### (202) 234-4433 Neal R. Gross & Co., Inc. Page 1 U.S. DEPARTMENT OF ENERGY PUBLIC MEETING ON ENERGY CONSERVATION STANDARDS FOR REFRIGERATED BEVERAGE VENDING MACHINES

+ + + + + Wednesday June 17, 2009

+ + + + + The Public Meeting convened in the Department of Energy, Room 8E-089, 1000 Independence Avenue, S.W. Washington, D.C., at 9:00 a.m., Doug Brookman, facilitator, presiding.

PARTICIPANTS: DOUG BROOKMAN, Facilitator BOB McGARRAH, USA Technologies STEVEN COUSINS, Coca-Coca Company MARC CHESSEROT, shecco AMANDA STEVENS, Energy Solutions EDWIN HORNQUIST, Southern California Edison ANDREW deLASKI, Appliance Standards Awareness Project GLEN SELFRIDGE, Royal Vendors RAY McFADDEN, Royal Vendors TRENT ROTH, Dixie-Narco/Crane TROY DOOM, Dixie-Narco/Carne JAMES MATHIS, Dixie-Narco/Crane NINA TARLEY, Pepsi Co. KRISTEN RAYMOND, Department of Justice MARGO FAIER, Department of Justice MICHAEL KIDO, Department of Energy CHARLES LLENZA, Department of Energy MICHAEL FRIEDRICHS, Department of Energy FRANCINE PINTO, Department of Energy SAM JASINSKI, Navigant Consulting ARIS MARANTAN, Navigant Consulting PARTICIPANTS (Continued):

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 2 MATTHEW MILLARD, Navigant Consulting JEFFREY KINGMAN, Navigant Consulting SRIRAM SOMASUNDARAM, Pacific Northwest National Laboratory MICHAEL SCOTT, Pacific Northwest National Laboratory GRAHAM PARKER, Pacific Northwest National Laboratory ERIC ANDERSEN, Pacific Northwest National Laboratory REBECCA DUFF, ICF International MICHAEL REDMAN, American Beverage Association NED MONROE, National Automatic Merchandising Association LANE BURT, National Resources Defense Council AMANDA KORANE, American Council for an Energy Efficient Economy

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 3 TABLE OF CONTENTS

PAGE

Introductions .............................4 Rulemaking Overview ......................10 Discussion of Issues by Participants .....13 Engineering Analysis .....................43 Energy Use Analysis by Cycle Cost Analysis ...........................52 National Impact Analysis .................69 Manufacturing Impact Analysis ...........170 Utility Impact Analysis .................212 Employment Impact Analysis ..............213

Environmental Assessment ................215 Regulatory Impact Analysis ..............216 Additional Issues and Summary Comments by Participants ......................227 Next Steps ..............................227 Closing Remarks .........................228

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 4 1 P R O C E E D I N G S 2 (9:14 a.m.) 3 MR. BROOKMAN: Okay. Let's please 4 take your seat and let's get started. 5 Good morning, everybody, and 6 welcome. This is the U.S. Department of 7 Energy's public meeting on energy conservation 8 standards for refrigerated beverage vending 9 machines. Glad you could make it here. 10 Welcome to Washington. 11 And we're going to start off this 12 morning with welcoming remarks from Charles

13 Llenza.

14 MR. LLENZA: Welcome here to the 15 Department of Energy. On behalf of my boss, 16 Ron Lewis, and the rest of the team, I welcome 17 you here to the beverage vending public 18 meeting for the NOPR. And it's been a long 19 three years. So we hope that we get good 20 inputs from all the parties here on our work 21 MR. BROOKMAN: Thank you. 22 Are you okay? Yes?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 5 1 PARTICIPANT: There's one more 2 person. 3 MR. BROOKMAN: Okay. Well, they 4 can join us midstream. 5 It's our tradition to give 6 everyone a chance to introduce him or herself. 7 Please say your name and organizational

8 affiliation. I'll start over here with Bob. 9 Not all of you will be on the

10 record for this. This is a matter of 11 courtesy.

12 Bob. 13 MR. McGARRAH: Bob McGarrah, USA 14 Technologies. 15 MR. COUSINS: Steve Cousins, the 16 Coca-Cola Company. 17 MR. HORNQUIST: Edwin Hornquist,

18 Southern California Edison. 19 MS. STEVENS: Amanda Stevens,

20 consultant for Pacific Gas and Electric 21 Company. 22 MR. deLASKI: Andrew deLaski,

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 6 1 Appliance Standards Awareness Project. 2 MR. McFADDEN: Ray McFadden, Royal

3 Vendors. 4 MR. SELFRIDGE: Glen Selfridge, 5 Royal Vendors.6 MR. ROTH: Trent Roth, Dixie7 Narco/Crane. 8 MS. TARLEY: Nina Tarley, Pepsi

9 Co. 10 MS. RAYMOND: Kristen Raymond, 11 Department of Justice. 12 MS. FAIER: Margo Faier, 13 Department of Justice. 14 MR. KIDO: Michael Kido, 15 Department of Energy. 16 MS. PINTO: Francine Pinto, 17 Department of Energy, General Counsel's Office

18 with Mike. 19 MR. LLENZA: I'm Charles Llenza, 20 Department of Energy.

21 MR. BROOKMAN: I didn't introduce 22 myself. Doug Brookman.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 7 1 (Laughter.) 2 MR. BROOKMAN: Nice to see you.

3 Please. 4 MR. KINGMAN: Jeff Kingman, 5 Navigant Consulting. 6 MR. MARANTAN: Aris Marantan, 7 Navigant Consulting. 8 MR. JASINSKI: Sam Jasinski, 9 Navigant Consulting. 10 MR. MILLARD: Matt Millard, 11 Navigant Consulting.

