the foregoing 

6 matter went off the record at 11:07 a.m. and 

7 went back on the record at 11:29 a.m.) 

8 FACILITATOR BROOKMAN: Briefly, 

9 Brenda is about to make Xerox copies of 

10 everybody's business cards, and she's missing 

11 a few, so if you haven't handed her a business 

12 card yet, please do so, so we've got a 

13 complete record of the attendees for this 

14 meeting today. And Mohammed also has an 

 th

15 announcement surrounding the May 5 date. 

16 MR. KHAN: Yes, there was question 

17 about the public meeting for the Air 

 th

18 Conditioning rule happening on May 5 . I 

19 checked with the Project Manager, Wes 

20 Anderson, on that activity, and it is going to 

 th

21 be on the 5 . 

22 FACILITATOR BROOKMAN: It is 

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1 confirmed. 

2 MR. KHAN: Yes. 

3 FACILITATOR BROOKMAN: Okay. Thank 

4 you for that. So, we're proceeding then. 

5 We're still hearing from Adam. Thank you. 

6 MR. DARLINGTON: So, we're going to 

7 get into the NOPR analyses, and I'm going to 

8 start off talking about the market and 

9 technology assessment, and the screening 

10 analysis, and the engineering analysis before 

11 passing it on to Alex. So, we'll start off 

12 with the market and technology assessment. 

13 Basically, the purpose of the 

14 market and technology assessment is to 

15 characterize the current market for 

16 residential furnaces, which includes 

17 manufacturers, historical shipments, 

18 regulatory and non-regulatory initiative 

19 programs, and the products, and the 

20 performance characteristics, and other 

21 characteristics of products on the market. 

22 And then in the technology assessment, DOE 

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1 will identify technologies that are available, 

2 and are being used to improve the efficiency 

3 of residential furnaces. 

4 So, the first in the market 

5 assessment, DOE creates, or, I guess, decides 

6 what product classes will be considered. EPCA 

7 gives DOE the authority to create product 

8 classes based on the three criteria shown, 

9 which are the type of energy used, the 

10 capacity, or other performance-related 

11 features. And DOE, for this rulemaking, is 

12 planning to maintain the same product classes 

13 that were analyzed in the November 2007 Final 

14 Rule, which were non-weatherized gas furnaces, 

15 weatherized gas furnaces, mobile home gas 

16 furnaces, and non-weatherized oil furnaces. 

17 And DOE is welcoming comments on the planned 

18 product classes for this rulemaking. 

19 FACILITATOR BROOKMAN: Comments on 

20 the product classes? 

21 MR. DARLINGTON: DOE determines the 

22 technologies to improve each product by 

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1 surveying the market to determine what 

2 technologies are currently being used to 

3 improve efficiency. DOE also looks at 

4 technologies that have been used in the past, 

5 as well as prototype designs that are being 

6 used to improve efficiency. And, now, DOE 

7 will consider further in the analysis only 

8 those technologies that would improve the AFUE 

9 that would be measured by DOE's test 

10 procedure, as those technologies would be most 

11 likely to be implemented in response to an 

12 amended energy conservation plan. 

13 So, DOE has developed a very 

14 preliminary list here of technology options 

15 that would potentially improve the efficiency 

16 of residential furnaces. Now, this list is 

17 not in the Rulemaking Analysis Plan, but this 

18 presentation is on-line if you need to review 

19 this later, so you can see of the preliminary 

20 technology options that have been identified 

21 are here on the slide. And we are welcoming 

22 comment on these technologies, as well as any 

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1 additional technologies that DOE should 

2 consider for residential furnaces. 

3 FACILITATOR BROOKMAN: Jim. 

4 MR. VerSHAW: Jim VerShaw of Trane. 

5 Could you give us a definition of fuel 

6 filtration? 

7 MR. DARLINGTON: Fuel filtration is 

8 mainly for oiled-fired furnaces, and that 

9 would reduce, I guess, the contaminants in the 

10 fuel to help for a cleaner, possibly more 

11 efficient combustion. 

12 FACILITATOR BROOKMAN: I guess, in 

13 particular, as you look at this list, thoughts 

14 on obvious omissions, and things that should 

15 not be included. Okay. Yes. 

16 MR. PROCTOR: Maybe you guys can 

17 help me out here, and I know it would be a 

18 change, but if we're going to do the blower 

19 efficiency over here, why are we doing to do 

20 the blower efficiency over here, too? 

21 FACILITATOR BROOKMAN: Thank you, 

22 John Proctor. 

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1 MR. PROCTOR: Do you understand 

2 what I'm saying? In other words, if there's 

3 going to be one for the furnace fan, then why 

4 are we throwing it in here, other than the 

5 fact that traditionally we have. 

6 MR. DARLINGTON: Yes. I'd just 

7 like to point out that this is a really kind 

8 of all-encompassing list, and DOE is going to 

9 whittle these down more and more to actually 

10 what would be used, what would impact AFUE. I 

11 know there's been some discussion in the past 

12 as to whether the blower efficiency actually 

13 impacts AFUE or not. We'll analyze that, and 

14 examine the actual impacts on AFUE, as well as 

15 considering it in the -- as part of the 

16 separate rulemaking for furnace fans, too. 

17 FACILITATOR BROOKMAN: Yes, Harvey 

18 Sachs. 

19 MR. SACHS: Harvey Sachs. One of 

20 our concerns is the threshold for including 

21 among the technology options, in a recent 

22 proceeding we saw exclusion of technology 

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1 options that were not used in the particular 

2 product class in the United States, but were 

3 used in other product classes, or 

4 internationally. And given the globalization 

5 of the market, it would be extremely 

6 disappointed if the Department adopts such a 

7 narrow criterion for inclusion in this 

8 rulemaking. 

9 FACILITATOR BROOKMAN: Is there 

10 anything specifically missing here that - 

11 MR. SACHS: We will reserve that, 

12 but to set the initial screen at technologies 

13 which are already used in furnaces 

14 manufactured in large numbers in the United 

15 States, as well as the screen that it impacts 

16 AFUE, as opposed to end-use efficiency, 

17 recognizing that AFUE is a model of 

18 efficiency, we believe is unnecessarily 

19 restrictive to the Department's consideration 

20 of options, and the paths by which 

21 manufacturers might comply. 

22 FACILITATOR BROOKMAN: Thank you. 

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1 Ashley. 

2 MS. ARMSTRONG: Okay. Just a 

3 follow-on to Harvey's point to the technology 

4 options we consider, and their impacts as far 

5 as outside the U.S. Adam will get to the 

6 screening criteria, which are coming up on the 

7 next slide, but these are just technologies 

8 that DOE could consider. To be considered 

9 further downstream in the analysis, they have 

10 to meet the four screening criteria. As part 

11 of that screening criteria, one of them 

12 references the ability for manufacturers to 

13 produce equipment, the ability for servicers, 

14 and sellers, and contractors to adequately 

15 service on equipment on a scale necessary to 

16 apply to the entire market by the effective 

17 date of the standard. 

18 If the U.S. infrastructure is 

19 greatly different from that of other 

20 countries, then that's something DOE does 

21 consider in its application of the four 

22 criteria for the screening analysis, as 

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1 appropriate. So, Harvey, when you send in 

2 your comments about what DOE should consider 

3 for the U.S. as applicable to -- from what 

4 you've learned, lessons learned from world 

5 markets, I ask you to keep that in mind. 

6 MR. SACHS: Thank you, Ashley. 

7 This is Harvey Sachs, and I would suggest that 

8 it is very different to screen out, initially, 

9 from consideration, to preclude consideration 

10 of technologies that are not in widespread use 

11 in furnaces in the U.S. today, to screening 

12 out for the criteria that you have raised of 

13 labor force or other issues during 

14 consideration of technologies. The latter is 

15 certainly appropriate, the former we felt was 

16 quite inappropriate. 

17 FACILITATOR BROOKMAN: Thank you. 

18 Other comments on this slide? 

19 MR. DARLINGTON: So, as Ashley just 

20 alluded to, the next step is the screening 

21 analysis. And the purpose of the screening 

22 analysis is to screen out the technology 

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1 options that should not be considered further 

2 in the downstream analysis. And the Code of 

3 Federal Regulations gives DOE some guidance as 

4 to the criteria that DOE should use for 

5 screening out options, which are technological 

6 feasibility, practicability to manufacture, 

7 install, and service, impacts on product 

8 utility or availability to consumers, and 

9 impacts on health or safety. And if any 

10 technology option does not meet these four 

11 criteria, or any one of these four, then DOE 

12 would exclude it from consideration further in 

13 the analysis. So, next we'll get into the 

14 engineering analysis. 

15 The main purpose of the engineering 

16 analysis is to characterize the relationship 

17 between achieving an increase in efficiency, 

18 and the increase in cost that comes with that. 

19 And the engineering analysis results are used 

20 in the downstream analysis, the life cycle 

21 cost and payback period, the manufacture 

22 impact analysis, and the employment impact 

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1 analysis is shown here on the slide. 

2 FACILITATOR BROOKMAN: Harvey 

3 Sachs. 

4 MR. SACHS: It's become part of the 

5 ritual for these proceedings, but we, again, 

6 note that the depiction in Slide 41 is a 

7 static depiction, and DOE has never done the 

8 historical or retrospective analysis to see 

9 what the time dependent change in price and 

10 efficiency levels is subsequent to adoption. 

11 We recognize that some of these technologies 

12 have incremental costs, but we also recognize 

13 that like all manufactured products, there has 

14 been a consistent decline in price relative to 

15 the CPI, even as efficiency levels have risen 

16 for most products. And, consequently, this 

17 static depiction is an incomplete analysis 

18 that should be complemented at some point by a 

19 more thorough DOE retrospective analysis. 

20 FACILITATOR BROOKMAN: Okay. Thank 

21 you. 

22 MR. DARLINGTON: Okay. DOE, 

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1 basically, there are four main steps in the 

2 engineering analysis. The first step is 

3 defining the baseline models. These are 

4 typically the lowest technology products on 

5 the market. They just meet the current 

6 Federal Energy Conservation Standards, and DOE 

7 uses them as a comparison point for the higher 

8 efficiency products. Next, DOE identifies the 

9 more efficient products on the market at 

10 higher efficiency levels. Then DOE selects 

11 units both at the baseline and higher 

12 efficiency levels for the tear-down analysis, 

13 which DOE disassembles individual products, 

14 and creates a Bill of Materials for each 

15 product that contains detailed information 

16 about the product and its manufacturing. And 

17 then DOE uses the information in the Bill of 

18 Materials to develop the manufacture 

19 production costs using a cost model that 

20 contains information about typical pricing, 

21 and labor rates, and things of that nature. 

22 And I'll talk about each of these more as we 

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1 move on. 

2 FACILITATOR BROOKMAN: Let's pause 

3 there. Talbot. 

4 MR. GEE: I'm sorry for the delayed 

5 response here, but I do have to just have one 

6 response for Harvey on that. I don't, 

7 necessarily, disagree that over time the costs 

8 or affordability of a high-efficiency product 

9 may decrease, but if the DOE is going to add 

10 that to its analyses, then it needs to make 

11 sure it is absolutely still quantifying the 

12 effect of the marketplace during those peak 

13 price points at the point of implementation, 

14 because granted, it's great if five, ten years 

15 down the road it becomes a more affordable 

16 product, but that doesn't, necessarily, mean 

17 that our guys will last five to ten years, if 

18 it's a significant change that costs us 

19 business in those five to ten years. So, 

20 that's just an addition I'd put to that. 

21 FACILITATOR BROOKMAN: Let's return 

22 to the slides. Thank you. 

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1 MR. DARLINGTON: So, DOE initially 

2 identified some representative characteristics 

3 of each of the furnace product classes, and 

4 these characteristics are based on a review of 

5 the current furnaces market, and what DOE 

6 found the majority of furnaces were 

7 characterized by. So, DOE is welcoming 

8 comments about the representative 

9 characteristics that DOE has identified for 

10 each of the four product classes. 

11 FACILITATOR BROOKMAN: 

12 Representative characteristics. 

13 MR. VerSHAW: Jim VerShaw with 

14 Trane. One thing that you've got to be 

15 careful of when you look comparing furnaces of 

16 different manufacturers is on the firing rate, 

17 their input capacity, is to make sure that 

18 you've got reasonable apples-to-apples 

19 comparison. So, one manufacturer may have a 

20 75,000 input in a 14-inch width cabinet, and 

21 the other manufacturer may have a 60, and an 

22 80, but not a 75, so then you'd compare that 

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1 to the 60 that has the same number of burners, 

2 and the same cabinet width, and you compare 

3 that to the 80 that's got one more burner and 

4 heat exchanger, and a wider cabinet. So, if 

5 you look at the key players in the furnace 

6 industry, 75 is not typical for every one of 

7 them. 

8 MR. DARLINGTON: Right. 

9 FACILITATOR BROOKMAN: Other 

10 comments? Okay. 

11 MR. DARLINGTON: So, as I 

12 mentioned, one of the first steps is selecting 

13 the baseline models. Now, each product class, 

14 DOE will select a baseline model that 

15 represents the typical characteristics of that 

16 product class for the minimally efficient 

17 products. And shown here on the slide are the 

18 baseline AFUE ratings, which are the existing 

19 current Federal Energy Conservation Standards 

20 for residential furnaces. And then DOE uses 

21 the baseline models as a comparison point for 

22 higher efficiency models. And DOE is seeking 

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1 comment about the typical characteristics of 

2 the baseline models for residential furnaces. 

3 FACILITATOR BROOKMAN: No 

4 additional comments? Okay. 

5 MR. DARLINGTON: So, DOE also 

6 identifies efficiency levels for analysis, and 

7 DOE will select efficiency levels spanning the 

8 entire range from the baseline to the maximum 

9 technologically feasible level, which is also 

10 known as the max tech level. DOE is required 

11 to analyze the max tech level by EPCA. The 

12 max tech may be based on prototype designs 

13 that are not, necessarily, already 

14 commercially available. 

15 Now, DOE has tentatively identified 

16 the max tech efficiency level as being the 

17 highest efficiency that's currently available 

18 on the market at the representative rated 

19 input capacity. And the max tech AFUE for 

20 each of the product classes of residential 

21 furnaces are shown here on the slide. And DOE 

22 is seeking comment regarding the max tech 

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1 efficiency levels. 

2 FACILITATOR BROOKMAN: Harvey 

3 Sachs. 

4 MR. SACHS: Harvey Sachs. With 

5 respect to the max tech on weatherized 

6 furnaces, just a note that this is the 

7 intersection of max tech with limitations of 

8 the AFUE rating method, that one can well 

9 imagine a rating method that took account of 

10 the fact that a unit running at part load 

11 might deliver the same comfort with less 

12 energy, and that might not be reflected in the 

13 rating method, because of the need to keep it 

14 in non-condensing mode at peak output. So, 

15 there's just a standing comment that the AFUE 

16 measure is an imperfect model, even if it's 

17 what we're locked into. 

18 FACILITATOR BROOKMAN: Jim. 

19 MR. VerSHAW: Harvey, we have to 

20 keep those heat exchangers in the non21 condensing mode no matter what input. So, I 

22 didn't understand your comment about the lower 

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1 input. 

2 MR. SACHS: I would have thought 

3 there are some improvements we still can make 

4 when we're less heavily loaded, but I could be 

5 wrong, and please instruct me later. 

6 MR. VerSHAW: Okay. 

7 MR. SACHS: Thank you. 

8 FACILITATOR BROOKMAN: No 

9 additional comments? Okay. 

10 MR. DARLINGTON: Moving on. So, as 

11 I mentioned, DOE selected efficiency levels 

12 for analysis at the baseline, the max tech 

13 level, as well as the most commonly available 

14 efficiencies on the market. This slide shows 

15 in the tables the efficiency levels DOE plans 

16 to analyze for non-weatherized gas furnaces, 

17 as well as weatherized gas furnaces. And then 

18 on this slide we have the efficiency levels 

19 that DOE plans to analyze for mobile home gas 

20 furnaces, and for non-weatherized oil 

21 furnaces. And DOE is also seeking comment 

22 about the efficiency levels that DOE plans to 

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1 analyze in the NOPR analysis. 

2 FACILITATOR BROOKMAN: Additional 

3 comments here? No. Okay. 

4 MR. DARLINGTON: So, as I 

5 mentioned, DOE does a tear down analysis for 

6 the engineering analysis, which is basically a 

7 reverse engineering of products available in 

8 the market. DOE physically disassembles these 

9 products to examine the existing designs at 

10 each efficiency level. And then DOE records 

11 all the characteristics of each of the 

12 components, including the manufacturing 

13 processes required for fabrication. And those 

14 all go into the Bill of Materials. 

15 Now, for this -- for residential 

16 furnaces, DOE is planning to select over 40, 

17 about 40 furnaces for a tear down analysis. 

18 And the different criteria for selecting units 

19 for tear down analysis are shown here on the 

20 slide. These will cover the full range of 

21 efficiencies analyzed in each product class, 

22 and will also span multiple manufacturers, as 

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1 well as conform to these other criteria. And 

2 DOE is seeking comment on the criteria that 

3 was used to select units for the tear down 

4 analysis. 

5 FACILITATOR BROOKMAN: Steve 

6 Rosenstock. 

7 MR. ROSENSTOCK: Steve Rosenstock, 

8 Edison Electric Institute. I would guess the 

9 last big tear down analysis was done in 2005 

10 or 2006 for the last rulemaking, and I guess 

11 my question is, has a lot changed since then 

12 in furnaces in those last five years? 

13 FACILITATOR BROOKMAN: Ashley. 

14 MS. ARMSTRONG: To answer Steve, 

15 since the previous rulemaking started in the 

16 mid-`90s, the tear down analysis was done much 

17 before. 

18 MR. ROSENSTOCK: It was? Okay. 

19 MS. ARMSTRONG: 2005. And I would 

20 gauge that there has been some changes, 

21 especially in the higher efficiency markets, 

22 for which DOE will - 

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1 MR. ROSENSTOCK: Well, the NOPR 

2 didn't come out until like 2005, or early 

3 2006. 

4 MS. ARMSTRONG: Correct, but ANOPR 

5 and previous to that, previous analysis to 

6 that were - 

7 MR. ROSENSTOCK: Okay. Thank you. 

8 FACILITATOR BROOKMAN: John 

9 Proctor. 

10 MR. PROCTOR: To do a bad step 

11 back, but non-weatherized gas furnaces, go in 

12 attics in California, you may all have noticed 

13 in the winter it's cold in the attic, and in 

14 the summer it's hot. So, AFUE isn't properly 

15 calculating what happens with real furnaces in 

16 California. 

17 FACILITATOR BROOKMAN: Jim. 

18 MR. VerSHAW: Could you explain a 

19 little bit more about how that affects AFUE? 

20 MR. PROCTOR: Because the cabinets, 

21 you can correct me if I'm wrong, but then I'll 

22 learn something new, which is good. Is that 

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1 the jacket loss on a non-weatherized furnace 

2 is not counted in AFUE. Is that correct? 

3 MR. VerSHAW: No, that's not true. 

4 It's assumed to be isolated combustion with 

5 about a 45 degree ambient temperature, so they 

6 take the jacket loss and multiply by 1.7, and 

7 that's included in the AFUE for all non8 weatherized furnaces. The weatherized here I 

9 think means can't sit outside in the rain and 

10 everything. So, a weatherized furnace, you've 

11 got a 3.3 multiplier due to wind and other 

12 things on it. So, it is assuming that you 

13 have cooler air, 45 degree combustion air, and 

14 it's assuming that you have that -- well, you 

15 test in the lab so you don't get that, but you 

16 do have the jacket loss included at 1.7 

17 multiplier. 

18 MR. PROCTOR: Okay. Thank you. 

19 FACILITATOR BROOKMAN: Thank you. 

20 That's illuminating. Is it Cyril? 

21 MR. FOWBLE: Cyril Fowble. I was 

22 wondering, has DOE generated a list, and if 

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1 they have, they shared, of what you consider 

2 non-efficiency-related premium features, 

3 because one of the concerns I have is looking 

4 at standby energy potentially as part of this 

5 rulemaking. There are some features that are 

6 -- that don't AFUE, necessarily, that may have 

7 higher standby power consumption than the 

8 normal plans. 

9 MR. DARLINGTON: DOE has not 

10 generated an official list, but, I mean, 

11 certainly we do consider non-efficiency12 related premium features, such as those that 

13 are mainly related to interaction with the 

14 user, if there's a special type of premium 

15 controls. And sometimes those do impact 

16 efficiency, the AFUE rating, as well, in which 

17 case they would be included. But we can 

18 certainly try to be more - 

19 MS. ARMSTRONG: Let me follow-on to 

20 Adam, just with the units that we did select, 

21 we did select some that have features that 

22 might not show up in the AFUE specifically to 

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1 look at the standby and off mode energy 

2 consumption, and how it might change, and how 

3 those optional features would affect that 

4 calculation. And if you have certain features 

5 in mind of furnaces that you think we should 

6 consider, let us know what that should be, but 

7 we definitely did take that into 

8 consideration, as well. Thank you. 

9 FACILITATOR BROOKMAN: Thank you. 

10 Jim. 

11 MR. VerSHAW: In reading the RAP on 

12 page 35, it states that, "In order to 

13 understand incremental manufacturing costs, 

14 products chosen for tear down should be from 

15 the same manufacturer and product series to 

16 the extent possible," which conflicts with 

17 what you said a minute ago about multiple 

18 manufacturers. 

19 MR. DARLINGTON: Yes. So, for each 

20 different manufacturer, we try to analyze a 

21 series of products, so we could see kind of a 

22 good, better, best from each manufacturer. 

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1 So, it's kind of from the same manufacturer 

2 and product series across several 

3 manufacturers, is sort of what that means 

4 there. 

5 FACILITATOR BROOKMAN: Ashley. 

6 MS. ARMSTRONG: I'll just - 

7 MR. VerSHAW: The intent sounds 

8 right. 

9 MS. ARMSTRONG: I'll just clarify 

10 with an example. Say Manufacturer A offers an 

11 80, a 90, a 92, and a 95. We look at that as 

12 one whole product line with the same, more or 

13 less, user features, no optional features. We 

14 do the same thing for Manufacturer B, for 

15 Manufacturer C, Manufacturer D, normalize the 

16 differences, and try to isolate those 

17 incremental efficiency gains, and their cost. 

18 Does that help? 

19 MR. VerSHAW: Yes. 

20 FACILITATOR BROOKMAN: Good 

21 question. 

22 MR. GEE: This is Talbot, maybe a 

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1 process question. We've seen some market 

2 shares of high efficiency products increase 

3 recently because of unprecedented efficiency 

4 incentives, be it federal, or utility, or 

5 something like that. How is that taken into 

6 account? In other words, those -- that 

7 adoption, or the growth in that market may not 

8 have happened without that heavy 

9 subsidization, so how is that factored in when 

10 you're doing market penetration analysis, that 

11 sort of thing? 

12 FACILITATOR BROOKMAN: Alex Lekov. 

13 MR. LEKOV: Alex Lekov. So, there 

14 is specific analysis called regulatory impact 

15 analysis where DOE addresses the issue of 

16 incentives, programs like ENERGY STAR, and 

17 other similar non-regulatory impacts. 

18 MS. ARMSTRONG: I'm going to follow 

19 on - 

20 MR. LEKOV: And, also, within the -

21 - for example, life cycle cost analysis, we 

22 have distribution of efficiency in the base 

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1 case, and those also account for the impact of 

2 programs, such as ENERGY STAR. 

3 MS. ARMSTRONG: Okay. And just as 

4 a follow-on, this is Ashley. So, one of the 

5 things is like how DOE shipments might change, 

6 and you're saying maybe, possibly, that the 

7 shipments today, because of the incentives and 

8 whatever else may be different than the 

9 shipments were five years ago, and they may be 

10 different than the shipments are five years 

11 from now. 

12 I would say DOE shipments model is 

13 based on historical data, not just from one 

14 year, multiple years. And then it's going to 

15 project based on a number of different things, 

16 including new housing starts, new incentives 

17 that might come into the picture that might 

18 change the efficiency mix of products, along 

19 with historical factors and trends within the 

20 industry. And all of those will be available 

21 for comment, so if you feel that these 

22 incentives might impact the market differently 

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1 five years from now, we welcome your comments 

2 on that. Does that make sense? 

3 MR. GEE: Well, no, but it might 

4 just be my problem. 

5 (Laughter.) 

6 MR. GEE: I guess, my question is, 

7 it could be easy in a vacuum to assume that 

8 there is a strong penetration of certain 

9 products. And, frankly, it could just be over 

10 the last two to three years where some of that 

11 could have spiked. And I just -- I'm curious 

12 how you could take into account -- well, first 

13 of all, those incentives won't exist for a lot 

14 of these types of products if the standard 

15 increased significantly, so then there's an 

16 affordability issue there. And then how does 

17 it factor in the market price of the product, 

18 if it, in a sense, was discounted by all the 

19 incentives? 

20 MS. ARMSTRONG: So, the pricing 

21 starts off -- this is Ashley. The pricing 

22 starts off with the manufacturing cost. The 

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1 manufacturing cost, we calculate it from the 

2 bottom up, with a manufacturing cost model as 

3 if the entire market was at that level. So, 

4 in other words, that's the new minimum 

5 standard, so it's not, necessarily, reflective 

6 of the market penetration of that efficiency 

7 level today, but as if that becomes the new 

8 manufacturing standard and the volume goes 

9 there, the complete volume. 

10 FACILITATOR BROOKMAN: How does 

11 that address his concern, Ashley? 

12 MS. ARMSTRONG: I think it goes to 

13 the pricing. Our pricing is going to be what 

14 it is, irrespective of those incentives. You 

15 might disagree with that approach, but -- I 

16 see him shaking his head over there, but 

17 that's how we do it. And we welcome comments 

18 on that approach. 

19 FACILITATOR BROOKMAN: Or any 

20 alternative approach to capture the spike, 

21 based on incentives. 

22 MR. GEE: We'll work with you guys 

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1 and - 

2 MS. ARMSTRONG: Okay. That's fine. 

3 MR. GEE: -- figure out how to do 

4 this. 

5 MS. ARMSTRONG: I mean, I think the 

6 crux of the matter is, it wouldn't matter, 

7 incentives, or otherwise, if you're taking it 

8 as a baseline price. 

9 MR. GEE: Okay. 

10 FACILITATOR BROOKMAN: Do we have 

11 additional comments on this point? Yes, 

12 Frank. 

13 MR. STANONIK: Yes, just one 

14 additional comment, because in -- I think a 

15 general answer to the question is, this 

16 analysis for DOE is going to be extremely 

17 difficult, because, in fact, we are -- well, 

18 whether in the middle or in the back-end, 

19 we're in a situation, as far as the furnace 

20 industry, that is by all accounts, if not 

21 unprecedented, extremely rare. Okay? The 

22 downturn in the appliance industry that 

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1 started in probably the late `07, maybe `08, 

2 okay, was major, and now we have unprecedented 

3 incentives in forms of tax credits from 

4 Congress and other places promoting really 

5 products at the highest efficiency levels. 

6 Okay? And the one thing we know, those 

7 incentives are not going to be around forever. 

8 We hope the downturn in the economy isn't 

9 around forever. Okay? But, in fact, that's 

10 the condition we're in, so to try and forecast 

11 where the product is going to go for the next 

12 10 or 15 years, when you've got this very 

13 anomalous situation is a very difficult --

14 going to be a very difficult task. And I 

15 would just think if somebody gave you an 

16 agreement that you could do a direct Final 

17 Rule would be very attractive. 

18 (Laughter.) 

19 FACILITATOR BROOKMAN: So, Frank, I 

20 just want to note for the record, DOE 

21 appreciates your empathy, I'm sure. 

22 (Laughter.) 

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1 FACILITATOR BROOKMAN: Do we have 

2 additional comments on this series of issues, 

3 because we're going to keep moving on. Okay. 

4 MR. DARLINGTON: So, as I 

5 mentioned, the results of the tear down 

6 analysis will be a complete Bill of Materials. 

7 DOE will use the Bill of Materials to 

8 calculate the manufacturer production cost 

9 using a cost model that contains the price of 

10 materials, labor rates, cost of overhead and 

11 appreciation, and convert the BOM data into 

12 dollar values. And then the last step in the 

13 engineering analysis, DOE will apply 

14 manufacturer markup to the manufacturer 

15 production cost to get the manufacturer 

16 selling price, and construct the cost 

17 efficiency curves. And DOE is seeking comment 

18 about the markup used for the previous 

19 analysis, and whether a markup of 1.26 would 

20 still be applicable for the residential 

21 furnaces market. 

22 FACILITATOR BROOKMAN: We almost 

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1 always get some comment on markup. None at 

2 this time. Okay. We're moving on. 

3 MR. GEE: Are we isolating this 

4 just to manufacturer markup? 

5 MR. DARLINGTON: This is 

6 manufacturer markup, yes. 

7 MR. GEE: Okay. 

8 FACILITATOR BROOKMAN: Okay. 

9 MR. DARLINGTON: Also, DOE 

10 recognizes that there may be large variations 

11 in the manufacturer production costs across 

12 the range of input capacities. And, as a 

13 result, DOE is planning to analyze a couple of 

14 additional common input capacities in addition 

15 to the representative products that were 

16 identified earlier. And DOE is planning to 

17 perform tear downs above and below the 

18 representative input capacity at 50,000 BTU 

19 per hour, and 125,000 BTU per hour to help DOE 

20 to better characterize the relationship 

21 between manufacturer production cost, and 

22 input capacity. And DOE is welcoming comment 

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1 about the appropriateness of these two input 

2 capacities for analysis. 

3 FACILITATOR BROOKMAN: Yes, Jim. 

4 MR. VerSHAW: Back to my comment 

5 earlier on 75. If you look at the market 

6 share of furnaces, find out what percentage of 

7 the market share actually has increments of 

8 25,000. 

9 MR. DARLINGTON: These were based 

10 on an initial review of the products in the 

11 AHRI Directory. So, I think they should be --

12 they're pretty common input ratings. 

13 FACILITATOR BROOKMAN: They would 

14 appreciate you supplying the data that shows 

15 the increments that we think are more 

16 prominent. Frank Stanonik. 

17 MR. STANONIK: Frank Stanonik, 

18 AHRI. I think on this point, especially if 

19 you're talking about the tear downs, I think 

20 rather than, necessarily, focus on discrete 

21 input levels, the real point that I think is 

22 underlying Jim VerShaw's comment is that every 

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1 manufacturer has what they would consider, 

2 let's say, their baseline of their family, 

3 their model family, whether it's 75, 66, 72, 

4 whatever. Okay? But I think the point of 

5 this is that you should look at some models 

6 that are on the - near the ends of that model 

7 family. It doesn't, necessarily, have to be a 

8 50, it would probably be something near there. 

9 There are not many smaller, but where one 

10 manufacturer may make the end of the family, 

11 125, another one might make it 118, or 

12 whatever, but I think -- so, really, I think 

13 the point of this is don't get locked in on 

14 those values when you do the tear downs, if 

15 you get to that point. But just recognize 

16 that you're looking at ends of whatever would 

17 be the model family for the manufacturer. 

18 You're looking at the variation, right, 

19 anyhow, when you're tearing down. 

20 FACILITATOR BROOKMAN: Ashley. 

21 MS. ARMSTRONG: To answer you both, 

22 I think it's fair to say that's what we are 

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1 doing. There is some wiggle room within those 

2 hard numbers, depending on what exactly 

3 manufacturer series you're looking at. 

4 MR. VerSHAW: Jim VerShaw. 

5 Condensing and non-condensing furnaces have 

6 different upper ends. You won't find many 

7 above 120. 

8 FACILITATOR BROOKMAN: Okay. 

9 That's helpful, those comments. Harvey. 

10 MR. SACHS: Harvey Sachs. Last 

11 time I tried to do any analysis of the AHRI 

12 Directory, one of the things that fell out is 

13 that an awful lot of furnaces are shipped in 

14 two similar models of the same size, differing 

15 in the fan diameter, and fan power. And we 

16 casually refer to these as northern and 

17 southern models, and got beat up pretty bad, 

18 but, nonetheless, the fact that we commonly 

19 see alternative fan sizes at cost of capacity, 

20 I think is a perturbation you'll have to be 

21 sensitive to. 

22 MR. DARLINGTON: And DOE will try 

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1 to maintain the same fan sizes when looking at 

2 different models. 

3 FACILITATOR BROOKMAN: Okay. 

4 MR. DARLINGTON: With that, I'll 

5 hand it over to Alex. 

6 FACILITATOR BROOKMAN: Next we'll 

7 hear from Alex Lekov. 

8 MR. LEKOV: Alex Lekov, LBNL. I 

9 will focus on several components of the LCC 

10 analysis, starting with the markup for 

11 equipment price determination. So, the 

12 purpose of this analysis is to determine the 

13 consumer furnace prices based on manufacturer 

14 cost, and to characterize furnace distribution 

15 channels. 

16 DOE will estimate the consumer 

17 prices by applying markups consistently of 

18 distribution channel markups, as well as sales 

19 tax to manufacturer selling price estimates. 

20 This slide lists the sources that we used in 

21 the previous rulemaking. For example, a big 

22 part of the input to determine the wholesaler 

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1 and the contractor's input are the income 

2 statements from wholesale profit reports, for 

3 contractors in this particular case, previous 

4 rulemaking we used financial analysis from 

5 ACCA. 

6 For the general contractors and 

7 builders, we used builders -- we used source 

8 from the census which is listed here. And the 

9 output of the markup analysis are baseline and 

10 incremental markups aggregated to total markup 

11 for the product. 

12 As discussed this morning, DOE 

13 plans to address the impact of regional 

14 standards on furnace distributors and 

15 contractors. Two main ways in which regional 

16 standards could impact furnace distributors 

17 and contractors relate to the inventory 

18 management cost, which could increase, or the 

19 overall investment in inventory could also 

20 increase. New compliance cost for 

21 distributing contractors if only at the 

22 minimum additional record keeping and 

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1 reporting, also could cause change in costs. 

2 DOE believes that any additional 

3 cost that regional standards may impose on 

4 furnace distributors and contractors would be 

5 reflected by a change in the markups used. As 

6 a result of this conclusion, DOE plans to 

7 estimate changes in markups based on an 

8 assessment of the inventories, as well as the 

9 potential cost of the enforcement 

10 requirements. 

11 Item 16 in the list for comment 

12 request, basically, asks for comment and 

13 seeking data that will assist with the 

14 analysis of the impact of the regional 

15 standards on furnace distributors and 

16 contractors. 