12 MR. SOMASUNDARAM: Sriram 13 Somasundaram, Pacific Northwest National 14 Laboratory. 15 MR. SCOTT: Michael Scott, Pacific 16 Northwest National Laboratory. 17 MR. PARKER: Graham Parker,

18 Pacific Northwest National Lab. 19 MR. BROOKMAN: Start over here, 20 please.21 MR. DOOM: Troy Doom, Dixie22 Narco/Crane.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 81 MR. MATHIS: Jim Mathis, Dixie2 Narco/Crane. 3 MR. MONROE: Ned Monroe, the 4 National Automatic Merchandising Association. 5 MS. DUFF: Rebecca Duff, ICF 6 International and Support Energy Center. 7 MS. KORANE: Amanda Korane, 8 American Council for an Energy Efficient 9 Economy. 10 MR. ANDERSEN: Eric Andersen, 11 Pacific Northwest National Laboratory. 12 MR. ASHLEY: John Atchley, Elstat

13 Americas. 14 MR. REDMAN: Mike Redman, American 15 Beverage Association.

16 MR. BROOKMAN: Thanks. Thanks to 17 all of you. 18 Did we miss anybody? 19 (No response.) 20 MR. BROOKMAN: Okay. Just a quick 21 run-through on the agenda. I think all of you 22 have received a packet when you came in the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 9 1 door. I think probably everybody handed off a 2 business card as you registered at the front 3 desk. The Department will make a copy of the 4 attendees for this meeting today. 5 You can see we're going to start 6 off, for those of you who are looking at this 7 agenda, we're going to start off with a 8 rulemaking overview. Immediately following 9 the overview there's an opportunity for each 10 of you to make brief summary comments about 11 the issues that matter to you today. So we 12 are going to provide that opportunity to you. 13 We'll take a break mid-morning 14 around about 10:30 or 10:45 or so. Following 15 that, we're going to have a description of the 16 engineering analysis, and then energy use 17 analysis and life cycle cost analysis.

18 Around about 12:15 or so we'll 19 break for lunch. Following the luncheon 20 break, we'll do national impact analysis, 21 trial standard levels, manufacturing impact 22 analysis, and then following that utility

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 10 1 impact analysis, employment impact analysis, 2 environmental assessment, regulatory impact 3 analysis.

4 We'll break mid-afternoon when we 5 need to take a break, whether that's 3:15 or 6 whenever that is, and then at the end of the 7 day there's yet another opportunity for those 8 of you that wish to do so to raise additional 9 issues, make summary comments.

10 We'll close out around about no 11 later than 4:15, 4:30ish with next steps and a 12 few closing remarks. 13 So that's the plan for today. 14 Questions, Comments about the agenda as

15 written? 16 And, in particular, anything that 17 you came here to discuss that doesn't fall in 18 the scope of the agenda as written? 19 (No response.) 20 MR. BROOKMAN: Okay. So this 21 looks good. Then to Charles.

22 MR. LLENZA: Welcome to the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 11 1 Department of Energy's beverage vending 2 machine Notice of Proposed rulemaking public 3 meeting. 4 The main purpose of our meeting 5 today is to invite the stakeholders comment on 6 the proposed energy conservation standard 7 levels and request recommendations for 8 alternatives to our presented methodologies; 9 characterized results; in addition, to discuss 10 specific issues related to the analysis. We 11 seek your input on our work on the analysis 12 and methodologies assumptions, data and 13 results of the analysis.

14 We welcome comments from the 15 participants in written form and/or in today's 16 meeting, and please note that the NOPR comment 17 period ends July 28th, 2009. 18 Under the statutory authority of 19 EPACT, we are to issue a final rule no later 20 than August 8, 2009, the standard levels 21 becoming effective on or after August 8th,

22 2012.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 12 1 We've also gone through the series 2 of steps in order to get to this meeting 3 today. So far the actions from the Department 4 on the beverage vending machine rule: we 5 issued test procedures in December 8, 2006; 6 the framework document was published in June 7 28, 2006; we had an advanced notice of 8 proposed rulemaking June 16, 2008; we have a 9 technical support document that's posted on 10 the DOE website of all our analysis and work 11 here at the Department; we published a notice 12 of proposed rulemaking on May 29th and then 13 today's meeting. Today's meeting would be the 14 final step before our final rule is issued on 15 August 8, 2009.

16 We all know the seven factors as 17 described in EPCA, and the selection of our 18 proposed standards, we have seven TSLs 19 selected for Class A; six TSLs selected for 20 Class B; and the way we have come up with 21 these, our different TSL levels, is that we go

22 from the most efficient to the less efficient

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 13 1 levels for each class. 2 At the end of the analysis is a 3 summary of the potential benefits that 4 outweigh the potential burdens, and that's 5 what we try to focus on for the recommended

6 TSL levels.

7 And on slide 7 we show what we 8 have proposed in terms of for equipment Class 9 B and Class A, and these are the energy 10 conservation equations that correspond to

11 each.

12 MR. BROOKMAN: So that is a 13 summary, an overview from Charles. Now 14 there's an opportunity for any of you that 15 wish to do so to make brief summary remarks 16 about your issues and your concerns. 17 Did anybody sign up to do this in

18 advance? Bob did. We'll start with Bob since 19 he did what he was supposed to do. 20 MR. McGARRAH: That's what happens 21 when you retire and have a lot of time. 22 (Laughter.)

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 14 1 MR. BROOKMAN: And all of you, you 2 know, I didn't do the ground rules. So let me 3 just remind you very briefly. I think all of 4 you are familiar with this. 5 I'd ask that you please speak one 6 at a time. Please say your name for the 7 record. I'm going to be cuing people by name 8 as best I can to speak. I also wish to 9 encourage follow-on comments. So after I say 10 your name, you don't have need to say your 11 name and organizational affiliation every 12 time. It's sufficient just to say your name. 13 Please keep the focus here. Turn 14 off your cell phones or turn them on silent 15 mode, and if you need to have a sidebar 16 conversation with someone, these microphones 17 work rather well. We can hear you. So please 18 take that sidebar out of the room, and if 19 you'd share the air time, be concise today. 20 There's a lot to be said in a fairly short 21 amount of time. That would be helpful to 22 everyone.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 15 1 So then, Bob, please.

2 MR. McGARRAH: Ladies and 3 gentlemen, thank you for the opportunity to 4 once again discuss the energy savings 5 opportunities in the improved design of 6 refrigerated beverage vending machines. 7 The report to date, the TSD, is 8 probably one of the most factual pieces of 9 information compiled about the vending machine

10 that I've ever seen in one document. Nice 11 job, guys. 12 In reviewing the report, I went 13 back to the root, the original of the task we 14 embarked on in 2005, and that root is the 15 Energy Policy and Conservation Act. Reviewing 16 this group's genesis, I'd like to read from 17 the report prepared on this project by the 18 Department of Energy, page 12, Item 5. 19 "The EPCA, Energy Policy and 20 Conservation Act, precludes Department of 21 Energy from adopting any standard that would 22 not result in significant" -- significant --

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 16 1 "conservation of energy."