17 FACILITATOR BROOKMAN: Yes, Talbot. 

18 MR. GEE: Yes, this is Talbot with 

19 Hardi. First of all, we commend the DOE for 

20 adding this section of analysis. I know it 

21 was part of the statute, as well, but the 

22 specific formulas that were offered for 

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1 analyzing distributor cost impacts, price 

2 impacts, I think are, in general, something 

3 that can work. We will supply more detailed 

4 comments in writing on this. We think there 

5 may be still some confusion between markup and 

6 margin. The terms are used awful 

7 interchangeably in the RAP, and we get a 

8 little concerned that the analysis is using 

9 the wrong figures at the wrong time, 

10 sometimes. So, again, we'll provide some more 

11 detailed analysis on that to clarify that 

12 point in written comment. 

13 There's also -- depending on how, 

14 again, the analysis works at the different 

15 efficiency levels, in general, good, better, 

16 best-type options enjoy slightly different 

17 gross margins on those products. I don't know 

18 if you can take that back in a regression 

19 analysis, if you assume that minimum raises to 

20 one of those levels. In other words, that you 

21 can't, necessarily, assume that gross margin 

22 will maintain the same on Product B, if B 

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1 becomes the new minimum standard. So, again, 

2 we will try to work with you as best we can to 

3 clarify this. We very much appreciate the 

4 added attention to exploring and analyzing the 

5 distributor impacts on this. We think the 

6 formulas, in general, should work, but we want 

7 to make sure we're clarifying exactly what 

8 you're using for markup sometimes, versus 

9 margin in other parts. 

10 FACILITATOR BROOKMAN: Charlie. 

11 MR. McCRUDDEN: On the previous 

12 slide under the inputs it lists ACC 1995 

13 Financial Analysis Industry. Was this covered 

14 in the RAP, or in the Chapter 17? 

15 MR. LEKOV: It's covered partially 

16 as a source in Chapter 17. 

17 MR. McCRUDDEN: Okay. 

18 MR. LEKOV: And it's also explained 

19 in detail in the 2007 Rulemaking in the markup 

20 chapter. 

21 MR. McCRUDDEN: Okay. 

22 FACILITATOR BROOKMAN: Harvey 

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1 Sachs. 

2 MR. SACHS: Harvey Sachs, and just 

3 to request that, in particular, where we're 

4 talking about distributors, contractors in 

5 border regions, that the marginal cost of 

6 upsizing product as an alternative to 

7 increasing inventory needs to be considered, 

8 since we'd expect the smart distributors to 

9 take the lower cost option in almost every 

10 case. 

11 MR. LEKOV: Okay. Thank you. With 

12 that, other part of the LCC analysis related 

13 to the energy use analysis, where DOE will 

14 identify the energy use of furnaces in the 

15 field, and potential energy savings associated 

16 with energy efficiency improvement. The key 

17 components are listed in here. DOE will 

18 estimate the household heating load based on 

19 the EIA's 2005 Residential Energy Consumption 

20 Survey known as RECS for the specific 

21 household samples for each product class. 

22 Also, will determine the burner 

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1 operating hours, and fuel and electricity 

2 consumption based on algorithms associated 

3 with current ASHRAE test procedures. And DOE 

4 will account for effects of annual weather 

5 variation by adjusting consumption estimated 

6 for RECS 2005 homes, using 30-year averages 

7 separated for each division, and large state. 

8 As well as, DOE will use the forecast for 

9 weather conditions for the next period. In 

10 addition, DOE will consider incorporating a 

11 rebound effect of 15 percent. 

12 FACILITATOR BROOKMAN: John. 

13 MR. PROCTOR: So, when you say 

14 ASHRAE test procedures, you're talking about 

15 the procedures that produce AFUE? 

16 MR. LEKOV: That procedure that 

17 produces AFUE, particularly the component 

18 associated with Appendix C, which relates to 

19 the burner operating hours calculations. 

20 MR. PROCTOR: Okay. And my concern 

21 is the air handler portion of that, so I'll 

22 submit comments on the air handling portion of 

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1 that. 

2 FACILITATOR BROOKMAN: Steve 

3 Rosenstock. 

4 MR. ROSENSTOCK: Steve Rosenstock, 

5 Edison Electric Institute. I'm just curious 

6 if the 2009 RECS data set won't be available 

7 soon for your use in this analysis? 

8 MR. LEKOV: DOE commonly uses the 

9 most currently available data set. It's 

10 unknown when the next one, you refer to 2009, 

11 will be available. If it's available on time, 

12 DOE will consider applying it. 

13 MR. ROSENSTOCK: And the second 

14 thing, the rebound effect you're just saying 

15 it's across the board, national, 15 percent. 

16 Correct? 

17 MR. LEKOV: It's - 

18 MR. ROSENSTOCK: National, across 

19 the board. Thank you. 

20 FACILITATOR BROOKMAN: Cyril. 

21 MR. FOWBLE: Cyril Fowble. I just 

22 want to follow-up on the comment about the 

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1 RECS data. Obviously, we talked earlier about 

2 all the non-regulatory, like tax credits, for 

3 example, rebates that have driven high4 efficiency furnace sales here over the last 

5 couple of years. That's all occurred since 

6 the last RECS data, so I'm curious -- I think 

7 energy consumption in the U.S. today per 

8 household basis is probably less now than it 

9 was in 2005. And I think if we don't include 

10 the latest data, we're missing something here 

11 in terms of what the true energy savings would 

12 be for the new rulemaking. So, I really think 

13 you need to find the -- use the 2009 data, or 

14 find a way to estimate what the savings would 

15 be based on the recent push in high-efficiency 

16 appliances. 

17 FACILITATOR BROOKMAN: If the RECS 

18 data is not available, do you have any other 

19 sources you'd recommend? 

20 MR. FOWBLE: At this point in time, 

21 no, but in our comments we'll suggest it, if 

22 we have it. 

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1 FACILITATOR BROOKMAN: Okay, that 

2 sounds fair. Don Brundage. 

3 MR. BRUNDAGE: Don Brundage, 

4 Southern Company. By a rebound effect of 15 

5 percent, does that mean that the usage of the 

6 appliance goes up by 15 percent due to the 

7 increased efficiency and lower cost? Is that 

8 what you're saying? 

9 MR. LEKOV: That's the common 

10 assumption. 

11 MR. BRUNDAGE: Okay. You're going 

12 from an 80 percent efficient furnace, to a 90 

13 percent efficient furnace in northern regions, 

14 and only from 80 to 83 percent for the rest of 

15 the country, so at best, you're going to have 

16 a 15 percent increase in efficiency, so across 

17 a national basis, that's saying they're 

18 spending more money for heating their home 

19 because they've upped the thermostat so high 

20 in response to the efficiency. That looks 

21 like way too large a rebound effect. It seems 

22 like it should be lower than that, because 

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1 that's saying they're going to be burning more 

2 gas when you get through with this than they 

3 are now. 

4 FACILITATOR BROOKMAN: Don, in your 

5 comments, or now, if you can suggest what that 

6 rebound effect would be. 

7 MR. BRUNDAGE: No more than - on a 

8 national average weighted basis, the 

9 efficiency is going to go up by no more than 

10 about 8 or 10 percent, so perhaps half is what 

11 we usually look at doing for a rebound effect. 

12 So, I would think no more than about 5 

13 percent. And I'm not an expert on gas. Our 

14 friends at AGA could comment on that. 

15 FACILITATOR BROOKMAN: Okay. Thank 

16 you. Karl? Yes, Talbot. 

17 MR. GEE: This is Talbot from 

18 Hardi. We were just talking that 

19 hypothetically, you might be able to get some 

20 sort of information to update that RECS-type 

21 information based on, perhaps 25C tax credit 

22 claims, perhaps. Now, you wouldn't know 

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1 exactly what the improvement is, but they were 

2 all a list of specified, qualified energy3 saving improvements. Maybe if you could get 

4 an idea of how many claimed them, could give 

5 you some insight. 

6 FACILITATOR BROOKMAN: Okay. 

7 Charlie. 

8 MR. McCRUDDEN: I was just going to 

9 add that the IRS comes out with, I think it's 

10 called the Data Line Sets, and it's 

11 information specifically by IRS form, how many 

12 have claimed -- you can look at the 5695, how 

13 many claims were made per line item, so you 

14 can sort of break it down by class. And I 

15 think line 5A, B, and C are for HVAC. You can 

16 see how many claims were filed. It doesn't 

17 tell you the type of improvement, doesn't tell 

18 you the level of efficiency of that 

19 improvement, it just says that these were 

20 claims made. The data is out for 2006 and 

21 2007. IRS holds the data for three years, so 

22 we won't see numbers for 2009 for a while, 

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1 probably not before this concludes. But it's 

2 a good indication of how popular or effective 

3 -- it's just got some good numbers, these tax 

4 credits. And, remember, in `06 and `07, it 

5 was the $500 tax credit where you were maxed 

6 out at, I think $300 for heat pumps, and $150 

7 for furnaces. 

8 FACILITATOR BROOKMAN: Thank you. 

9 Harvey Sachs. 

10 MR. SACHS: Harvey Sachs. I very 

11 much appreciate Cyril's perspective in the 

12 follow-up on this. My sense is that if we can 

13 get the 2009 data, it's going to be very neat 

14 to incorporate that, but my sense is also that 

15 the impact of the tax credits, which perhaps 

16 have affected in round numbers a million units 

17 over several years, are probably small against 

18 an installed base that's in the range of 70 to 

19 80 million gas furnaces, as I recall. That 

20 number may not be exactly right, so it's going 

21 to be a second order adjustment, I think. 

22 And, perhaps, less important than the inherent 

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1 errors and moving from ASHRAE to data. 

2 MR. ROSENSTOCK: I guess all this 

3 would be moot if you just adopt a consensus 

4 agreement. 

5 (Laughter.) 

6 FACILITATOR BROOKMAN: Don 

7 Brundage. 

8 MR. ROSENSTOCK: I had a little -- 

9 FACILITATOR BROOKMAN: You have 

10 something else. 

11 MR. ROSENSTOCK: I have some -

12 yes. If you don't - 

13 FACILITATOR BROOKMAN: This is 

14 commercial brought to you by - 

15 (Laughter.) 

16 FACILITATOR BROOKMAN: Jim, go 

17 ahead. 

18 MR. VerSHAW: I think we've seen a 

19 big shift in high-efficiency furnace sales 

20 since 2005. I think if you're using 2005 

21 data, it may not represent how many high22 efficiency furnaces have gone in since that 

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1 period of time. And, also, I'm looking here, 

2 you're talking about using census regions and 

3 everything else. How is -- I don't think the 

4 regions you're talking about for climate is 

5 matching up with the regions we're talking 

6 about for furnaces. And I want to make sure 

7 we don't get that overlay in there, such that 

8 you over-estimate, or under-estimate the 

9 effect of an improved standard. How are you 

10 doing to accomplish that? 

11 FACILITATOR BROOKMAN: Thank you. 

12 Karl. 

13 MR. ZIA: Karl Zia. The analysis 

14 anticipates some consumer behavior in the 

15 rebound effect. Correct? My question is, 

16 does the analysis also take into account fuel 

17 switching, or alternative system usage by the 

18 consumer in light of changes in efficiency 

19 requirements? 

20 MR. LEKOV: The answer is yes, and 

21 I will come to this when talking about the 

22 national impact analysis. 

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1 FACILITATOR BROOKMAN: Don 

2 Brundage. 

3 MR. BRUNDAGE: I would not 

4 recommend using RECS 2009. I'm sure that 

5 census will do a fine job on it, but it's not 

6 typical times. We've seen some very puzzling 

7 effects of energy usage in our own area in 

8 2008 and 2009, maybe a large number of vacant 

9 houses. It may be economic trauma, and people 

10 are more cost-sensitive than normal. But I 

11 would not rush into just dropping in 2009 and 

12 using it, if it suddenly becomes available, 

13 because I suspect the data is going to be very 

14 non-typical. Thank you. 

15 FACILITATOR BROOKMAN: Thank you. 

16 Steve Rosenstock. 

17 MR. ROSENSTOCK: Just as a follow18 up for the rebound effect, since I agree with 

19 what Don Brundage said, is it really more that 

20 in the analysis that if you do you technical 

21 analysis, and you say per customer you're 

22 saving, I'll just use that round number, 100 

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1 therms in kilowatt-hours, the rebound effect, 

2 because the rebound effect nationally, you can 

3 really count on 85 kilowatt hours, or 95 

4 therms at a discount to the amount of energy 

5 you're saving because some people are going to 

6 readjust their thermostats. Is that a better 

7 way to say it, or are you just saying you're 

8 just going to use 15 percent more energy, 

9 period? 

10 MR. LEKOV: Effectively, we will 

11 say 15 percent more energy. And there are 

12 sources behind this. The topic has been 

13 discussed on and off the last 15 years. There 

14 are several articles in referee journals that 

15 document the impacts of the rebound effect, as 

16 well as the number we have here is kind of the 

17 medium value as used in the National Energy 

18 Modeling Systems, NEMS. Basically, this is 

19 part of their algorithm. More details on this 

20 were available in the previous rulemaking. 

21 MR. ROSENSTOCK: Again, Steve 

22 Rosenstock. Yes, again, to follow-up with 

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1 Don, that says if the standard goes from 78 to 

2 80 or 81, and you assume a 3 to 4 percent more 

3 efficiency, that your actual energy use would 

4 go up by a net of 10 percent. 

5 FACILITATOR BROOKMAN: Thank you. 

6 I'm certain the Department would welcome your 

7 comments, if there was some way to give them 

8 actual data, modeling, whatever, that would 

9 show a difference in rebound effect. 

10 MR. LEKOV: And the Department 

11 seeks comment on that approach using RECS data 

12 for determining energy consumption, as well as 

13 comments on the rebound effect. 

14 FACILITATOR BROOKMAN: Any 

15 additional comments on these? 

16 MR. LEKOV: Going into the basic 

17 assumption associated with core LCC analysis 

18 and payback calculations, just as a reminder 

19 to everybody, life-cycle cost essentially 

20 equals the total installed cost, plus the sum 

21 of the operating costs discounted to a 

22 particular base year. Analysis, DOE's 

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1 analysis modeled uncertainty in variability of 

2 input using probability distribution through 

3 Monte Carlo approach, and the analysis are 

4 implemented in Excel spreadsheets combined 

5 with the Crystal Ball software. 

6 A full illustration of the life7 cycle cost approach, the upper part shows the 

8 derivation of the total installed cost, bottom 

9 part, the derivation of the operating cost. 

10 The yellow boxes are inputs, green boxes are 

11 intermediate calculations, and the blue boxes 

12 are the final results. And the next slides 

13 will discuss some of the boxes in detail. 

14 Important component to determine 

15 operating cost are the energy prices. DOE 

16 will derive average monthly energy prices 

17 using EIA data for each of the census 

18 divisions, and large states. And in terms of 

19 the projections, DOE will utilize the most 

20 recent EIA's Annual Energy Outlook to forecast 

21 the future energy price. 

22 Next component of the inputs 

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1 relates to the discount rates. Essentially, 

2 it's used to determine the present values of 

3 lifetime operating expenses. Will derive the 

4 discount rates from estimates of finance cost, 

5 the core source is the Federal Reserve Board's 

6 Survey of Consumer Finances, very credible and 

7 rich source, more than 200,000 data points. 

8 And the finance cost is interpreted in two 

9 parts, as a finance cost of any debt, such as, 

10 let's say, lost loans or credit card, and 

11 opportunity cost of any equity which is 

12 checking, savings account, CDs, and different 

13 investment. Overall, DOE seeks input on the 

14 planned approach for estimating discount rates 

15 for consumer. 

16 FACILITATOR BROOKMAN: Charlie. 

17 MR. McCRUDDEN: One of the things 

18 that we've heard in the last -- that our 

19 contractors have told us about through 

20 surveys, and other meetings, is that more and 

21 more consumers are being turned down for 

22 financing, so whatever the rate is, they can't 

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1 even get there. And part of this is because 

2 the Fed has released rules recently dealing 

3 with, same as cash promotions, otherwise known 

4 as low-interest -- a lot of -- I think a lot 

5 of manufacturers may offer financing through 

6 themselves. A lot of our members use a third7 party vendor, like GE Capital, and some 

8 others. And what we've heard from some of 

9 those third-party vendors is that the 

10 restrictions, and the tightening of 

11 restrictions on them from the Fed have 

12 basically caused them to either pull out, or 

13 put a lot more scrutiny on loans. And we held 

14 -- AHRI and ACCA held a meeting last summer to 

15 talk about this. I don't know how you work 

16 this into the analysis. I mean, I'm not an 

17 economist, and I don't know if this is 

18 something you're looking at. And I don't --

19 and I hope that this isn't a problem in 2015, 

20 or whatever it is we're looking at making 

21 these rules effective, but I think it's 

22 something that's out there. So, it's not a 

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1 matter of the discount rate that the Fed has 

2 published, it could be that more and more 

3 homeowners are unable to finance these types 

4 of improvements. And, again, not sure if this 

5 is something that can be put into the model, 

6 but I just -- I'd be remiss if I didn't make 

7 this comment, because it is a problem. 

8 MR. LEKOV: If it will help, I will 

9 very briefly mention the basis. Essentially, 

10 the source mentioned here are tri-annual 

11 surveys, starting in 1989, and DOE will use 

12 every one available, `89 up to 2007. All the 

13 values you mentioned are, for example, the 

14 type of debts, or equity, are presented as 

15 distribution, including extreme situations, 

16 the one you explained. 

17 FACILITATOR BROOKMAN: Talbot. 

18 MR. GEE: Yes. Hardi also tracks 

19 and collects distributor average day's sales 

20 outstanding, and I don't know if that's 

21 factored in into the cost analysis, but that 

22 is, obviously, a cost of money to be financing 

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1 over that period of time, so we can give 

2 averages over certain years of what those DSOs 

3 have been. And then the factor of important 

4 note here is, if you're talking about more 

5 efficient, more expensive product, there's 

6 actually a higher carrying cost, of course, to 

7 financing those products, as well. So, we can 

8 give that data, and try to see if there's a 

9 way to make sure that's accounted for, because 

10 it is a significant cost of doing business 

11 with these products. 

12 FACILITATOR BROOKMAN: Okay. Thank 

13 you. Other comments? Yes, Jim. 

14 MR. VerSHAW: Jim VerShaw. I think 

15 if you look up the average credit card debt 

16 for the average family, it's about $16,000 at 

17 fairly high interest rate, and with harder to 

18 get home equity loans. You need to look at 

19 that whole thing, as we were just talking 

20 about, because it seems like this discount 

21 rate is going to be much higher than a 3 to 7 

22 percent range in order to be realistic. 

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1 FACILITATOR BROOKMAN: The $16,000 

2 you're referencing, is that -- what is that, 

3 again? 

4 MR. VerSHAW: That's the average 

5 household credit card debt. 

6 FACILITATOR BROOKMAN: Okay. Thank 

7 you. 

8 MR. LEKOV: Just to mention that, 

9 essentially, we're talking about real interest 

10 rate, so not accounting for inflation. 

11 FACILITATOR BROOKMAN: So, other 

12 comments on discount rate? We're about to 

13 move on. 

14 MR. SACHS: Harvey Sachs. If you 

15 go to direct rule - 

16 (Laughter.) 

17 FACILITATOR BROOKMAN: There's a 

18 recurring theme in this meeting. It's like an 

19 echo in this room. I appreciate your 

20 endurance, if nothing else. Alex. 

21 MR. LEKOV: The next has to do with 

22 how DOE will account for installation, 

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1 maintenance, and repair. So, we'll evaluate 

2 how the installation cost, and maintenance and 

3 repair costs change with increased 

4 efficiencies. The sources will be RS means, 

5 expert consultants, manufacturer literature, 

6 any inputs from interested parties. We know 

7 for sure that DOE will account for regional 

8 differences in labor cost, and the approach, 

9 essentially, insures that an installation cost 

10 is calculated individually for each household 

11 based on the RECS household characteristics. 

12 FACILITATOR BROOKMAN: Yes, 

13 Charles. 

14 MR. McCRUDDEN: As I alluded to in 

15 my opening statement, this is one where I 

16 think expert consultants -- I don't know if 

17 our members are considered expert consultants, 

18 but they'll consider themselves expert 

19 consultants, and provide information. And we 

20 don't have a big pot of money to run our own 

21 analysis to provide you, but we're going to do 

22 the best we can. 

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1 FACILITATOR BROOKMAN: Thanks. 

2 That's helpful. Are there comments on these 

3 important features, installation, maintenance 

4 and repair costs? 

5 Jim. 

6 MR. VERSHAW: Jim VerShaw. At what 

7 point in the analysis do you look at the 

8 effect if a new standard would drive people to 

9 repair rather than replace? I think if you 

10 look at the manufacturers' parts sales since 

11 the 13 SEER went into effect, you see a spike 

12 in repair. 

13 MR. LEKOV: The approach, as it is 

14 right now, looks at distribution of lifetime 

15 of the individual components, in particular, 

16 fan failure. 

17 MR. VERSHAW: You can get 

18 replacement fans and blowers. You can get 

19 replacement heat exchanger, burners. You 

20 could replace the whole guts of the thing. 

21 FACILITATOR BROOKMAN: Mohammed. 

22 MR. KHAN: Yes. This is Mohammed 

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1 Khan, DOE. I think that typically homeowners 

2 will elect, in the case of furnaces, to repair 

3 versus replace major components such as a heat 

4 exchanger. I think that the cost of replacing 

5 a heat exchanger might be to a point where 

6 it's probably cost effective to change the 

7 whole thing and upgrade to something newer 

8 entirely. And in general when a heat 

9 exchanger goes, it corresponds basically to 

10 the end of the life of the product. 

11 MR. LEKOV: For components such as 

12 blower or ignition system, DOE plans to assume 

13 that it's always repaired. 

14 FACILITATOR BROOKMAN: Yes. 

15 MS. MEYERS: This is Karen with 

16 Rheem and, Mohammed, I would agree with your 

17 comment if you are replacing a product that 

18 has alike venting system. But when you are 

19 not doing that and are changing the venting 

20 system due to a new minimum efficiency I think 

21 the repair instances will increase 

22 significantly. That is clearly an instance 

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1 that happened with the 13 SEER rule because of 

2 the size issues as well as the cost. But 

3 there was in our analysis a lot of times that 

4 repair escalated significantly because the 

5 product size increased and it was just 

6 physically almost impossible or cost 

7 prohibitive to replace the product. 

8 FACILITATOR BROOKMAN: Thank you. 

9 Ted. 

10 MR. WILLIAMS: Ted Williams, 

11 American Gas Association. We concur with 

12 that. In fact, when you're talking about 

13 modification of the venting system, relining 

14 chimneys and the like, you know, cost in the 

15 neighborhood just for the venting system is 

16 $1500 to $2000 to install a Category 4 

17 furnace. Replacing heat exchangers is a 

18 viable option and a business opportunity. 

19 FACILITATOR BROOKMAN: Thank you. 

20 Talbot. 

21 MR. GEE: I concur with the 

22 manufacturer's statement on this, but I'd also 

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1 point out again the impact of the incentives 

2 in the near term here where that has turned 

3 what probably or what we would project would 

4 have been a normal repair job. Because it was 

5 heavily incentivized, they went ahead and did 

6 the replacement. And I just want to make sure 

7 that the analysis gets clouded there assuming 

8 that there's been a decrease in repair rates 

9 all of a sudden. But the fact is just because 

10 they're being paid not to repair, but to 

11 replace it which won't be the case going 

12 forward. 

13 FACILITATOR BROOKMAN: Karl. 

14 MR. ZIA: Karl Zia. To further 

15 comment on consumer behalf, there's a certain 

16 amount of collateral, if you will, furnace 

17 installations that take place when an outdoor 

18 system is replaced. And so the economic 

19 burden of requirement of the 90 percent 

20 minimum in some areas may actually lead some 

21 consumers not to replace a furnace during 

22 whole system review that they might otherwise 

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1 replace. 

2 FACILITATOR BROOKMAN: All good 

3 comments. Alex. 

4 One more here. Harvey Sachs. 

5 MR. SACHS: Harvey Sachs. I'm a 

6 little concerned about what I heard as a 

7 pretty large discrepancy in the estimated cost 

8 of replacing a noncondensing furnace with a 

9 condensing furnace and providing the chimney 

10 liner from the DOE analysis relative to the 

11 AGA statements. And I hope that we'll see a 

12 little bit more referencing and elaboration on 

13 that. Thank you. 

14 FACILITATOR BROOKMAN: Thank you. 

15 Ted. 

16 MR. WILLIAMS: Ted Williams, 

17 American Gas Association. Yes, you'll see 

18 that and I think the fundamental problem with 

19 the TSD furnace so far through the 2007 rule 

20 is it did not consider all the venting issues 

21 for properly dealing with taking an 

22 atmospheric Category 1 furnace off a common 

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1 vented system, for example. So we'll be 

2 providing data to the process on that. 

3 FACILITATOR BROOKMAN: Thank you. 

4 MR. LEKOV: Another essential 

5 component is the determination of the 

6 lifetime. DOE plans to utilize an approach 

7 which determines the distribution of lifetime 

8 using shipments data, stock of furnaces, RECS 

9 data on the age of furnaces in homes. 

10 FACILITATOR BROOKMAN: Anything 

11 else on the furnace lifetimes? 

12 (No verbal response.) 

13 MR. LEKOV: And DOE seeks comments 

14 on this methodology as well as references to 

15 potential lifetime differences among the four 

16 product classes to be considered in this rule17 making. 

18 FACILITATOR BROOKMAN: Additional 

19 thoughts? 

20 (No verbal response.) 

21 MR. LEKOV: LCC analysis DOE also 

22 develops projected shares of products by 

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1 efficiency under the base case assuming that 

2 there are no new standard for each Census 

3 Division and large state. And, in this 

4 analysis, DOE will use data on recent market 

5 trends for furnace efficiency, also the 

6 potential impact of Energy Star Program and 

7 other policies that may affect the demand for 

8 more efficient furnaces. 

9 FACILITATOR BROOKMAN: Frank 

10 Stanonik. 

11 MR. STANONIK: Frank Stanonik, 

12 AHRI. On this little trailing piece here 

13 about using large state, I mean it's clear 

14 that RECS says of late included information 

15 besides the consensus regions on these large 

16 state. I believe the large states are four, 

17 California, New York, Texas and I think 

18 Florida. 

19 MR. LEKOV: Correct. 

20 MR. STANONIK: Okay. In the 

21 context of a furnace rule-making, I would 

22 suggest that there really isn't a lot of value 

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1 of focusing on the four large states because 

2 in some -- Well, taking out New York those 

3 other three states are at best I'll call them 

4 mild winter climates. They have furnaces. No 

5 question. But they're mild winter climates 

6 and focusing on them I think gives you a 

7 distorted picture particularly if you're going 

8 to do the Census thing and if somebody 

9 mentioned that issue of overlying the Census 

10 regions over the two heating regions. Okay. 

11 That should be adequate. But dragging in the 

12 four states for a furnace rule-making I think 

13 is not going to give you anything of 

14 additional value. 

15 FACILITATOR BROOKMAN: Thank you. 

16 Yes. Talbot. 

17 MR. GEE: Talbot with HARDI. To 

18 add to that, our Midwest members, upper 

19 Midwest members, have a serious concern about 

20 losing access to 80 percenters because of the 

21 growth in hybrid systems that they've been 

22 selling and their customers have been 

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1 installing. And they have concerns about 

2 losing the cost of the effectiveness of such 

3 systems if you don't have access to an 80 

4 percent furnace. So I point that only because 

5 you may have market shares in some of those 

6 states that need a little bit more weighted to 

7 the mid-efficiency furnaces. But perhaps you 

8 might find that it's weighted to a much more 

9 efficient heat pumps for example. So I don't 

10 know how you take that into account, but that 

11 might not have been the option of choice for a 

12 lot of those homeowners if they have not had 

13 access to a mid-efficiency furnace. 

14 MR. LEKOV: Just as mentioned for 

15 maybe two slides later, I'll talk about the 

16 equipment and fuel switching. But to use the 

17 opportunity, any data on fuel or equipment 

18 switching would be helpful for DOE. 

19 FACILITATOR BROOKMAN: Then on to 

20 shipments analysis. 

21 MR. LEKOV: Okay. The next are 

22 shipment and national impacts analysis. So 

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1 shipments, the purpose is to estimate the 

2 shipments in base case and standard cases. 

3 DOE looks at several markets including 

4 replacement in kind, new housing 

5 installations, conversions from non-central 

6 heating to furnaces. 

7 The slide here basically addresses 

8 the issue of determination of the base case 

9 shipments forecasts compared to the standard 

10 case shipments forecasts. So the base case 

11 shipment, in case there are no standards, DOE 

12 will consider products market share in new 

13 housing as a major driver as well as the 

14 mixture of furnace efficiency sold in the 

15 absence of standards and in the case for the 

16 standard case forecasts, DOE will account for 

17 fuel and equipment switching that may result 

18 from standards requiring higher-efficiency 

19 furnaces. 

20 And we'll apply the roll-up 

21 scenario to estimate the effective standards 

22 in the effective year where the roll-up 

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1 assumes that the product efficiency in the 

2 base case in fact do not meet the standard 

3 level. And the consideration will roll up to 

4 meet the next standard level. And the product 

5 efficiency above the standard level under 

6 consideration would not be affected. 

7 FACILITATOR BROOKMAN: Steve 

8 Rosenstock. 

9 MR. ROSENSTOCK: Steve Rosenstock, 

10 Edison Electric Institute. I think that this 

11 will be an important part of the analysis and 

12 I would urge DOE to start this analysis. In 

13 January, as of January 2006 when the standards 

14 for heat pumps significantly increased and 

15 there were no other increase in other 

16 competing heating products. So I really think 

17 it's good for this analysis that there's 

18 little background in terms of going back to 

19 2006 what happened with the fuel switching 

20 back then to create today's market and then 

21 going forward. Thank you. 

22 FACILITATOR BROOKMAN: Thank you. 

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1 Karl. 

2 MR. ZIA: Karl Zia. What types of 

3 equipment switching are taken into account in 

4 the analysis? 

5 MR. LEKOV: At this point, DOE 

6 looks at all electric furnaces including heat 

7 pumps. However, if there are other 

8 considerations like as mentioned by Talbot, 

9 combined system, if there is information about 

10 those DOE will also include that in the fuel 

11 switching and equipment switching model. 

12 FACILITATOR BROOKMAN: Okay. 

13 Yes, Talbot. 

14 MR. GEE: Talbot with HARDI. Just 

15 so I understand, the roll-up scenario assumes 

16 that anything you think would be replaced, a 

17 retiring furnace in the effective year, would 

18 automatically be replaced by what the new 

19 standard would be. 

20 MR. LEKOV: That's correct. And 

21 everything above the considered standard is 

22 not going to change. 

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1 FACILITATOR BROOKMAN: Andrew 

2 deLaski. 

3 MR. deLASKI: I think you need a 

4 model, a shift scenario, as you've done on 

5 other dockets for this docket as well. I 

6 think the market we've seen and just about 

7 every market that sort of is marketing 

8 according to a good, better, best approach is 

9 what works. That's not going to go away with 

10 the new standard so that some portion of 

11 consumers will -- Well, what's now marketed as 

12 good will become the new standard and then 

13 you're going to still have a distribution 

14 that's going to shift above whatever that new 

15 standard is. It isn't just going to all go 

16 right to that new standard. You'll have 

17 Energy Star will be recalibrated. You're 

18 going to have utility programs recalibrated 

19 and a whole set of market factors that are 

20 going to push efficiency towards a shift 

21 scenario. So I think at a minimum I think it's 

22 reasonable to model as at least one of the 

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1 scenarios. 

2 FACILITATOR BROOKMAN: Thank you. 

3 Frank Stanonik. 

4 MR. STANONIK: I just want to go to 

5 a point of clarification about the fuel 

6 switching and other options. I understood 

7 when Talbot was talking about hybrids that he 

8 was talking, that you were talking, about a 

9 combination gas furnace combined with a heat 

10 pump system. Alex, if that's correct, that's 

11 not a fuel switching issue. 

12 MR. LEKOV: No. I don't -- 

13 MR. STANONIK: He just said yes. 

14 When he was talking about hybrids, he was 

15 talking about in the Midwest and probably 

16 other places there's a growing popularity of 

17 combining a gas furnace with a heat pump so 

18 that you're using the heat pump I'll say as 

19 long as you can and then when it gets too cold 

20 for that you use the gas furnace. If somebody 

21 goes with that system, there's no fuel 

22 switching there. 

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1 And then going to the point I think 

2 whatever DOE is going to analyze as a fuel 

3 switching issue needs to be a little more 

4 spelled out. 

5 MR. LEKOV: So basically you're 

6 saying in terms of the supplementary heat 

7 instead of provided by electrical resistance 

8 it is provided by the heat pump unit. Is this 

9 what you mean? 

10 MR. STANONIK: I'm sure it's 

11 promoted as the best of both worlds, but yes. 

12 FACILITATOR BROOKMAN: I see Ted. 

13 MR. WILLIAMS: Ted Williams, AGA. 

14 I understood Talbot's question to be what 

15 happens to the alternative of hybrid systems. 

16 Actually, the alternative may be to go away 

17 from a hybrid system to an all electric 

18 system. That would be a fuel switching 

19 situation. Is that correct, Talbot? 

20 MR. GEE: That's one scenario. But 

21 the other scenario is you don't go with this 

22 efficient cooling capable equipment and you 

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1 end up going kind of mid-efficiency all the 

2 way across. So I don't know if that's the 

3 outcome we want either. 

4 But while I got here I also want to 

5 respond to Andrew's point though because I'm 

6 not so convinced about the total upward shift 

7 when you raise the minimum standard because -- 

8 And again, maybe I should defer to the 

9 utilities on this. I'm not so convinced 

10 regulatory commissions are going to leave it 

11 that way also. So if you set the standard at 

12 90, are they going to be real crazy about the 

13 same incentives you offer at 92, for example, 

14 when there's no longer that delta. I'm not 

15 convinced that will happen. 

16 FACILITATOR BROOKMAN: If the 

17 proportions don't stay the same in the -- 

18 MR. DeLASKI: I don't know what the 

19 proportions are, this is Andrew, to follow up 

20 on Talbot's response. I don't know what the 

21 shift is. I don't know whether it's going to 

22 be exactly the distribution we have today. I 

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1 also don't think it's all going to go exactly 

2 to 90 if the new standard is 90. If the 

3 standard were to go to 96, for example, which 

4 would be contrary to our recommendation, then 

5 a roll-up would be a perfectly reasonable 

6 model. 