2 I do not believe that we've 3 established that direction and we are taking 4 as a result a path that may probably not 5 result in any significant energy savings. I 6 would submit that the current proposal does 7 not result in significant conservation of 8 energy. Unless the installed base is included 9 in the standard, the energy efficiency

10 achieved will be minimal and have little 11 impact on energy presently consumed by 12 refrigerated beverage vendors. 13 Currently produced equipment meets 14 or exceeds the standards proposed for 15 implementation in three years. Purchases

16 since 2003 met ENERGY STAR Tier 2 17 requirements, and the regulations we're 18 proposing for implementation are no more 19 rigorous than the standards currently being 20 met voluntarily by the industry. 21 I don't see any savings greater 22 than what we are currently achieving, and I'll

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 17 1 explain a little bit about that in a minute. 2 Savings by the elimination of 3 equipment is not true savings, but only a 4 reduction in the energy usage by reduction of 5 the number of energy using products. 6 Further, the Energy Policy and 7 Conservation Act, as required by Sections -- 8 and I'm not going to read -- well, I should 9 read some of them -- 325(o), 345(a), 342(c) 10 4(a), they say simply this. We have to 11 improve energy conservation, use less energy, 12 and we have to make it possible with greatest 13 new technology. I don't know that we're doing

14 that. 15 Technology is available. It's 16 tested. It's in use today that provides 17 greater energy savings than achieved by 18 current ENERGY STAR II machines. In fact, 19 technology can be retrofitted for less than 20 $100 a machine, well within the scope and 21 criteria established in the report. 22 The report on refrigerated

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 18 1 beverage vending machines is complete, 2 exhaustive, and more than reasonably accurate. 3 Ownership of the five million-plus vending 4 machines or refrigerated beverage dispensing 5 machines is primarily in the hands of two 6 companies: Coca-Cola Company and Pepsi-Cola 7 Company. 8 Either through their own companies 9 or through subsidiaries, these two brands own 10 and operate 95 percent of cold beverage 11 vending machines in the United States. That's 12 on page 45 of the study. These two companies 13 purchase 90 percent or more of the total 14 beverage vending machines produced annually in 15 the United States. There's a table on page 47 16 and there's comments on page 60 to that

17 effect. 18 The energy used to operate these 19 machines is calculated on page 7 and 8 of the 20 report, along with the emissions associated 21 with this level of energy generation. The 22 tables on page 90 also show consumption levels

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 19 1 for various equipment types. This report 2 calculates the potential energy savings and 3 has comprehensive cost-benefit analysis and 4 projections into the future, page 10. 5 What it states specifically or by 6 interpretation are several indisputable facts. 7 First, vending machines consume a lot of 8 energy. 9 Second, machine purchases are 10 going down and machine energy consumption per 11 machine is rising due to the shift to a higher 12 energy consuming glass front-enders. That's 13 on page 67. I'm sorry. Page 76. 14 Third, projected machine life, 15 according to the Coca-Cola Company is 16 declining from 13 years to about ten years. 17 That's on page 57. 18 Fourth, the manufacture of new 19 machines has declined dramatically in the last 20 ten years to approximately 25 percent of a 21 high of 200,000 machines in the 1990s. So 22 less than 50,000 machines today, a huge

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 20 1 decline. 2 Fifth, machine placements. Total 3 machines on location is also declining with 4 Coca-Cola reporting picking up 200,000 or more 5 machines a year while purchasing substantially 6 less than 50,000 machines per year. Industry 7 production figures confirm this alarming drop 8 in new equipment purchases.

9 Machines on location will have a 10 projected drop to under one million by 2020. 11 That's less than 13 years. That's on page 79

12 of the statement. 13 Sixth, new technology advances are 14 five or more years away, will only generate 20 15 to 25 percent energy savings, and will cost 16 substantially more than the existing machines. 17 Word is reported on March 30th 18 that Pepsi Co. was testing energy efficient 19 machines in Washington, D.C. area and expects 20 to be "rolling them out worldwide over the 21 next several years." And I have a copy of 22 that if anybody wants to read it.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 21 1 Seven, the current flow to 2 existing machines, approximately five million 3 Coke or Pepsi machines combined total, and the 4 current new equipment purchased per year, 5 under 100,000 units, it would take 50 years to 6 replace the existing float just on a swap-out 7 basis with no provision for any increase in

8 total number of machines or new business. 9 If Coke's negative replacement 10 number is real at minus 200,000 machines being 11 removed annually and not being replaced, the 12 vending business will all but disappear in 15 13 years, if the base of five million were taking 14 out 200,000 per year. And that's just the 15 Coca-Cola company. 16 Eight, both Coke and Pepsi are 17 shifting purchases in vending machines to 18 Visicoolers or glass front refrigerated boxes. 19 These machines are currently not regulated by 20 any industry or government energy standards. 21 Nine, the vending machine 22 manufacturers are undergoing significant

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 22 1 consolidation and the industry is in serious 2 trouble. I just learned this morning that one 3 of the companies is moving its entire 4 manufacturing operation and closing one of its 5 plants. 6 Ten and last, substantial funds 7 are becoming available for energy conservation 8 and reduction of energy consumption for 9 equipment such as vending machines and 10 Visicoolers. It is quite clear the simple 11 facts are that there will be little, if any, 12 substantial energy savings unless the industry 13 significantly increases production and 14 purchase of highly efficient machines. 15 Neither Coke nor Pepsi appear interested in 16 making a capital investment of that size.

17 And that size would be 18 approximately $150 million for 100,000

19 machines. 20 The alterative is to substantially 21 reduce machine populations. It seems 22 population reduction is the course the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 23 1 industry is set on. This will result in jobs 2 lost, revenue lost for the industry. Remember 3 every 500 machines represents one technician's 4 job. Every machine represents a minimum of 5 100 cases of product sold annually, minimum.

6 Route drivers deliver these cases. 7 Their jobs go away. The tax on the 8 employees' salaries, the tax on the product 9 sales, and all revenue and tax opportunities 10 in between disappear. All of the vending 11 manufacturing jobs disappear. It is happening 12 now. I think some of the folks will speak to

13 that. 14 The vending industry is being 15 legislated out of business. Bottle bills 16 requiring deposits on soft drink containers, 17 the restricting of beverage sales in schools, 18 ENERGY STAR implementation of energy 19 consumption standards have all hurt the 20 vending industry.

21 There are several alternatives.

22 There is a substantial and immediate

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 24 1 opportunity to reduce energy consumption by 2 refrigerated beverage machines. At once, no 3 need to wait for attrition, 10 or even 4 possibly 50 years based on current purchases 5 and size of existing base with the float. 6 MR. BROOKMAN: Bob, summarize the 7 rest of your comments.

8 MR. McGARRAH: I can do it. 9 MR. BROOKMAN: Okay.

10 MR. McGARRAH: Cut to the chase. 11 MR. BROOKMAN: And you can submit 12 that for the record if you wish, your entire

13 MR. McGARRAH: I think I have.

14 PARTICIPANT: We have it in the

15 record.

16 MR. McGARRAH: Over 50 utilities 17 nationwide are providing rebates for 18 purchasing technology. Foster Miller, one of 19 your sources for the report, and a government 20 contractor has tested the technology for 21 performance and reliability. The Department 22 of Energy endorses the technology. This is

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 25 1 not a case of finding the technology solution. 2 It's a case of properly applying centers to 3 adopt the existing technology. 4 The vending industry, its 5 manufacturers, equipment users are more than 6 capable of implementing the technology almost 7 immediately. Utilities are interested in 8 installing the technology and paying for it, 9 and the customer will benefit instantaneously 10 with substantial savings in their energy

11 bills. 12 Unique ownership of 90 percent of 13 machines among two entities makes for 14 unprecedented chance to encounter significant 15 savings in a relatively short time. This is 16 an opportunity to do what the government does 17 best, put interested parties together and make 18 it happen with a modest initial incentive. 19 The opportunity is large, but we can only act 20 on it and convert the existing base to a more 21 efficient operation. 22 We should target stimulus dollars.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 26 1 I'll save three pages of stimulus dollars. 2 These machines, the millions of 3 machines that are going to disappear take 4 thousands of jobs with them in manufacturing, 5 service, repair and failing. 6 Tax revenues, et cetera, I talked

7 about that. 8 The best and quickest path to 9 achieving substantial energy savings and 10 assure that the best available technology is 11 implemented is to address the 800 pound 12 gorilla, the installed base. 13 Thank you. 14 MR. BROOKMAN: Thank you, Bob. 15 Other summary remarks here at the

16 outside? Please. 17 MR. SELFRIDGE: Yeah, I would 18 postpone it to later, but I'll be brief.

19 MR. BROOKMAN: Yes.

20 MR. SELFRIDGE: I think it's 21 appropriate now. 22 MR. BROOKMAN: Glen, please say

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 27 1 your name for the record. 2 MR. SELFRIDGE: Glen Selfridge. 3 MR. BROOKMAN: Thank you. 4 MR. SELFRIDGE: Royal Vendors, 5 Incorporated. 6 When I first received my copy of 7 the proposed rule, I looked at the formula for 8 the Type A and Type B machines, and my

9 immediate reaction was that there's whole a 10 whole typographical error. It seemed to be

11 inverted. 12 The Type A machine by its very 13 nature, cooling more volume than Type B 14 typically and utilizing a glass transparent 15 door, is inherently less energy using machine 16 than a Type A machine. So it was some 17 surprise that we see a projection that is 18 fully 20 percent more restrictive than that 19 for the Type B.

20 A little mental exercise here 21 might make this more clear than some I've used

22 with the other hundreds. I think we believe

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 28 1 CSX, the railroad company, the mileage, per 2 ton mile for freight rail is 423. Okay? A 3 freight rail is motorized, engine driven, 4 ground transportation. Okay? Why shouldn't 5 the mileage rating for a ton and a half sedan 6 be on the order of 20 percent better than 7 that? Okay? Over 500 miles per gallon. 8 It's just a thought experiment. 9 Okay? 10 Coming out of this meeting, we

11 would like to understand how these formulas 12 are determine given, okay, that reason and 13 given that there might be methods to get to a 14 Class A tank. Why do we use and if we use 15 them, are there restrictions to trade in terms 16 of anything out there that would prevent us 17 doing something that might be allowed under

18 the test? 19 And that's what I want to get out 20 of this meeting. It will be in my public

21 record. 22 MR. BROOKMAN: Okay, okay. Do you

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 29 1 wish to comment, Charles? Charles Llenza. 2 MR. LLENZA: Charles Llenza, 3 Department of Energy. 4 I think the best thing to do would 5 be to go through our presentation today, and 6 as we get to the different steps, there will

7 be a section that we discuss our results and 8 the analysis of how we got to those results, 9 and that would be a good opportunity at that 10 point to get into more detail. 11 MR. BROOKMAN: And, of course, the 12 Department would welcome your questions and 13 specific follow-on to make sure you understand 14 that methodology.

15 Trent.

16 MR. ROTH: Trent Roth from Dixie

17 Narco.

18 I would contradict that a little 19 bit. We'll talk about that at the appropriate 20 time, but we feel that the standards actually, 21 when we started doing the math worked out to

22 be correct in the case where we looked at

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 30 1 stack units. In fact, the change from cubic 2 capacity, from can capacity to cubic capacity, 3 when we look at a stack unit compared to a 4 glass front, actually when we do the 5 mathematical equations, we'd come out to the 6 exact threshold on a comparable unit. 7 So we'll be able to explain why we 8 think it is correct, and why we would disagree

9 with that.