7 But the point is that what the 

8 ultimate standard is will affect the 

9 distribution above that and I think the 

10 Department has to take that into account. It 

11 rolls through the analysis in many ways and I 

12 think it's important to model that. 

13 FACILITATOR BROOKMAN: Thanks, 

14 Andrew. 

15 MR. LEKOV: DOE is open to both 

16 approaches. 

17 FACILITATOR BROOKMAN: Karim, are 

18 you all set? Okay. I want to keep us moving 

19 on here. 

20 MR. LEKOV: So -- 

21 (Off the record comment.) 

22 FACILITATOR BROOKMAN: I'm sorry. 

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1 (Off the record comments.) 

2 MR. LEKOV: So here is DOE's 

3 request on the topics we just discussed 

4 related to the potential practical standards 

5 on the product shipment including fuel and 

6 equip switching and also comments on the roll7 up. We've got the comment that the shift 

8 scenario could be as good. 

9 FACILITATOR BROOKMAN: Those are 

10 good comments. Additional comments on these 

11 points? 

12 (No verbal response.) 

13 Okay. 

14 MR. LEKOV: National impact 

15 analysis. So once the shipment models 

16 generates results, DOE looks at the 

17 calculation of the national energy savings and 

18 the next present value of those savings. So 

19 DOE calculates the annual equipment 

20 expenditures by modifying the price per unit 

21 by the forecast achievements. The difference 

22 between base and standard case is the national 

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1 energy savings and it's converted to dollar 

2 values. The difference each year between 

3 energy savings and the increased equipment 

4 expenditure essentially will present the net 

5 savings and net costs. 

6 The next two slides will illustrate 

7 essentially the approach for the national 

8 energy savings, the next one the NPV. As you 

9 see here, the base case annual energy 

10 consumption is calculated annually and 

11 summarized. In the standard case, the same 

12 thing calculated annual, summarized. 

13 Site to source conversion to apply 

14 for the inefficiencies associated between the 

15 power plant and the site are applied. And the 

16 Department arrives at the projected national 

17 energy savings. 

18 In terms of NPV, net present value, 

19 of the savings, basically the Department looks 

20 at operating costs which is associated with 

21 the cost of energy minus the maintenance and 

22 repair and also on the other side the total 

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1 install costs which include the product costs, 

2 install costs, accounts for this in the base 

3 case project, accounts in the standard case 

4 projection, assumes applied discount rate, 

5 arrives at the national value. 

6 The Department also looks at the 

7 consumer subgroups. So basically the point is 

8 to look specifically at subgroups, consumer 

9 subgroups, who may be disproportionally 

10 affected compared to the general population. 

11 In the past, the focus was on low income 

12 consumers or senior citizens in terms of 

13 heating systems. And the Department does it 

14 is by creating essentially a separate LCC 

15 analysis using a specific sample for those 

16 groups and does exactly the same calculation 

17 as for the general population and reports the 

18 results as they are applicable to the 

19 subgroup. 

20 FACILITATOR BROOKMAN: Talbot. 

21 MR. GEE: Talbot from HARDI. I 

22 want to talk, for example, condensing 

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1 furnaces. Could this be more application 

2 specific or considerations that you made for 

3 applications rather than the status of the 

4 actual pennant, in other words, urban setting 

5 with townhomes, multi-unit, things like that 

6 where you are going to find more common 

7 installation issues? 

8 MR. LEKOV: It comes to the core of 

9 the RECS information. RECS actually states 

10 whether there is low income consumers or 

11 seniors. So the sample created is for RECS 

12 illustrated using the low income consumers. 

13 If the low income consumer is according to the 

14 standard supposed to get a condensing furnace, 

15 the Department will evaluate what's the impact 

16 on this particular household type will be. 

17 MR. GEE: I guess my point would be 

18 that you could essentially say this impact 

19 will apply to anyone who lives in this type of 

20 a building. 

21 MR. LEKOV: No, because it's -- It 

22 essentially could be a condo, but the income 

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1 of the people could be high. This information 

2 is available. 

3 FACILITATOR BROOKMAN: Yes, Jim. 

4 MR. VERSHAW: I think what Talbot 

5 is trying to get is that when people are 

6 speculating on multi-family buildings they're 

7 going to put in the least cost system they 

8 can. And so what you'll see is it'll be 

9 harder for them to put 90s in through a large 

10 multi-apartment building because of the extra 

11 plumbing and everything else and that you 

12 might find that they're going to go to heat 

13 pumps or something that's less costly. 

14 And then looking at just consumer 

15 groups, low income or seniors, which I've got 

16 to get a definition of senior by the way as 

17 I'm getting close to that. 

18 (Laughter.) 

19 FACILITATOR BROOKMAN: I'm right 

20 there with you. 

21 MR. VERSHAW: But it may not really 

22 cover what's really going to happen. 

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1 FACILITATOR BROOKMAN: Okay. 

2 MR. VERSHAW: And another question 

3 which I had which kinda of goes bad. Sorry. 

4 FACILITATOR BROOKMAN: That's okay. 

5 MR. VERSHAW: Let's say a 90 

6 percent standard goes in across the nation and 

7 we use less gas. What's going to happen to 

8 the gas utilities? Are they going to be 

9 allowed to raise their rates because the gas 

10 consumption has gone down, but they have 

11 infrastructure they have to maintain. And is 

12 that type like electricity -- I think 

13 California, I don't think the electrical 

14 companies out there care how much they sell 

15 because they're told by the public how much 

16 they can make. 

17 So I'm not sure. That's a question 

18 I have. How does that work? 

19 FACILITATOR BROOKMAN: We'll hear 

20 from Molly first and then go to Don. 

21 MS. TROMBLEY-McCANN: This is 

22 Molly. That's a simplification of an actually 

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1 pretty complicated situation. 

2 (Laughter.) 

3 But is it true that in California 

4 the utilities are what's called decoupled such 

5 that the amount of money they make per year is 

6 not tied directly to the number of kilowatt 

7 hours or the number of therms that they sell. 

8 That's unique to California. There are 

9 different states that have similar setups. 

10 But each state is different. 

11 FACILITATOR BROOKMAN: We have Don. 

12 Or pardon me. Either Don or Ted. Which one? 

13 MR. WILLIAMS: Go ahead, Don. 

14 MR. BRUNDAGE: This subgroup 

15 analysis, this is basically not something 

16 that's, correct me if I'm wrong, defined with 

17 the EPCA legislation. This is something that 

18 is part of the process rule and has been 

19 determined a way to look at impacted 

20 subgroups. And, yes, in the past you've done 

21 them based on low income consumers, senior 

22 citizens, things that can be broken out of 

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1 RECS. 

2 But I don't see any reason you 

3 couldn't do something like retrofit water 

4 heaters in places where it's expensive in 

5 multi-family or gas furnace where you're 

6 redoing, having to redo, the venting system. 

7 I don't see why that could not be an impacted 

8 subgroup for purposes of who's going to get 

9 really killed by doing this. 

10 Since this is part -- Since this is 

11 not really defined by legislation, I think you 

12 are free to define some subgroups that are not 

13 defined under RECS. Thank you. 

14 FACILITATOR BROOKMAN: Ted. 

15 MR. WILLIAMS: Yes. Ted Williams, 

16 AGA. Thanks for going first. That's exactly 

17 my point that I was tempted to bring this 

18 comment up during the life-cycle cost analysis 

19 generally. But, yes, indeed subgroups could 

20 be defined in terms of replacement for new 

21 construction. There is no restriction on how 

22 that's done. The fact that it's been done on 

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1 low income and seniors is more of a history of 

2 the implementation of the process rule. 

3 But I think it's imperative that 

4 the Department takes a look at replacement 

5 versus new construction. I mean it's hard to 

6 say. Replacement is 70 percent of the market 

7 being a subgroup. But if that's where it 

8 belongs that's where it should be. 

9 If you look at the analysis, it was 

10 done for the 2007 final rule and the breakout 

11 of the 5,000 plus 80 degree day population you 

12 can't tell where those costs lie with respect 

13 to the replacement versus a new construction 

14 market. And the fact that the analysis showed 

15 that 70 percent of consumers would receive no 

16 benefit from a 90 percent minimum in that 

17 analysis I think is telling. And that needs 

18 to be explored in more great detail. 

19 I think Harvey Sachs and I may 

20 disagree on the cost of relining chimneys and 

21 so forth. We're not happy with the way DOE 

22 put the cost adders on the venting system. 

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1 But those facts aside these two markets need 

2 to be analyzed separately. 

3 FACILITATOR BROOKMAN: Okay. Thank 

4 you. 

5 Yes. Steve Rosenstock. 

6 MR. ROSENSTOCK: Steve Rosenstock, 

7 Edison Electric Institute. Two different 

8 points again. The heat pump rule there was 

9 also an issue with spacing and sizing. And it 

10 was brought up about well what about multi11 family building with space constrained areas 

12 and now we have six years of, excuse me, four 

13 years of experience of what has happened in 

14 those markets that might be an instructive 

15 type of -- If that data is available, it might 

16 be rather interesting for DOE to look at that. 

17 In terms of the impacts on 

18 utilities, the next section is utility impact 

19 analysis and, yes, rates are decoupled in 

20 California. Also they do get extra benefits 

21 for meeting demand management goals as well 

22 and other areas of the countries are different 

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1 and that's just one of the factors in utility 

2 rate making. There's a whole bunch of fuel 

3 costs and deregulated versus regulated, a 

4 bunch of fun stuff to think about. 

5 FACILITATOR BROOKMAN: Final 

6 comments on subgroup analysis. Let's move on. 

7 MR. DeLASKI: I have one quick 

8 comment on this. 

9 FACILITATOR BROOKMAN: Yes, please. 

10 MR. DeLASKI: I think I want to 

11 concur with the point that was made that it's 

12 the subgroup analysis definitely required. 

13 The Department has a history of giving to 

14 seniors and low income families. 

15 I also think that as people suggest 

16 additional groups where does this end. We 

17 could do subgroup analysis for people who pay 

18 over 20 cents a kilowatt hour, people who pay 

19 four cents a kilowatt hour. You could 

20 subgroup this thing to the point where you've 

21 just got no new information. So I think you 

22 need to be careful in terms of how many of 

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1 these analyses you want to do and how does 

2 that really give us additional information to 

3 get to the decision. 

4 FACILITATOR BROOKMAN: We're going 

5 to move on then to the next item which is 

6 manufacturing impact analysis and we're going 

7 to hear from Rob Carmichael. 

8 MR. CARMICHAEL: Okay. Good 

9 afternoon. My name is Rob Carmichael and I'm 

10 going to go through the next NOPR analysis 

11 which is the manufacturing impact analysis or 

12 the MIA. 

13 And there are three primary 

14 purposes for the MIA. The first is obviously 

15 to assess the impacts, both quantitatively and 

16 qualitatively, of amended energy conservative 

17 standards. The second is to, similar to the 

18 subgroup analysis for the LCC, identify 

19 subgroups, manufacturer subgroups, those 

20 groups of manufacturers that may be 

21 differentially or more severely impacted by 

22 standards than others. And the third is to 

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1 examine the impact of cumulative regulatory 

2 burden, to look at some other affected 

3 regulations to which manufacturers are also 

4 subjected and to take that into account. 

5 And the methodology, there are two 

6 primary tools that we utilize. The first is 

7 the Governmental Regulatory Impact Model or 

8 the GRIM, and that is an industry cash flow 

9 model. It checks cash flows going forward 

10 throughout the analysis period and then 

11 calculates from that a net present value of 

12 the industry, both in the base case and then 

13 in the standards case. 

14 And the second major tool is 

15 interviews with manufacturers. We use these 

16 interviews to refine the inputs that go into 

17 the GRIM, into the cash flow model, to also 

18 develop and identify those subgroups that I 

19 spoke about and then also to address other 

20 qualitative issues, such as impacts on 

21 competition, manufacturing capacity and the 

22 like. 

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1 And so the major output obviously 

2 of the GRIM are the industry NPV impacts. 

3 Also you'll have a subgroup impact, whether it 

4 will be small businesses or niche 

5 manufacturers. Whatever the rule and the 

6 industry dictates, you'll also have INPV 

7 impacts from those. And you'll also have a 

8 direct employment impact, impacts on 

9 manufacturing capacity and competition. 

10 FACILITATOR BROOKMAN: Yes. Steve 

11 Rosenstock. 

12 MR. ROSENSTOCK: Steve Rosenstock. 

13 Yes, just a quick question. I haven't really 

14 seen it in the past, but is there going to be 

15 a breakout of impact on domestic versus 

16 nondomestic manufacturers at some point? Or 

17 impacts of possible shifting to nondomestic? 

18 MR. CARMICHAEL: We addressed the 

19 manufacturing capacity whether the current 

20 industry that's in the United States is 

21 capable of continuing to produce the products 

22 that would be required. There is not a 

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1 separate international perspective or a 

2 separate international industry that's 

3 analyzed. 

4 FACILITATOR BROOKMAN: Please say 

5 your name. 

6 MR. ARNOLD: Dan Arnold, Nordyne. 

7 I was just wondering if your model took into 

8 account warranty impacts on manufacturers 

9 between different levels. For example, the 

10 complexity if you looked at a 95 percent 

11 furnace versus an 80 percent furnace is much 

12 greater and we'd like to think as 

13 manufacturers we manufacture products that 

14 don't break. But the reality is they do and 

15 the more complex they get the more we have to 

16 increase our warranty reserves as 

17 manufacturers. 

18 And also if you look historically 

19 at what's in the marketplace those products 

20 are considered premium products today. They 

21 carry a longer warranty. So again, it has a 

22 greater impact as a manufacturer. And once 

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1 these warranties are in place it's tough to 

2 take them back. 

3 Look what happened ten versus 

4 thirteen SEER, for example. We moved to what 

5 was then considered a premium product. The 

6 warranty pretty much stayed as it was. I just 

7 wondered if that was included in your model. 

8 MR. CARMICHAEL: Yes. There will 

9 be a section on the manufacturing interview 

10 guides that tries to get at this issue. So we 

11 can try to ascertain what those costs are as 

12 the products increase in efficiency level. 

13 Okay. So briefly the MIA consists 

14 of three main phases. The first is the 

15 industry profile, basically an industry 

16 characterization that builds on the market and 

17 tech assessment that Adam spoke about earlier. 

18 Also takes into account what we've learned 

19 here today and any and all publicly available 

20 information that we can find including 

21 industry reports, manufacturing annual 

22 reports, 10Ks, etc. 

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1 The phase two begins with the 

2 development of a strawman GRIM. So we're 

3 taking any inputs from the engineering 

4 analysis, also the shipments analysis and that 

5 publicly available information to develop a 

6 strawman GRIM which gives us a basic idea of 

7 what the impacts may be. It represents 

8 basically the starting point for our 

9 interviews. 

10 And for those interviews, we 

11 developed an interview guide where we take 

12 into account what we've learned here today and 

13 also from your comments. And we use that 

14 interview guide to guide our subsequent 

15 discussions with manufacturers. 

16 

17 And so phase three begins with those 

18 interviews. I would like to mention two 

19 quick things on the interviews. First, we'll 

20 look to schedule those in the latter half of 

21 May and June most likely. And, second, DOE 

22 emphasizes confidentiality in those 

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1 interviews. Generally we establish a non 

2 disclosure agreement with each manufacturer 

3 before doing the interview. 

4 Based on what we learn in this 

5 interviews and subsequent research and 

6 revision to the other analyses, we move onto 

7 completing the GRIM and the industry wide and 

8 subgroup calculations of INPV. And finally 

9 look to finish the direct employment 

10 assessment, impacts on competition and 

11 accumulative burden. 

12 So DOE recognizes that for a 

13 variety of reasons small businesses may be 

14 more severely or disproportionately affected 

15 by energy conservation standards. So the 

16 Department makes an effort to identify and 

17 contact those small businesses ahead of time 

18 to inquire about what those impacts may be. 

19 As you can see, the Small Business 

20 Administration has set the threshold at what 

21 constitutes a small business as those having 

22 750 employees or fewer. So in its tentative 

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1 preliminary research, DOE has identified the 

2 following listed manufacturers here as 

3 potential small businesses. Now I want to 

4 note. This list isn't actually in the rule5 making analysis plan. So please take a look 

6 at these and if you know of any others that 

7 are missing or that are here that shouldn't be 

8 please let us know and we'll continue to 

9 follow up on those. 

10 FACILITATOR BROOKMAN: Charlie. 

11 MR. McCRUDDEN: Is this a list of 

12 manufacturers? 

13 MR. CARMICHAEL: Yes. It's 

14 intended to be. There may be some 

15 distributors or contractors that snuck on 

16 there. 

17 MR. McCRUDDEN: Okay. Because the 

18 last one there is Xenon Heating and Air 

19 Conditioning and Clockwork Home Services. 

20 MR. CARMICHAEL: See, what happens 

21 is the Small Business Administration has a 

22 list as you probably know. 

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1 MR. McCRUDDEN: Yes. 

2 MR. CARMICHAEL: And when you plug 

3 in that NAICS code the small businesses that 

4 register tend to put in 100 NAICS codes and so 

5 it's not entirely clear what their business 

6 is. So that's where that follow-up will come 

7 in. 

8 MR. McCRUDDEN: So are you looking 

9 for contractors or you just want manufacturers 

10 for the purposes of this slide? 