10 MR. BROOKMAN: I see. So Class A 11 and B work for you as described. 12 MR. ROTH: It appears that it kind 13 of did what I thought was the original piece 14 of trying to set up to one that has similar 15 parameters. Yes, it does work for us. We'll 16 talk about it at the appropriate time. 17 MR. BROOKMAN: Great. Okay. 18 We'll have significant, detailed presentation

19 on these matters. 20 Other summary remarks here at the 21 outset? Andrew, Andrew deLaski. 22 MR. deLASKI: A couple of remarks.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 31 1 Is this on? Do you push the button there? 2 MR. BROOKMAN: No, it's on. 3 MR. deLASKI: In general, we want 4 to support the proposal. We think it's a 5 solid proposal by the Department for new 6 standards for vending machines. 7 For Class A machines, the 8 Department had proposed standards that are the 9 maximum level that's cost effective, and I 10 think that's a good policy. It's a policy 11 that we have long advocated for and rulemaking 12 that the Department should focus as the 13 statute requires on setting the standard which 14 maximizes energy efficiency, energy savings,

15 and is cost effective. 16 Sometimes in the past the 17 Department has gravitated towards setting

18 standards which maximize economic benefits 19 focused on consumers, rather than maximizing 20 cost effective energy savings, and the 21 distinction in those two points is important, 22 and over the 25 or so rulemakings that will be

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 32 1 completed in the next two years has the 2 potential if this stands as policy to be a 3 significant departure for the Department and 4 one that will result in very large energy 5 savings not just in this rulemaking, but over 6 the many rulemakings that are underway right

7 now. 8 With respect to Class B machines, 9 TSL-3 and TSL-4 seem to have very similar 10 results, economic results. The Department had 11 proposed TSL-3. The difference in energy 12 savings also is pretty small. 13 That said, we would tend to 14 suggest that if the economic impacts are about 15 the same, given uncertainty in the analysis, I 16 think we'd have to say that they are about the 17 same; that the Department should set the 18 stronger standard and that TSL-4 should be 19 given additional consideration for the Class B 20 machines, given the uncertainty in the 21 analysis and the likelihood that the economic 22 impacts are really about the same.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 33 1 A key question that we have that 2 hopefully will be dealt with later today I 3 think relates to point that the two 4 manufacturers commented on earlier. My 5 understanding is that the Class A machines, 6 much of the savings come from the application 7 of LED lighting in that equipment, and that 8 the standard proposed for Class B machines 9 does not include, does not imply, is not based 10 on design options that assume LED lighting. 11 Therefore, the large difference in energy and 12 relative improvement, one set of machines 13 looking at a 30 or 40 percent more improvement 14 relative to the best case, the other about 14 15 percent. 16 It doesn't work, the current 17 market situation where glass front machines 18 now would become the more efficient option in 19 the marketplace. 20 We're interested in exploring why

21 TSL-5 for the Class B machines and 22 understanding better why the cost

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 34 1 effectiveness falls off a cliff. That is that 2 DOE has assumed dramatically larger increases 3 in lighting costs for TSL-5 machines relative

4 to -- for the solid front machines relative to 5 the glass front machines and much smaller 6 savings.

7 And the result is that we have 8 standards that would necessarily be applying 9 to one type of machine but not the other. 10 Understanding that is something I hope I can 11 come out of today, why the difference. 12 I want to highlight, and just to 13 comment briefly on the issue of significant 14 savings. The issue of significant savings was 15 resolved in the 1980s in NRDC v. Harrington. 16 This standard clearly addresses as proposed 17 clearly a threshold of significant savings. 18 It's not the biggest energy conservation 19 standard the Department will ever do, but when 20 you add up all the pebbles you get some rocks, 21 and that's important to keep in mind as we 22 address each of these energy conservation

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 35 1 standards. 2 Four quick comments that are 3 cross-cutting that I hope will come up today. 4 If not, I hope we can address them at the end 5 or at some point during the day. One is 6 multi-part standards. DOE has decided that it 7 does not have the authority to set standards 8 for more than one component. We argued early 9 in this rulemaking that DOE should consider 10 control strategies in addition to setting up 11 performance standards. The Department says we 12 don't have the authority. 13 We think issue, what's come up in 14 rulemaking after rulemaking, we think it's 15 right to be revisited under this new

16 administration. The Clinton administration17 determined it did have authority for multi18 part standards. The Bush folks under 19 President Bush, there was a determination that 20 that authority wasn't there. It's time to 21 revisit again does DOE have the authority to 22 set multi-part standards that would enable

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 36 1 things that require smart controls in vending

2 machines.

3 I understand it's too late in this 4 rulemaking. August 8th is right around the 5 corner. It's not going to be considered in 6 this rulemaking, but I think the policy needs

7 to be revisited. 8 Test method, DOE screened out 9 energy saving technologies early in this 10 rulemaking on determining that variable speed 11 technology would not be -- the methods would 12 not be captured by the test method, and this 13 is a real shame. Significant energy savings 14 are not considered in the rulemaking because 15 of this problem in the test method because it 16 doesn't grasp those technologies. 17 This brings into light or 18 highlights the need for the Department to get 19 moving on revising and updating test methods 20 for this technology, but also for other 21 technologies where control strategies aren't 22 being reflected in the test method. Real

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 37 1 savings are being left on the table. 2 Carbon valuation, DOE has 3 indicated it's reevaluating its approach on 4 carbon valuation. We think this is important. 5 We welcome the Department's reevaluation of

6 this issue.

7 I would note that it's about time 8 and something should be done with all due 9 speed. Looking at the maximum level of carbon10 valuation in this rulemaking, it's about one11 third of the maximum NPV calculation, consumer

12 NPV calculation. It's also five to six times 13 the estimate of manufacturer impacts, and this

14 is an estimate that we think is still lower

15 than it should be based on the literature.

16 The final issue is one that's been 17 nagging at me for several years now at the 18 Department where we consider -- which is the 19 discount of the physical values. The 20 Department continues to apply financial 21 discount rates to physical values like quads 22 of energy, and it in my view is an

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 38 1 inappropriate application of financial tools,

2 financial evaluation tools to discount the 3 value of energy savings and pollution

4 reductions over time. 5 It was an approach that was 6 applied starting a couple of years ago, and I

7 think it should be discontinued. 8 MR. BROOKMAN: Thank you, Andy. 9 So other summary remarks here at 10 the outset before we get into the more 11 detailed presentation? 12 (No response.) 13 MR. BROOKMAN: Okay. So before we 14 then launch into the actual presentations -- 15 go ahead, Aris -- there are a few people that 16 joined us and missed the introductions at the 17 outset. Could you state your name and 18 organizational affiliation? 19 MR. BURT: Lane Burt, Natural

20 Resources Defense Council. 21 MR. BROOKMAN: Thank you, Lane. 22 And would you introduce yourself,

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 39 1 please? 2 MR. CHASSEROT: Yes, Marc 3 Chasserot, Managing Director, shecco. 4 MR. BROOKMAN: Thank you. 5 Anybody else that we missed? 6 PARTICIPANT: (Speaking from an 7 unmiked location.) 8 MR. BROOKMAN: Good, thank you. 9 Glad you could join us. 10 Oh, yes.

11 MR. FRIEDRICHS: Mark Friedrichs. 12 I'm with the Policy Office at DOE. 13 MR. BROOKMAN: Thank you, Mark. 14 Okay. So all of you, I believe, 15 have a copy of the slides that are going to be 16 projected up on the screen, and so let's turn

17 it over to Aris. 18 MR. MARANTAN: Thank you, Doug.

19 Aris Marantan. 20 While DOE requests comments and 21 feedback on the proposed standards in this 22 Notice of Proposed Rulemaking, DOE also

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 40 1 requests feedback and input from any 2 stakeholders on the methodology and the 3 assumptions that's in the data that's used in 4 the analysis itself. 5 So everything that's contained in 6 the Notice of Proposed Rulemaking in the 7 Federal Register is subject to that request

8 for comment. 9 However, DOE specifically requests 10 comment on a couple of specific issues, and

11 these are listed on the next two slides. 12 Slide 9 starts with industry NPV. DOE is 13 requesting specific comments on the estimated 14 decline in industry net present value at TSL-6 15 and what impacts this could have on industry 16 parties, including small businesses.

17 This is summarized in Tables 512 18 through 515 in Section V(b)(2) of the notice.

19 The second one is the standards 20 equations. DOE developed a method to develop 21 a standard equation based on the analysis. 22 This is contained in Table B-3 of Section V(a)

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 41 1 of the notice. 2 The third one is industry impacts 3 as a whole. This is Section V(b)(2) in the

4 notice. 5 And before we get to the next 6 slide, we will be coming back to these 7 specifically later on in the day when we get 8 to that portion of the presentation. So we'll

9 come back and address these in turn.

10 Slide 10 has the first three

11 bullets that deal with small businesses in 12 particular. This is the impact on small 13 businesses, how small businesses will be 14 affected due to the new standards; compliance 15 costs for the small businesses; and any

16 alternatives DOE should consider in 17 establishing this standard.

18 These are contained in Section 19 VI(b) of the notice, and the last one is the 20 standard levels selected themselves, whether 21 the energy savings and related benefits of 22 TSL-6 outweigh the costs. That's specifically

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 42 1 for Class A, and that's contained in Section 2 V(c) of the notice. 3 So, again, we'll come back to all 4 of these specifically during the day. 5 Okay. The next section of the 6 presentation deals with the rulemaking 7 analyses. You can see here that the top set 8 of chevrons describe our rulemaking process. 9 We start off with the framework document, and 10 I believe we had our public meeting for that 11 framework document about two years ago. 12 The ANOPR, or the Advanced Notice 13 of Proposed Rulemaking, laid out the 14 analytical tools that DOE would be using in 15 the rulemaking. We held a public meeting for 16 the ANOPR about a year and a day ago. It was 17 June 16th, as Graham pointed out to me 18 earlier, last year, and today we're at the 19 NOPR stage. This is the Notice of Proposed 20 Rulemaking where DOE is actually proposing a

21 standard. 22 And we'll start off with a summary

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 43 1 of the analyses that are part of the NOPR. 2 The first part is the revision of the ANOPR 3 analyses, and we will go through the rest of 4 them later today. 5 But as part of the first step, the 6 revision of the ANOPR analyses, we conduct an 7 engineering analysis, a life cycle cost and 8 payback period analysis and a national impact 9 analysis. So to present the engineering is

10 Sam Jasinski next. 11 MR. JASINSKI: Thank you, Aris. 12 As he said, my name is Sam 13 Jasinski from Navigant Consulting, and I'm 14 here to discuss the engineering analysis that 15 the Department of Energy did for beverage 16 vending machines. 17 First, the main purpose of the 18 engineering analysis is to characterize the 19 cost to manufacturers of producing higher 20 efficiency equipment, and this is typically in 21 the form of cost efficiency curves for each 22 equipment class.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 44 1 Another goal of the engineering 2 analysis is to evaluate design options. These 3 are technologies that have the potential to 4 when they're implemented in the vending 5 machines to increase and improve their energy 6 efficiency. 7 Lastly, when necessary, the 8 Department conducts as part of the engineering 9 analysis sensitivity analyses, particular for 10 vending machines. There was a sensitivity 11 analysis done on material prices because 12 variation in material prices could have 13 impacts on the rulemaking. 14 Leading up to the engineering 15 analysis and also encompassing the engineering 16 analysis is a market and technology 17 assessment. As part of the market and 18 technology assessment, the goal of the market 19 assessment is to develop a qualitative and 20 quantitative characterization of the BVM 21 industry. The main goal of the technology 22 assessment is to develop a preliminary list of

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 45 1 technologies that could increase the 2 efficiency of vending machines.

3 The details of this market and 4 technology assessment, how it was conducted, 5 and the findings can be found in Chapter 3 of 6 the TSD, but one of the major outcomes of the 7 market and technology assessment is the 8 Department deciding on equipment classes, and 9 this is just how the Department deems it 10 necessary to classify the beverage vending 11 machine equipment available.

12 The DOE decided that the 13 classification would be into two separate 14 equipment classes, Class A and Class B. Class 15 A equipment, in the decision to classify in 16 these rulemakings, it's usually determined by 17 physical characteristics that affect energy 18 consumption. In this case it was based 19 largely on refrigeration method, certain 20 design features, and vending mechanisms. 21 So for Class A equipment, these 22 are fully cooled vending machines, and they

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 46 1 typically use a shelf style storage and 2 vending system, and they also typically have a 3 glass transparent front.

4 Class B machines are treated as 5 anything that can't be classified as a Class A 6 machine in our analyses, and these machines 7 are typically solid or closed front machines 8 that use a stacked storage system or vending 9 method, and they are zone cooled machines.