11 MR. CARMICHAEL: For this, yes. 

12 MR. McCRUDDEN: Just manufacturers. 

13 MR. CARMICHAEL: Just 

14 manufacturers, yes. 

15 MR. McCRUDDEN: Okay. Will you get 

16 to the reg flex later? 

17 MR. CARMICHAEL: It's probably safe 

18 -- This is basically a pre-cursor to the 

19 regulatory flexibility analysis. 

20 FACILITATOR BROOKMAN: Additional 

21 comments? 

22 (No verbal response.) 

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1 MR. CARMICHAEL: That's it for my 

2 section. 

3 FACILITATOR BROOKMAN: Okay. Back 

4 to Alex. 

5 MR. LEKOV: So, sequentially, we'll 

6 talk about the utility impacts, employment 

7 impacts, environmental impacts and regulatory 

8 impacts. 

9 Starting with the utility impacts, 

10 the purpose is to assess -- DOE would like to 

11 assess the impacts on energy supplies that 

12 could result from the imposition of standards. 

13 The tool to do this evaluation is NEMS, the BT 

14 variant. And the way it's termed is 

15 essentially we utilize these two scenarios, 

16 one is without standard and the other with the 

17 standard. And the output of this is 

18 essentially a forecast of electricity 

19 generation and avoided capacity. 

20 FACILITATOR BROOKMAN: Comments on 

21 utility impact analysis? Yes please. Molly. 

22 MS. TROMBLEY-McCANN: Molly 

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1 Trombley-McCann again with PG&E. I just 

2 wanted to go back for a moment. This relates 

3 more to an earlier discussion, but there is a 

4 question about utility rebates programs and 

5 how those will impact shipments and the 

6 efficiency distribution. And I did want to 

7 clarify just for the State of California that 

8 all of the utility rebates programs are 

9 essentially redesigned once every three years. 

10 So when this standard goes into 

11 effect the next round of program design for 

12 our utility programs will account for that 

13 standard. There will be changes in the 

14 minimum rebate level and also probably the 

15 rebate quantity. So in terms of Andrew's 

16 comment about a shift scenario versus a roll17 up scenario, I do think it's important to look 

18 at both because the utility rebates are not 

19 going to remain static as the standard 

20 changes. 

21 FACILITATOR BROOKMAN: In the State 

22 of California. 

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1 MR. ROSENSTOCK: Steve Rosenstock, 

2 that would be nationally. 

3 FACILITATOR BROOKMAN: Good. Good 

4 to know. That's what I was hoping to get. 

5 Thank you. Okay. 

6 Comments on utilities before we 

7 move on? 

8 (No verbal comments.) 

9 MR. LEKOV: Employment impacts from 

10 outset to state there are two types of 

11 impacts, direct employment impacts and 

12 indirect employment impacts. The direct, that 

13 have been described I believe in the 

14 manufacturing impacts analysis. What this 

15 component here relates to is the so-called 

16 indirect employment impact. 

17 And in fact this is the employment 

18 impact resulting from shifting consumer 

19 expenditures to illustrate it from the savings 

20 that will result on the manufacturing side to 

21 the other sectors of the economy. So people 

22 to have more money to spend. And the method 

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1 to do this is a standard program called ImSET 

2 which is a model of the evolution of dose 

3 impact. 

4 FACILITATOR BROOKMAN: Yes. Jim. 

5 MR. VERSHAW: I'm not familiar with 

6 ImSET. How can we get information on what 

7 that model is? 

8 MR. LEKOV: It's a publicly 

9 available model developed by PNNL. There is a 

10 website which includes the model plus manual 

11 explaining the details. 

12 MR. VERSHAW: PNNL website? 

13 MR. LEKOV: Yes. And also in DOE's 

14 documentation generally there's some 

15 background about it, too. 

16 FACILITATOR BROOKMAN: Frank 

17 Stanonik. 

18 MR. STANONIK: I'm certainly not an 

19 economist. But having been through what is 

20 soon to be a finished water heater rule21 making, this particular aspect of the 

22 analysis, the deployment impact analysis, 

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1 listening to you again, Alex, if I understand 

2 this basically if the consumer saves money 

3 because of some new efficiency requirement 

4 there's an assumption they're going to go out 

5 and spend that money and stimulate the 

6 economy. 

7 MR. LEKOV: It's not that the 

8 consumer will spend money but will open other 

9 job opportunities because of actually having 

10 an excessive money supply. This is my 

11 understanding of how this model works. 

12 MR. STANONIK: Okay. Well, I'm 

13 going to make my comment and maybe based on 

14 what you just said totally missing the point. 

15 But it seems to me that the way this is 

16 structure when you're talking about a rule 

17 that is intended to drive efficiency 

18 requirements to be the maximum feasible and 

19 economically justified, within that construct, 

20 it's always going to result in a huge increase 

21 in indirect employment. That's what we saw in 

22 water heater rule. The number of indirect 

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1 employment dwarfed whatever happened to the 

2 poor manufacturers. And I think in these 

3 kinds of rules it seems you've almost 

4 predetermined that's going to be the 

5 circumstance. But it says to me, "Why is this 

6 even included in the analysis?" It doesn't 

7 make sense to me at all. 

8 FACILITATOR BROOKMAN: Thank you. 

9 I saw Harvey first in fact. 

10 Harvey. 

11 MR. SACHS: Harvey Sachs. And I've 

12 been thinking about Dan Arnold's comment about 

13 the potential for increased warranty costs and 

14 trying to overlay that on the employment 

15 impact. And it would seem to me that 

16 logically if the Department is to consider the 

17 potential for increased warranty impacts, 

18 warranty cost impacts, at higher efficiency 

19 levels, then that directly rolls into 

20 increased direct employment on the 

21 contractor's side as well as some on the 

22 manufacturing side to service those warranty 

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1 costs. 

2 So I'm just not sure how far out 

3 into the second order we can go with some of 

4 these things. Thank you. 

5 FACILITATOR BROOKMAN: Steve 

6 Rosenstock. 

7 MR. ROSENSTOCK: Steve Rosenstock. 

8 Yes, again thinking about this again is a 

9 matter of how much of this is domestic versus 

10 international, especially some of these 

11 indirect employment impacts. If there's more 

12 spending on goods and services but they're 

13 manufactured overseas is it really indirect, 

14 nondomestic impact and shouldn't that be 

15 highlighted in the analysis? Thank you. 

16 FACILITATOR BROOKMAN: Talbot. 

17 MR. GEE: This is Talbot from 

18 HARDI. If we're going to go this route, I 

19 have to throw in there, too, though. If we're 

20 talking about changing a minimum standard 

21 where you affect negatively the gross margin 

22 on the product that has a negative impact on 

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1 the wholesale level which could be contrary to 

2 this analysis to some degree. And then when 

3 you talk about warranties, that's a lost 

4 leader. So I don't see how increased warranty 

5 activity is a benefit. 

6 FACILITATOR BROOKMAN: Thank you. 

7 Any other comments on employment 

8 impact analysis? 

9 MR. DeLASKI: A quick comment. 

10 Andrew deLaski. The ImSET model I think has 

11 been used for a long time. I think it's 

12 pretty well established as being an overall 

13 well-established model of the economy and 

14 employment and how energy factors into that. 

15 It strikes me that we need to be 

16 careful about how we get all these second 

17 order effects as Harvey is saying. So using 

18 an overall model I think is appropriate. I 

19 can't recall that it's been -- I think we've 

20 used it in every docket for quite a number of 

21 years. And I think to Steve's point I think 

22 it did a model of the U.S. economy. 

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1 MR. LEKOV: That's correct. DOE is 

2 just one of the government branches that uses 

3 it. Many other government branches are using 

4 the tool. 

5 FACILITATOR BROOKMAN: Other 

6 comments? 

7 (No verbal response.) 

8 Okay. We're moving on. 

9 Environmental impact. 

10 MR. LEKOV: The purpose of the 

11 environmental assessment is to report the 

12 changes in emissions, power plant emissions, 

13 as well as site emissions due to the use of 

14 gas and oil furnaces based on the proposed 

15 standard. 

16 The method again utilizes the NEMS, 

17 too. And the result is an estimate of 

18 national emission reductions of CO, NOx and 

 2

19 mercury. Also there is a separate tool, that 

20 assesses the emissions at the site for the 

21 fossil fuel emissions such as the one that are 

22 included in this rule-making. 

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1 FACILITATOR BROOKMAN: Comments? 

2 (No verbal response.) 

3 MR. LEKOV: And DOE also plans to 

4 monetize the emission reductions using the 

5 current cost of carbon as developed by the 

6 interagency reviews. Basically, the social 

7 cost of carbon is intended to be a monetary 

8 measure of the incremental damage resulting 

9 from green gas emissions as explained here. 

10 At present, this is essentially the 

11 approach itself. It's constantly, slightly 

12 refining. There are quite a few changes almost 

13 constantly coming. But recently it essentially 

14 estimates the cost based on the global benefit 

15 at four levels as listed here from 4.7 to 64.9 

16 dose per metric ton and those also are both 

17 escalated for the future years and discounted 

18 for a specific year. DOE in addition to CO, 

 2

19 also plans to estimate the potential monetary 

20 benefit of reduced NOx. 

21 FACILITATOR BROOKMAN: Steve 

22 Rosenstock. 

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1 MR. ROSENSTOCK: Steve Rosenstock, 

2 Edison Electric Institute. I have a lot of 

3 concerns with this part of the analysis for 

4 several reasons. Number one, you're saying 

5 global benefits for a domestic policy. I'm a 

6 little worried about that, how that affecting 

7 the dollar amount. 

8 Number two, you're showing values 

9 that are the factors are from the minimum to 

10 the maximum, a factor of 15. You're going 

11 from $4 to $64 and then you inflate them over 

12 time. So the bandwidth of results can be 

13 quite interesting. 

14 Also in certain parts of the 

15 country like New England, there is a carbon 

16 market on the -- There are carbon caps on 

17 power plants and there is a carbon market in 

18 New England that's been around for at least 

19 three years now. The actual prices on that 

20 carbon market have ranged basically between $2 

21 and $3 a ton. That's actual. And then, of 

22 course, there's a European experience where it 

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1 was like $30 a ton and then it collapsed to 

2 about $10. So I'm very worry. 

3 And also if you look at some of the 

4 legislation that's being proposed there are 

5 proposed to have floors and caps on the carbon 

6 costs in the future. So I'm very worried 

7 about this because (1) for those New England 

8 the cost of that carbon has already been put 

9 into their electric rates. So in a form it's 

10 a way of double-counting in a way for those 

11 customers. And if it becomes national, if 

12 there's a national policy and some of these 

13 costs get incorporated into gas and oil and 

14 electric costs, then again it could be another 

15 form of double-counting in the future. So I 

16 have a lot of concerns about this and we'll 

17 try to add more in our comments. Thank you. 

18 FACILITATOR BROOKMAN: Thank you. 

19 Don Brundage. 

20 MR. BRUNDAGE: Along those same 

21 lines, we could be here all day and I'm not 

22 going to go there. But you show four 

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1 different numbers there. What does those four 

2 numbers mean? Are those four different 

3 estimates of different agencies or what are 

4 they? 

5 MR. LEKOV: First, I would like to 

6 point to DOE's publication of the most current 

7 rules, particularly small motors at the end of 

8 February. It includes a summary of this 

9 interagency document that describes in detail 

10 the derivation of the approach and since this 

11 is something which is kind of side to DOE and 

12 essentially DOE is required to do, the 

13 detailed explanation of pretty complex multi14 agency approach in this particular tool. 

15 Just in summary, this essentially 

16 presents a range of costs. So to allow DOE to 

17 show what's essentially the monetization 

18 markets will be within those particular 

19 ranges. 

20 MR. BRUNDAGE: Okay. Is this plan 

21 to be used just as informative within the 

22 analysis or actually included any sort of cost 

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1 benefit in the life-cycle cost calculation or 

2 is this just informative of the societal 

3 costs? 

4 MR. LEKOV: Probably the policy 

5 people will have a better explanation. I will 

6 just summarize that DOE in fact provides this 

7 in the main part of the analysis. 

8 FACILITATOR BROOKMAN: Betsy. 

9 MS. KOHL: Just to clarify. This 

10 is Betsy Kohl, DOE. We consider it as part of 

11 our seven factor analysis, but it's separate 

12 from the life-cycle reg guide. 

13 MR. LEKOV: Correct. 

14 MR. BRUNDAGE: Okay. That was the 

15 -- That was my concern. 

16 FACILITATOR BROOKMAN: Molly and 

17 then Karim. Karim. 

18 DR. AMRANE: Karim Amrane, AHRI. 

19 We have expressed concern with this analysis 

20 in the past and I think we would continue this 

21 concern with it I think for several reasons as 

22 Steve Rosenstock expressed. I mean it's 

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1 double-counting because the cost of CO will 

 2

2 be somehow factored in into the cost of fuel. 

3 So again, I mean if it's just for information 

4 maybe but we would never recommend it should 

5 be included in the life-cycle cost analysis. 

6 FACILITATOR BROOKMAN: Yes. 

7 Talbot. 

8 MR. GEE: This is Talbot with 

9 HARDI. I concur with Karim on that. I 

10 question the last statement talking about 

11 potential monetary benefit. I'm unclear who's 

12 supposed to be enjoying that monetary benefit 

13 in the analysis. In other words, if for 

14 example you don't agree with where DOE is 

15 going, are you there or pinned into a corner 

16 of costing the nation of some beneficiary some 

17 millions of dollars because of the lost carbon 

18 benefit? I don't understand how this works. 

19 FACILITATOR BROOKMAN: Okay. Final 

20 comments on this one? 

21 (No verbal response.) 

22 MR. LEKOV: A summary of DOE's 

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1 regulatory impacts analysis. So essentially 

2 investigates the national impacts of non3 regulatory alternative and comparative to the 

4 potential mandatory energy conservation 

5 standard and also alternatives are consumer 

6 rebates, consumer tax credit, manufacturer tax 

7 credit, voluntary efficiency target, early 

8 replacement and bulk government purchases. 

9 The tool we are using is the 

10 existing NIA spreadsheet. However we replaced 

11 the projections, shipments, to reflect non12 regulatory scenarios, estimating impacts based 

13 on the part of the inputs to it. We estimate 

14 the inputs of the non-regulatory base on the 

15 experience with the considered policies. And 

16 the output is very similar to what you are 

17 seeing from the NIA analysis, essentially 

18 national energy savings and net present values 

19 of those non-regulatory approaches. 

20 FACILITATOR BROOKMAN: Questions 

21 and comments on this last substantive slide, 

22 regulatory impact analysis? 

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1 (No verbal response.) 

2 I've just handed out now the 

3 Xeroxed copy of the -- Thank you, Alex -- 

4 listing of those that have been attending the 

5 meeting today. Thanks all of you for doing 

6 that. In a moment, I'm going to hand out the 

7 evaluation form. 

8 The Department provides at this 

9 point in the meeting an opportunity for 

10 anybody to make brief closing remarks if they 

11 wish to do so now, especially things you don't 

12 think have been covered sufficiently that need 

13 to be addressed. 

14 Talbot. 

15 MR. GEE: I'll just have one 

16 observation. We continue to have a little bit 

17 of concern here that appliance standards are 

18 being viewed now perhaps more as a goal or 

19 objective rather than what is actually capable 

20 or possible for 100 percent of the population. 

21 And I just express that because especially 

22 when we're talking condensing furnaces I mean 

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1 we absolutely know there are applications out 

2 there where there are significant barriers to 

3 adopting a condensing furnace. I mean we 

4 absolutely know there are applications out 

5 there where there are significant barriers to 

6 adopting a condensing or transitioning to a 

7 condensing furnace. 

8 And if we're considering adopting a 

9 standard that goes that way it seems like the 

10 idea is they're kind of -- they have to suck 

11 it up. And I'm not sure that's really where 

12 we want to go in terms of federal standards 

13 policy. 

14 FACILITATOR BROOKMAN: Thank you. 

15 Additional comments? 

16 Yes, Don Brundage. 

17 MR. BRUNDAGE: There's been a lot 

18 of comments about the consensus agreement and 

19 just going to a direct final rule. I would 

20 like to point out that while there were two 

21 major stakeholder groups that were included 

22 within the consensus agreement it was a very 

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1 limited number of electric and gas utilities, 

2 not the major trade groups. 

3 There were a number of significant 

4 stakeholder groups that were not included 

5 within that and, to talk about a direct final 

6 rule without doing all of the paperwork and 

7 justification, I don't think is appropriate 

8 for this sort of limited stakeholder 

9 agreement. You need at a minimum to do the 

10 full NOPR documentation and do cost 

11 justification numbers on the proposed 

12 standards and provide opportunities for 

13 comments on that. Thank you. 

14 FACILITATOR BROOKMAN: Thank you. 

15 Thanks for listing the stuff that you think 

16 would be necessary to actualize that. 

17 John. 

18 MR. PROCTOR: John Proctor. I 

19 concur. 

20 FACILITATOR BROOKMAN: Thank you. 

21 Ashley. 

22 MS. ARMSTRONG: I'm going to turn 

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1 the question around on you. I think we'd be 

2 interested to know what the utilities think of 

3 the consensus agreement that we're not 

4 signatories and why you may have a certain 

5 opinion the way you do. 

6 FACILITATOR BROOKMAN: Don, are you 

7 speaking on behalf of the utilities? 

8 MR. BRUNDAGE: No, I'm speaking -- 

9 I'm not even speaking on behalf of Southern 

10 Company at this point because we're still 

11 studying. But I would say particularly over 

12 the air conditioner side there's a lot of 

13 unanswered questions on how it would be done 

14 in the Southern region with the humidity 

15 issues which sort of got left out. A lot of 

16 it is going to be in the details of 

17 implementation because we're going through 

18 this process for the first time with regional 

19 standards. 

20 FACILITATOR BROOKMAN: Okay. John 

21 Proctor. 

22 MR. PROCTOR: This is John Proctor. 

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1 And on behalf of a lot of energy efficiency 

2 people who were not consulted in the midst of 

3 this agreement, I would say there was an awful 

4 lot of us left out and we don't think that the 

5 air conditioning side in particular addresses 

6 the problems that we need to deal with in hot, 

7 dry climates or in moist climates. 

8 FACILITATOR BROOKMAN: Thank you. 

9 Yes, Charlie. 

10 MR. McCRUDDEN: Just a general 

11 comment. The notice came out the 15th. We're 

12 here two weeks later. We've got two weeks to 

13 do comments. It would have been great to have 

14 more time. I realize that you're under 

15 constraints, but that's -- And you're always 

16 going to hear that. So I'll just have to say 

17 it. Thanks. 

18 FACILITATOR BROOKMAN: Thank you. 

19 MS. KOHL: Betsy again. Just if 

20 you think you're going to need more time once 

21 you get into it like I said earlier you can 

22 always request an extension. 

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1 FACILITATOR BROOKMAN: Can they 

2 just request that as they would with their 

3 normal submission? That way? 

4 MR. GEE: Right. 

5 FACILITATOR BROOKMAN: Karen, for 

6 the record, you're requesting it. 

7 MS. MEYERS: For the record, Rheem 

8 is requesting an extension on the time to file 

9 comments. I do have actually one other thing 

10 that I want to say. 

11 FACILITATOR BROOKMAN: Go ahead. 

12 MS. MEYERS: Rheem was a signatory 

13 to the consensus agreement and as the only 

14 manufacturer in here who is impacted from the 

15 water heater where a condensing standard will 

16 have a significant impact we do support the 

17 consensus agreement. 

18 And I guess I'm a little concerned 

19 that DOE is going through all of this and this 

20 consensus agreement was not arrived at in a 

21 short matter of time. There was two years 

22 actually of negotiation between a lot of 

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1 people. And it concerns me that manufacturers 

2 are still being called to DOE stakeholder 

3 meeting and are having to put in time on all 

4 of these different products when a consensus 

5 agreement across a very cross section of 

6 interest was arrived at. And there's a lot of 

7 money being spent at DOE and on the 

8 manufacturer's side when a consensus agreement 

9 has been presented that not only addresses 

10 federal minimum appliance standards but goes 

11 further and looks at additional ways that the 

12 country can save money. 

13 So just for the record we are 

14 disappointed in these additional rule-makings 

15 that are continuing on furnaces and air 

16 handlers when DOE has been presented with an 

17 alternative route that has been authorized by 

18 Congress. 

19 FACILITATOR BROOKMAN: Thank you. 

20 Steve Rosenstock. 

21 MR. ROSENSTOCK: Steve Rosenstock, 

22 Edison Electric Institute. To answer your 

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1 question about what utilities think, some 

2 utilities were part, know about the 

3 negotiations. Others did not. So a lot of 

4 our members, you know, we're sent this 

5 information and we're getting feedback, bits 

6 and pieces. 

7 We understand the hard work that 

8 went into it and as I said in the previous 

9 rule-making is that a lot of utilities are 

10 more concerned about EERs and SEERs. And so 

11 EERs do matter in areas outside of California, 

12 Arizona, New Mexico and Nevada. 

13 And there is the issue that Mr. 

14 Proctor raised in his comments about switching 

15 over to R410A and the impact on peak demands. 

16 How R410A works at higher temperatures and is 

17 there a degradation of the EER by switching? 

18 Mr. Proctor, and I hope I'm not misquoting, 

19 said in his paper that there was some sort of 

20 degradation. 

21 And we've seen in the past where 

22 you can have higher SEERs and lower EERs. So 

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1 if you combine that with new refrigerant lower 

2 EERs, there is a concern I think among some 

3 utilities that again it's a matter of on the 

4 average day your test conditions are great. 

5 But on the peak day when it really counts for 

6 utilities, it actually might increase peak 

7 demands. That's one thing that we're 

8 concerned with. 

9 MR. SACHS: Harvey Sachs, ACEEE. I 

10 appreciate the efforts the Department has 

11 made. I appreciate the feedback and even the 

12 pushback from others at the table. I want to 

13 comment on a couple of things that are in the 

14 consensus agreement which I believe address 

15 some of the concerns. 

16 First of all, with respect to my 

17 good friend John Proctor's comments on humid 

18 climates, a large number of us and I think 

19 John was involved as a reviewer of some of 

20 this struggled for a number of years with 

21 trying to find a really good metric to define 

22 a humid climate air conditioner, something 

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1 that would be enforceable. And we eventually 

2 had to table that on our own. We could not 

3 get to something. The manufacturers have 

4 agreement to disclose latent heat or 

5 respectfully sensible heat capacity under 

6 standard conditions as part of this agreement 

7 and disclose it pretty prominently. 

8 Secondly, in terms of high 

9 temperature performance and EER as addressed 

10 by Steve Rosenstock, my other good friend -- I 

11 have two -- one of the pieces of fine print in 

12 the consensus agreement which we are starting 

13 to work on now is national disclosure in a 

14 standard format of EER by BIN. This will 

15 allow the tailoring of utility and other 

16 voluntary programs to look at incentives that 

17 are tuned to meet their regional needs. If 

18 anything, there will be increased 

19 opportunities for utility programs based on 

20 the engineering information that will be 

21 provided by manufacturers. 

22 The consensus agreement doesn't do 

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1 everything that everybody wanted. But I think 

2 that considering the alternatives, the 

3 advocates and utilities and manufacturers that 

4 are involved probably get at least as good a 

5 job as DOE would be able to do. 

6 FACILITATOR BROOKMAN: So those 

7 closing remarks are helpful. 

8 Don Brundage. 

9 MR. BRUNDAGE: This is a remark 

10 more on the air conditioning standard. We'll 

11 be here in about a month and I'm bringing it 

12 up so that I can respectfully request general 

13 counsel to do some homework on it. The big 

14 issue, one of the big issues, I see when 

15 looking at the consensus agreement is it's 

16 very unclear and I'm saying right now that I 

17 don't think you ought to stick latent capacity 

18 performance into the DOE regulations into the 

19 energy efficiency standards. 

20 But it is very unclear when you get 

21 to local codes what they can do to restrict 

22 the use of NAECA approved equipment and limit 

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1 its use where it would not be appropriate. If 

2 you have a very humid area of Tampa and 

3 there's nothing to keep somebody from putting 

4 a unit in that would be best suited for 

5 Phoenix it's a real issue. 

6 And I've been to building code. 

7 I've been to energy code hearings in the State 

8 of Florida where they were seriously talking 

9 about requiring supplemental dehumidification 

10 systems because of the feeling that they had 

11 no ability to control what sort of humidity 

12 performance if it's a NAECA approved 

13 equipment. 

14 So there is a huge screaming need 

15 for clarifying what the limits are on states 

16 and local authorities on requiring humidity 

17 performance. Just some guidelines from you. 

18 Because if you don't and if people stick in 

19 things like separate dehumidifier systems 

20 you're going to get a system performance 

21 that's more like a SEER 10 or 11, not 13 or 

22 14. And that's not going to serve anybody's 

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1 purpose on saving energy. 

2 I'm not asking you to define 

3 anything. Just say where the ground rules are 

4 and what tools are available for doing what's 

5 basically a safety and human safety issue. 

6 Thank you. 

7 FACILITATOR BROOKMAN: Okay. From 

8 my perspective, I'll thank all of you. I 

9 really appreciate the spirit of open exchange, 

10 the quality of the comments. We really 

11 covered a lot of ground very efficiently here 

12 today and I'll turn it back to Mohammed Khan. 

13 MR. KHAN: Thank you all for 

14 coming. Your participation today I think was 

15 very worthwhile. I apologize that we went 

16 over the schedule that we handed out this 

17 morning. But again, it was definitely worth 

18 the added time that we spent today. 

19 I want to point out again the value 

20 of the written comments that we'd like to 

21 receive from you. The comment period closes 

22 on April 14th, but there might be some wiggle 

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1 room there for some comments that come in a 

2 little longer and might take a little longer 

3 to generate. Again, I appreciate your input 

4 today and look forward to your comments. 

5 Thank you. 

6 MR. SACHS: Mohammed, I'm going to 

7 ask you the -- Harvey Sachs -- same question I 

8 asked Wes a week ago and that question is 

9 framed as given the constraints you've 

10 established and our need to probably take more 

11 than two weeks, will it possible if we submit 

12 comments in a timely manner to edit them after 

13 your two week deadline? 

14 (Laughter.) 

15 MR. KHAN: Yes. 

16 MR. SACHS: Thank you very much. 

17 MR. KHAN: Thank you. 

18 FACILITATOR BROOKMAN: Please fill 

19 out the evaluation forms. Off the record. 

20 (Whereupon, at 1:42 p.m., the 

21 above-entitled matter was concluded.) 

22

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A

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129:14 253:16

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103:22 113:19

119:11 135:18

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151:21,22 152:2

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160:12 161:1,5,6

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162:16 163:5

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172:16 174:6,13

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178:11 179:10,12

180:4,9 181:14,20

182:8,11,14,19

183:13 184:12,13

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196:17,22 197:1,3

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203:21 204:7

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246:6 247:15

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253:22 254:7,11

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160:16,19 161:1

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answer 67:21,22

162:14 172:15

177:21 193:20

263:22

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anticipates 193:14

anybody 15:11

34:7 45:7 47:1,21

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appliances 187:16

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applies 50:3

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applying 6:15

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attic 30:18 163:13

attics 163:12

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bandwidth 251:12

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base 61:16 168:22

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based 25:8 29:8

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158:2,8 160:12

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beginning 56:19

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bit 51:12 99:14

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blowing 23:9 26:15

82:8,10 83:7,17

blue 197:11

board 186:15,19

Board's 198:5

boilers 61:7

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border 64:22 65:4

65:17 97:9 100:12

101:10,11,19

102:20 184:5

bottom 171:2 197:8

bound 114:2

box 32:20 64:12

90:22 92:17,17

boxes 19:6 85:11

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28:14 29:3 32:2

32:15 34:4 36:19

37:20 38:9,18

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53:11,14 57:14

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67:11 68:5 69:1,5

70:11,22 71:4,8

71:10 72:3 74:6

74:17 75:5,21

77:2 78:16 79:12

80:8,17 81:13

82:3 83:9 84:7

85:5 86:6,10,14

86:18 88:7,21

92:2,5 93:16

94:10 95:5 96:1

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100:3 101:3

102:14 103:6

104:2 105:16

106:22 107:10,14

107:22 108:16

109:17 110:20

111:4,7,16 114:5

114:13,22 116:3

116:17 117:12

118:17 119:13

120:7,16 121:18

123:6,22 124:12

125:9,15,19

126:15 127:2,4

129:20 131:3,13

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budget 74:4 92:11

Buffalo 107:20

buffer 92:13

builders 180:7,7

building 1:17 6:15

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buildings 225:6

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bulk 256:8

bullet 51:15 67:4

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bullets 72:11 84:11

bunch 231:2,4

burden 40:12

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burner 81:8 157:3

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C

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calculated 203:10

222:10,12

calculates 221:19

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calculating 163:15

calculation 45:19

166:4 221:17

223:16 254:1

calculations 185:19

196:18 197:11

238:8

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37:4,5 87:19,21

163:12,16 210:17

226:13 227:3,8

230:20 242:7,22

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call 82:13,19,19

91:5 115:5 211:3

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called 79:4 82:8,12

168:14 190:10

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campaign 73:10

campaigns 73:13

capable 218:22

234:21 257:19

capacities 175:12

175:14 176:2

capacity 145:10

156:17 158:19

175:18,22 178:19

233:21 234:9,19

241:19 266:5

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caps 251:16 252:5

capture 9:22 47:13

48:8 119:5 171:20

captured 28:19

capturing 31:15

carbon 250:5,7

251:15,16,17,20

252:5,8 255:17

card 9:19 143:12

198:10 201:15

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cards 9:21 143:10

care 89:16 226:14

careful 156:15

231:22 248:16

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11:19,19 71:1,2,5

72:18,19 100:4,5

102:16 232:7,8,9

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carry 140:6 235:21

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114:16 116:10

128:10 130:20

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cell 16:20

census 180:8 193:2

194:5 197:17

210:2 211:8,9

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49:4 96:9 105:22

106:14 116:22

118:14 119:19

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68:7 74:15 75:1

76:14 79:10 80:11

92:21 100:16

103:8 139:11

151:15 165:11,18

244:18

certification 45:21

CFR 127:17

chain 83:4,6

chair 20:21

challenge 8:13 9:2

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change 7:7 78:8

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characteristics

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cities 63:22

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codes 6:15 24:18,21

25:9 72:20 85:22

86:3 240:4 267:21

codify 72:12

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coiled 76:18

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colleague 51:2

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102:2

collectively 27:18

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Colorado 107:18

column 122:6,10

122:11 124:3

combination 30:14

77:15 78:4 85:21

217:9

combinations 24:9

75:15 79:8

combine 58:8

119:22 121:8,10

265:1

combined 29:16

37:17 106:16

116:20 117:10

119:1,14 121:20

121:22 126:18

197:4 215:9 217:9

combining 31:4

117:19,22 119:1

119:19 217:17

combustion 115:13

147:11 164:4,13

come 17:8 29:8

68:18 85:8 91:12

100:20 101:2

133:10,13 139:17

163:2 169:17

193:21 240:6

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190:9 224:8

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coming 114:6

150:6 250:13

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comment 14:4

19:18,22 32:7

33:17 48:13 58:15

58:18 64:12 74:1

74:9 79:13 80:21

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90:21 92:7 102:6

104:3 108:12

116:5 117:9

125:22 127:11

129:11,17 133:18

133:20 134:5

138:9 139:6,10

141:4,5,13,17,19

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158:1,22 159:15

159:22 160:21

162:2 169:21

172:14 174:17

175:1,22 176:4,22

181:11,12 182:12

186:22 189:14

196:11 200:7

205:17 207:15

220:21 221:7

228:18 231:8

242:16 245:13

246:12 248:9

261:11 265:13

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comments 13:14

15:12,17 16:14

19:1,16 21:10

32:3 34:5 36:21

38:19 42:22 43:16

43:20 44:22 46:3

46:11 47:19 48:4

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58:12 62:16 66:3

66:16 68:3 76:8

85:9 86:9 94:11

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110:22 111:10

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129:10 134:6

135:18 139:3

140:3 141:8

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160:9 161:3 170:1

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189:5 196:7,13,15

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237:13 240:21

241:20 243:6,8

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186:8

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226:14

Company 2:7 13:2

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260:10

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complete 17:3

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171:9 174:6

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components 24:14

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concentrated 64:9

concentration

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concepts 18:16

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concise 16:21

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concludes 57:11

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181:6

conclusions 97:3

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concur 206:11,21

231:11 255:9

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33:9 40:11,19

41:7,14 51:16

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118:14 119:20

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29:17 31:2,8,9

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conditioning 7:12

10:7,10 11:3

20:13 21:1,2 31:6

32:8,11 34:11

37:18 47:9 104:9

109:6 143:18

239:19 261:5

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265:4 266:6

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confined 97:9

confirm 55:2 97:18

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conform 162:1

conformance 89:17

confused 117:15

confusion 137:10

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68:13 73:18 90:18

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36:13 37:9,15

38:2,14 43:13,17

48:4,6,11 50:7,10

50:17 60:9,14

62:7 64:17 65:12

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112:6,10 113:9

119:18 120:8,10

124:7 126:8,12

139:12 192:3

210:15 258:18,22

260:3 262:13,17

262:20 263:4,8

265:14 266:12,22

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146:12 154:6

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44:18 48:14 51:3

56:5 68:3 101:17

101:18 103:22

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113:18 119:9

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146:7 147:2 150:4

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consideration 7:9

15:21 22:11 25:14

25:20 38:8 40:17

41:16 44:4 47:16

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considering 22:5

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62:6 64:22 65:4

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consistently 25:11

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consists 236:13

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constitutes 238:21

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constraint 131:1

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48:20 49:14,16

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Consulting 2:4,19

2:20 3:11 11:18

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40:12 41:2,16

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152:8 198:21

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227:21 229:15

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conversations

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conversion 222:13

conversions 213:5

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conveying 18:15

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coordination 20:16

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Corporation 10:14

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corresponding

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154:19 167:17

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212:2 222:21

225:7 228:18

229:20,22 246:18

250:5,7,14 252:8

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costing 255:16

costly 225:13

costs 98:1,15,15

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153:12 154:19

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coverage 4:11 14:7

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91:11 104:14

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101:15 223:14

credible 198:6

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credits 173:3 187:2

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criteria 36:14

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151:12 152:4,11

161:18 162:1,2

criterion 149:7

cross 52:2 263:5

crux 172:6

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cumulative 233:1

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110:17 194:21

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d 125:18 167:15

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data 18:10 19:2

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date 35:2,8 54:10

59:15,17,19 60:2

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108:7,10 111:12

117:6 120:21

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dates 108:15

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112:3,13 113:2

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120:22,22 121:10

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day 15:3,11,16

20:12 45:15 62:5

86:15 229:11

252:21 265:4,5

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69:11,15 90:8

115:18 141:4,17

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261:6

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December 125:12

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132:21

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Defense 2:9

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64:14,15 86:7,8

86:13 88:22 89:2

92:3 99:13 101:5

114:8,11 216:2,3

219:18 231:7,10

248:9,10

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159:11

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103:5 104:14

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230:21

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265:7

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6:14 9:20 11:11

11:14,16 15:5

16:18 17:1,15

28:3 32:4,6 34:20

36:1,3,16 37:10

39:4,5,8,14 43:3

43:10 44:18 53:3

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55:10,13 56:8

57:4 59:3 72:5

75:22 76:3,6 77:1

83:10 100:1 111:1

113:13 114:20

116:5 136:6,10

149:6 196:6,10

220:10 222:16,19

223:6,13 224:15

229:4 231:13

238:16 246:16

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77:16 78:8 97:20

178:2 182:13

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153:17

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253:10

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198:3

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128:16 136:12

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242:11

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41:10 76:16 95:15

113:3

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158:12 161:9

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197:13 229:18

253:9

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154:15 182:3,11

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56:21 57:2 70:1

129:2 195:19

244:11 260:16

Determin 4:16

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209:5 213:8

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233:18 237:5

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146:13 237:11

244:9 250:5

development 22:16

53:9 65:12,22

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devices 130:15

devoting 94:21

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different 7:22

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differentially

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differently 31:18

67:3 169:22

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difficult 77:19

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173:16 202:15

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258:19 259:5

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54:7

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171:15 229:20

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disassembles

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discuss 56:20

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100:9 168:22

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27:16 29:19 45:5

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pumps 37:18 47:9

47:14 96:10 106:1

116:22 191:6

212:9 214:14

215:7 225:13

purchaser 85:13

purchases 256:8

purely 63:12

purpose 18:7 58:7

144:13 151:21

152:15 179:12

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purposes 18:8

21:19 23:21

106:15 228:8

232:14 240:10

pursue 121:15

pursues 117:4

push 187:15 216:20

pushback 265:12

pushed 83:5

put 16:20 24:12

30:13,14 81:11

91:10 92:12

155:20 199:13

200:5 225:7,9

229:22 240:4

252:8 263:3

putting 88:10

268:3

puzzling 194:6

P-R-O-C-E-E-D-...