10 As I mentioned earlier in the 11 technology assessment, a preliminary list of 12 energy saving technologies is developed, and 13 then after the market and technology 14 assessment, there's a subsequent analysis 15 that's part of the engineering analysis, and 16 there's a screening analysis in which the DOE

17 uses certain criteria to screen out 18 technologies that are either not 19 technologically feasible, not practical to 20 manufacture, install or service, have adverse 21 effects on utility to the consumer, or have 22 adverse effects on healthy and safety.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 47 1 And after the screening analysis, 2 certain technologies are eliminated, and what 3 we have left are the design options, and the 4 Department of Energy used a design option 5 approach for this particular engineering 6 analysis in which we gathered data on the cost 7 efficiency of these design options for 8 manufacturers or components and flyers and 9 used a computer simulation to determine their 10 effect on the efficiency of the vending 11 machine equipment, and by using the design 12 option approach, the outcomes were six cost 13 efficiency curves, one for each of three 14 representative sizes. A size here, the metric 15 uses refrigerator volume or cubic volume as 16 mentioned earlier for each equipment class. 17 So the results of the engineering 18 analysis can be found in Chapter 5, but it's 19 important to realize that the results of the 20 engineering analysis are used as inputs for 21 downstream analyses, such as the LCC, which is 22 the life cycle cost analysis later on.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 48 1 To wrap up, I'd just like to go 2 over a few of the major changes that have been 3 made sine the ANOPR, since it has been a 4 while. Mainly throughout the rulemaking 5 process the Department of Energy continues to 6 look for information with regard to the market 7 and technology assessment, and since the ANOPR 8 the Department has found information that

9 influenced us to increase the external

10 dimensions for both Class A and Class B 11 equipment, and those increases have subsequent 12 effects on things such as wall area, the size 13 of the glass front. The details of that can 14 be found in Chapter 5 of the TSD. 15 The second major change has been 16 to LED energy consumption and pricing, as well 17 as configurations for Class B. Configuration 18 for Class A remain the same, and this is due 19 mainly to the fact that LEDs are a rapidly 20 developing technology. So new information is 21 constantly becoming available, and details of 22 those changes and explanations of those

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 49 1 changes can also be found in Chapter 5 of the

2 TSD. 3 So here's back to the snapshot of 4 the big picture, and I think the next analysis 5 that we're going to discuss is the energy use

6 and characterization.

7 MR. BROOKMAN: In a moment. Let's 8 just pause for a moment. Any questions on the 9 engineering analysis, in particular, what Sam 10 just said about the changes that were made 11 based on the ongoing analysis? 12 Yes, please, Amanda.

13 MS. STEVENS: Amanda Stevens. I'm

14 with PG&E. 15 So I had a question. I know that 16 LED prices were updated based on the 17 commercial refrigeration equipment rulemaking. 18 So for the Class B equipment, I see the price 19 for a fixture goes from about $50 in 2007 to 20 $135 in 2008. Could you talk a little bit 21 about why that pricing is --. 22 MR. JASINSKI: Sure. Class B,

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 50 1 LEDs for Class B equipment, like you said, 2 were based on commercial refrigeration 3 equipment. Since the ANOPR of the beverage 4 vending machine rulemaking, a final rule has 5 been published for commercial refrigeration 6 equipment. So information between now and 7 then for vending machines has been updated to 8 reflect that because it's originally based on 9 commercial refrigeration equipment. 10 Specifically for Class B, we found 11 based on manufacturing and stakeholder comment 12 that we were underestimating the number of 13 LEDs in closed front specifically that were 14 necessary to maintain a certain standard of 15 utility in terms of back lighting signage.

16 So the cost increase is reflective 17 of we are now putting more LED fixtures in to 18 replace the fluorescent system as had been

19 before. 20 MS. STEVENS: Right. 21 MR. JASINSKI: So originally it

22 was a one-to-one ratio. If there was a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 51 1 fluorescent fixture, we replaced it with one

2 LED fixture. Now that number is around one 3 and a half. So for every fluorescent fixture 4 in order to implement an LED fixture, we 5 implement one and a half times the LED

6 fixtures. 7 MS. STEVENS: I guess my question 8 was more the per fixture cost. I realize 9 there's a 1.5 differential, but per fixture. 10 MR. JASINSKI: If you're pulling 11 those numbers from that table, the one and a 12 half is implemented before that table. So 13 that is actually one and a half fixtures. 14 MS. STEVENS: Okay. I can follow 15 that maybe off-line. 16 MR. JASINSKI: Yeah, we can 17 discuss it later and I can show you the 18 spreadsheets.

19 MS. STEVENS: Sure. 20 MR. BROOKMAN: Yes, please, Nina. 21 MS. TARLEY: Nina Tarley, Pepsi

22 Co.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 52 1 I would just like to state for the 2 record that the use of LED lights in glass 3 front vendors is covered by intellectual 4 property. Coca-Cola owns the patent. So 5 we're precluded from using it. 6 MR. BROOKMAN: Thank you. 7 Okay. Other questions about this, 8 the content in engineering analysis, 9 particularly about the changes from the ANOPR

10 now to the NOPR? 11 (No response.) 12 MR. BROOKMAN: Okay. 13 MR. JASINSKI: Thank you. 14 MR. BROOKMAN: Thank you. 15 (Pause in proceedings.) 16 MR. SOMASUNDARAM: Sorry about the 17 confusion. Sriram Somasundaram, Pacific 18 Northwest National Laboratory.

19 I will talk about the first bullet

20 and then hand over to Mike Scott. 21 The energy use characterization 22 step of the analysis, this again was done as

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 53 1 part of the ANOPR, and then revised, updated, 2 subject to the engineering analysis changes to 3 the configuration of the two types of beverage 4 vending machines, Class A and Class B, that 5 Sam just described. 6 So we re-developed the energy 7 consumption numbers for each of the two 8 classes of beverage vending machines, and then 9 we fed that energy consumption figures for 10 both types of machines installed indoors and 11 outdoors to the life cycle cost analysis, and 12 before we get to the life cycle cost analysis, 13 we have to re-develop the mark-ups for the 14 price of the equipment. 15 Mike, do you want to describe that 16 or do you want me to continue? 17 MR. SCOTT: Why don't you go 18 through all of the purpose slides and then 19 I'll come up and do the details. 20 MR. SOMASUNDARAM: Okay. As part 21 of the ANOPR analysis, we had assumed three 22 distribution channels for the beverage vending

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 54 1 machines. The percentages of shipments 2 through each of the channels were 68 percent, 3 27 percent, and five percent.