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p.m 270:20

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quads 35:13

qualified 190:2

qualitative 233:20

qualitatively

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quality 130:11

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quantifying 155:11

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rapidly 127:9

rare 172:21

rate 156:16 198:22

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rates 110:11

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rating 78:8 159:8,9

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ratings 88:16

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rational 131:2

reach 52:3

react 102:10

reaction 68:10

read 28:16,18

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reading 50:4

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readjust 195:6

ready 53:12

real 30:14,15 79:19

81:10 82:1 92:19

94:4 99:5 163:15

176:21 202:9

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realistic 201:22

reality 27:22

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realize 261:14

really 68:1 69:19

70:16 86:5 87:4

87:11 99:4 103:9

109:1 135:3

137:13 142:7

148:7 173:4

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194:19 195:3

210:22 214:16

225:21,22 228:9

228:11 232:2

234:13 247:13

258:11 265:5,21

269:9,10

reason 41:9 64:3

73:3 80:6 124:7

228:2

reasonable 156:18

216:22 220:5

reasons 61:2 79:3

134:8 238:13

251:4 254:21

rebate 95:15

242:14,15

rebates 187:3

242:4,8,18 256:6

rebound 185:11

186:14 188:4,21

189:6,11 193:15

194:18 195:1,2,15

196:9,13

recalibrated

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recall 43:6 141:14

191:19 248:19

receipt 36:11

receive 229:15

269:21

received 13:11

105:19

recognize 6:22 9:7

46:12 68:13 79:1

139:13 153:11,12

177:15

recognizes 175:10

238:12

recognizing 149:17

recommend 39:7

131:6 187:19

194:4 255:4

recommendation

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133:11 220:4

recommendations

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reconsideration

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reconstruction

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record 9:4 10:1

16:2 28:3,18,20

37:8 59:11 139:1

143:6,7,13 173:20

180:22 220:21

221:1 262:6,7

263:13 270:19

records 161:10

RECS 184:20

185:6 186:6 187:1

187:6,17 194:4

196:11 203:11

209:8 210:14

224:9,9,11 228:1

228:13

RECS-type 189:20

recurring 202:18

redesign 140:13,19

redesigned 242:9

redo 228:6

redoing 228:6

reduce 65:1 134:14

147:9

reduced 250:20

reduction 35:16

reductions 249:18

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reengineer 113:4

140:14

refer 178:16

186:10

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reference 127:19

references 150:12

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reflect 54:12 137:4

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Refrigeration 10:7

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regarding 62:17

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regional 4:11 7:16

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45:3,4,8 55:9 60:9

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66:8 72:2 73:7

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97:5,14,20 100:15

102:13 180:13,15

181:3,14 203:7

260:18 266:17

regionality 75:3

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repaired 205:13

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reporting 26:8

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represents 109:9

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requesting 262:6,8

requests 92:11

require 22:18

26:20 41:19 97:6

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required 40:18

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104:22 113:17

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requires 45:1 56:5

128:9 135:20

requiring 33:9

67:10 213:18

268:9,16

research 238:5

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reservations 49:8

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reserve 149:11

198:5

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residential 1:5

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34:15 43:9 52:4

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resistance 46:21

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resource 110:9

resources 2:8 26:14

35:22 89:18 94:21

respect 51:3 89:9

90:3 140:15 159:5

229:12 265:16

respectfully 266:5

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respects 85:17

respond 114:8

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respondents 33:10

response 33:16

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responsive 22:19

26:17

rest 188:14

restrict 14:3

267:21

restriction 228:21

restrictions 199:10

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restrictive 149:19

result 7:7 30:7

35:15,19,20 36:6

57:10 100:8

175:13 181:6

213:17 241:12

243:20 245:20

249:17

resulting 128:16

243:18 250:8

results 152:19

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221:16 223:18

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resume 142:21

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retiring 215:17

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return 86:12

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reverse 161:7

review 4:4 13:19

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roll-up 213:20,22

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47:10 53:4,5,16

54:3 56:3,19,20

57:2,5,7 61:9,9

62:1 66:10,17

67:20 68:8 69:10

69:20,21 70:2,20

90:5,7,9 106:14

106:15 116:20

117:1,10 119:1,14

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128:3,22 145:11

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rulemakings 33:20

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rules 15:22 36:10

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rule-making

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rule-makings

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run 13:16 203:20

running 159:10

rush 194:11

R-value 105:4

R410A 264:15,16

S

Sachs 3:14 10:18

10:18 37:22 38:1

38:1 50:22 51:1

52:15 64:11 65:11

65:11 74:7,8,8

75:6 76:10,11,11

102:15 103:7,7

109:18,19,19

111:17,18,18

112:12,21,21

113:22 114:4

129:21,22,22

131:5 138:17,18

138:18 140:4

148:18,19,19

149:11 151:6,7

153:3,4 159:3,4,4

160:2,7 178:10,10

184:1,2,2 191:9

191:10,10 202:14

202:14 208:4,5,5

229:19 246:11,11

265:9,9 270:6,7

270:16

safe 240:17

safety 24:20 79:18

81:19 100:18

115:11 140:8

152:9 269:5,5

sake 136:19 137:11

sales 77:14 78:4

179:18 187:4

192:19 200:19

204:10

Sam 12:9

sample 223:15

224:11

samples 184:21

SAMUEL 2:19

San 37:4

satisfies 36:13

satisfy 56:8

save 35:9,13 130:21

263:12

saves 245:2

saving 22:13 190:3

194:22 195:5

269:1

savings 22:21

31:16 35:15 42:4

48:8 118:12 134:1

184:15 187:11,14

198:12 221:17,18

222:1,3,5,8,17,19

243:19 256:18

saw 71:10 148:22

245:21 246:9

saying 30:1 67:8

70:5 77:5 83:5

92:19 111:10

122:15 140:6

148:2 169:6

186:14 188:8,17

189:1 195:7 218:6

248:17 251:4

267:16

says 42:2 70:15

78:7 84:11,13

106:5 125:12

137:13 190:19

196:1 210:14

246:5

scale 150:15

scenario 213:21

215:15 216:4,21

218:20,21 221:8

242:16,17

scenarios 217:1

241:15 256:12

schedule 9:11

35:11 237:20

269:16

Scheer 13:3,3

scope 4:11 14:7

60:8,13,17

Scott 130:1

screaming 268:14

screen 149:12,15

151:8,22

screening 4:14

14:10 144:9 150:6

150:10,11,22

151:11,20,21

152:5

scrutiny 199:13

se 72:21

second 18:14 26:6

44:21 46:1 49:14

88:13 93:18

106:10 114:16

135:16 186:13

191:21 232:17

233:14 237:21

247:3 248:16

Secondly 85:7

266:8

secret 88:17

Secretary 125:13

section 21:10 57:12

82:9 181:20

230:18 236:9

241:2 263:5

sector 52:4

sectors 243:21

Security 54:6 61:5

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178:19 190:16,22

201:8 204:11

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222:9 225:8 228:2

228:7 238:19

239:20 248:4

267:14

seeing 82:16

101:10,12 256:17

seeking 19:4 62:16

87:15 97:11

108:12 111:1,10

117:8 129:16

157:22 158:22

160:21 162:2

174:17 181:13

seeks 33:17 57:4

196:11 198:13

209:13

seen 51:14 168:1

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216:6 234:14

264:21

SEER 49:4 75:12

76:16,17 79:2,4

95:17 120:12

204:11 206:1

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SEERs 264:10,22

segment 139:3

select 157:14 158:7

161:16 162:3

165:20,21

selected 160:11

selecting 157:12

161:18

selects 154:10

sell 8:16 26:4 91:8

226:14 227:7

sellers 150:14

selling 91:16

174:16 179:19

211:22

send 151:1

senior 223:12

225:16 227:21

seniors 224:11

225:15 229:1

231:14

sense 6:18 80:14

89:12 100:18

113:1,7 114:1,21

119:7 170:2,18

191:12,14 246:7

sensible 15:22

31:10 266:5

sensitive 44:14

178:21

sensitivity 62:10

sent 264:4

separate 46:5,21

47:13,14 67:10

69:10,21 70:2

74:10,14 79:16

80:6 82:1 110:13

118:4,6 120:6

121:15 128:21

131:11 132:11

133:7 134:9

148:16 223:14

235:1,2 249:19

254:11 268:19

separated 185:7

separately 118:7

122:20 135:7

230:2

September 54:18

sequentially 241:5

series 166:15,21

167:2 174:2 178:3

serious 22:22 23:18

24:2 25:1 211:19

seriously 33:4

111:21 113:13

268:8

serve 268:22

service 150:15

152:7 246:22

servicers 150:13

services 239:19

247:12

serving 100:10,12

session 43:5

set 73:21 74:3

75:17 89:21 118:7

123:10 149:12

186:6,9 216:19

219:11 220:18

238:20

sets 51:16 190:10

setting 104:7 224:4

setups 227:9

seven 23:6,11 56:4

254:11

severely 232:21

238:14

shaking 171:16

share 16:22 99:19

101:13 176:6,7

213:12

shared 27:9 165:1

shares 168:2

209:22 212:5

SHAW 11:9

shift 47:11 192:19

216:4,14,20 219:6

219:21 221:7

242:16

shifting 47:12,15

101:14 104:11

234:17 243:18

shipment 212:22

213:11 221:5,15

shipments 4:18

14:19 144:17

169:5,7,9,10,12

209:8 212:20

213:1,2,9,10

237:4 242:5

256:11

shipped 103:14

178:13

shipping 103:18

shops 142:22

short 6:19 56:2

262:21

shortening 141:16

shortly 67:20 141:8

short-term 103:2

show 85:4 100:7

131:1 135:4

165:22 196:9

252:22 253:17

showed 229:14

showing 121:9

251:8

shown 61:1,20,22

106:18,20 121:14

145:8 153:1

157:17 158:21

161:19

shows 24:8 56:7

84:22 85:12

106:12 108:4

160:14 176:14

197:7

sick 6:18

side 43:10 50:6

98:10,12 105:9,15

106:5,12 222:22

243:20 246:21,22

253:11 260:12

261:5 263:8

signatories 260:4

signatory 34:13

38:14,22 109:13

262:12

signed 14:2 48:16

signer 38:2

signers 40:5

significance 126:8

significant 24:15

35:14 42:4 89:14

89:15 99:19 126:7

130:17,17 140:20

155:18 201:10

258:2,5 259:3

262:16

significantly

170:15 205:22

206:4 214:14

silent 16:20

similar 84:3 88:2

104:19 168:17

178:14 227:9

232:17 256:16

simple 56:17

simpler 101:21

102:3

simplification

226:22

simply 24:12 71:17

93:20

simultaneous

109:22

simultaneously

110:16

single 47:10 74:16

106:16 121:22

sit 8:7 164:9

site 42:9 72:6

100:21 130:13

222:13,15 249:13

249:20

sitting 46:17

situation 73:2

101:21 102:4,7

172:19 173:13

218:19 227:1

situations 200:15

six 8:7 24:8 230:12

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261:12,12 262:21

266:11 270:11,13

two-tenths 130:22

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72:14 98:3,5

118:8 145:9

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typical 154:20

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ultimate 27:8 220:8

ultimately 65:7

unable 200:3

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138:13

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20:5 31:1 43:14

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215:15 245:1

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39:11 73:18 105:7

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218:8 221:20

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units 24:5 79:1,2,3

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211:18

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utilities 89:15

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219:9 226:8 227:4

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variant 241:14

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verification 23:21

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163:18 164:3

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88:19 89:2,8

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248:3

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130:6,16 136:21

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213:22 215:17

222:2 227:5

250:18

years 7:5,15 8:4

26:12 35:4,6,9,20

47:5 51:7,11,12

51:19 87:22

109:11 124:21,21

126:14 155:14,17

155:19 162:12

169:9,10,14 170:1

170:10 173:12

187:5 190:21

191:17 195:13

201:2 230:12,13

242:9 248:21

250:17 251:19

262:21 265:20

yell 30:2

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197:10

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210:17 211:2

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zone 63:4,6,14

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$150 191:6

$1500 206:16

$16,000 201:16

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268:21

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13 21:12 23:11

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78:11,12,14 79:2

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14 75:12,13 78:13

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269:22

14-inch 156:20

144 4:15

15 33:11 40:12

75:12 95:17 127:8

141:4,17 173:12

185:11 186:15

188:4,6,16 195:8

195:11,13 251:10

15th 39:5 48:12

56:22 261:11

16 181:11

17 4:6 96:9 97:4

183:14,16

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18 35:17

1975 53:20

1979 6:20

1989 200:11

1990s 136:14

1993 127:20

1995 183:12

2

2 84:13 249:18

250:18 255:1

2(A)(2) 21:11

20 4:8 51:10 231:18

200,000 198:7

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2005 162:9,19

163:2 184:19

185:6 187:9

192:20,20

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190:20 214:13,19

2007 22:7 35:5 36:7

54:6 55:14 60:19

61:6,18,22 62:9

87:3 125:3 145:13

183:19 190:21

200:12 208:19

229:10

2008 194:8

2009 54:18,20

57:20 186:6,10

187:13 190:22

191:13 194:4,8,11

2010 1:12 39:10

54:9 59:4

2011 54:11 56:1

117:5 122:1

2013 35:3 106:6

108:8 110:12

125:12

2015 106:9 108:10

110:12 124:11

199:19

2030 35:13,18

212 4:19

232 4:21

24 96:4

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25,000 176:8

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28 33:16

29 127:7

3

3 196:2 201:21

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51:19

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53 4:10

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6 4:3

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600,000 79:8

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62301 128:7

6295(f) 111:13

112:15 125:18

6295(g)(2) 59:14

64.9 250:15

66 177:3

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7 201:21

70 191:18 229:6,15

72 177:3

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136:19 156:22

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75,000 156:20

750 238:22

78 196:1

79.8 134:18

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8 189:10

8E-089 1:17

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42:5 75:10,10

99:16 101:22

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229:11 235:11

80s 105:11,13

81 196:2

83 188:14

85 195:3

89 200:12

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219:12 220:2,2

226:5 229:16

90s 162:16 225:9

92 167:11 219:13

95 95:16 167:11

195:3 235:10

96 99:17 220:3

98 42:8

EERE-2009-BT-STD-0022 DOC ID 1.2.006
1 n

This is to

the matter of

308

CERTI FI CATE

l.61^l- i fi' 1- hrr- r- ha f ^ra.'.\i n. 1-rane..ri nl-

. r.h a?^1' rr^hea,l."tion standards

Be fore :

Date:

Pface:

renresenf.s the fr:l I and

aforement.ioned matter,

1- rrnaurri I i na

For Residentiaf Furnaces

Douglas Brookman

March 31, 2 010

Washington, DC

namnl ero nrnnaodin.rg Of the

as rcnr")rfFd and reduced Lo

NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

WASHTNGTON, D.C. 20005-3701

Matthew Mawhin

(202) 234-4433 www. nealrgross.com

EERE-2009-BT-STD-0022 DOC ID 1.2.006