4 We heard comments from both 5 manufacturers and users of equipment during 6 the ANOPR public meeting that those 7 percentages need to be updated to 85 percent 8 through Channel 1, which is the manufacturer 9 direct to bottlers; and ten percent through 10 Channel 2; and five percent through Channel 3. 11 So once we incorporated those 12 percentages through the distribution channels, 13 we came up with new figures for the markups, 14 and the percentage numbers that I just

15 described are described on Slide No. 15. 16 So like I said, these numbers were

17 modified from the ANOPR based on comments at 18 the meeting. So putting in these new 19 percentages of shipments through the three 20 channels, we came up with the overall, sort of 21 the second bullet there, outputs. So the 22 overall weighted average baseline markup for

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 55 1 baseline equipment turned out to be 1.144 for 2 the ANOPR analysis. That compares with 1.226

3 in the ANOPR. 4 And the simple explanation of this 5 change is in the fact that the manufacturer 6 direct, if you remember, the manufacturer 7 direct to beverage bottler distributor number 8 went up from 68 to 85, who don't have markups 9 or have a markup of 1.00. So the overall 10 weighted average went down to 1.144. 11 Now, the overage weighted average 12 incremental markups for higher efficiency 13 equipment also went down to 1.102 compared to 14 1.137 in the ANOPR analysis, and both of these 15 markups include sales tax.

16 I believe I will hand it over to

17 Mike Scott now. 18 MR. BROOKMAN: Let's pause there 19 and see if there questions about these changes 20 based on from the ANOPR to the NOPR analyses 21 and the distribution channels. Any comments, 22 questions on these?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 56 1 (No response.) 2 MR. SCOTT: Okay. So from there 3 we proceed to the life cycle cost and payback 4 period analysis, and the purpose of that, of 5 course, is to develop the estimates of the 6 consumer or customer life cycle cost and the 7 notion of how long it takes to pay back an

8 initial investment in more efficient 9 equipment. 10 The life cycle cost equals the 11 customer price plus the sum of annual 12 operating cost discounted to the base year of 13 the analysis, which in this case is 2012. We 14 do the economic evaluation loosely speaking 15 from a customer perspective. We look at the 16 cost to the customer of purchasing the 17 equipment, but the savings are included in the 18 life cycle cost analysis regardless of to whom 19 they may actually go, and that's by reason of 20 EPCA. We take a look at the operational 21 savings, whether or not the actual owner of 22 the machine gets those savings.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 57 1 The analysis was implemented as 2 described back in the ANOPR meeting about a 3 year ago in an Excel spreadsheet with add-on 4 macros to estimate impacts in what we chose to 5 be individual states as a way to look at 6 variation in things like electricity prices, 7 sales taxes, installation costs and so on, to 8 obtain not only a point estimate of the 9 average for the country, but also to see how 10 that life cycle cost varied with location. 11 The description of the analysis

12 can be found in the NOPR itself abbreviated in 13 Section IV, but in addition to that, it is 14 more detailed in Chapter 8 of the TSD, of the 15 technical support document, and the results 16 can be found in Appendix F. 17 The results are expressed 18 generally as life cycle cost savings, that is, 19 the savings against the baseline equipment, 20 and also a payback period is calculated for 21 individuals who like to look at payback 22 periods.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 58 1 Okay. Electricity prices. There 2 has been a fair amount of change since the 3 ANOPR, and the principal change is that last 4 bullet on this slide. I'm not going to read 5 through the whole slide. You have it there in 6 front of you. Generally we followed the same 7 procedures as we were a year ago with the 8 difference that electricity price trends have 9 changed between the AEO 2008 reference case

10 and the AEO 2009 reference case. 11 And we're required to follow that

12 AEO reference case as a central case. That's 13 what the Department does for the default 14 scenario, and then we extrapolate the trend in 15 values from 2020 through 2030 as a forecast to 16 establish prices for the rest of the 30-year 17 forecast period. 18 We use a 30-year forecast period,

19 and there was a comment about that at the 20 ANOPR stage, to maintain a consistent frame of 21 reference for the full life cycle of products 22 of various lengths because the Department

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 59 1 wants to keep some comparability across 2 rulemaking so that they can look at equipment

3 with different lifetimes and see what the 4 energy savings actually are. 5 And there's a fairly detailed 6 write-up in the NOPR about the history of that 7 30-year rulemaking or 30-year time period. 8 Other inputs to the life cycle 9 cost analysis. Installation costs were 10 updated and then held constant with higher 11 efficiency levels based on industry comments.

12 The installation costs are shown in NOPR and

13 documented in the TSD. 14 Discount rates were updated

15 somewhat. We obtain our discount rates from a 16 weighted average cost of capital calculations 17 that we do with data on individual companies

18 from a Website called Damodaran Online. It's 19 from New York University, and the data were 20 updated initially for 2008 at the ANOPR stage 21 and then updated again to 2009 in early this 22 year.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 60 1 The equipment lifetime, there was 2 some comment about that at the ANOPR stage. 3 We had originally, I believe, put in a service 4 life of 14 years average. We were told at the 5 ANOPR stage, no, the average service life is 6 more like ten years with maybe 15 years as 7 kind of a maximum for that, for BVMs. So we

8 made that correction. 9 Repair cost, there was some 10 discussion of repair cost which got also mixed 11 in with maintenance cost at the ANOPR stage.

12 We believe we've sorted all of that out 13 correctly in the NOPR. We have a baseline 14 repair cost that does increase due to higher 15 cost components at more efficient levels. 16 We got some comment that I believe 17 it was our base maintenance cost was too high 18 originally. We corrected that and then did 19 some other corrections, all of which is 20 reported in the NOPR. So there were changes 21 to all of those things.

22 Our results still look about the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 61 1 same as they did before, although if you look 2 back at the ANOPR, the numbers are 3 considerably different due to all of the 4 changes that were made. 5 Generally there's a fairly flat 6 life cycle cost curve as you go to higher and 7 higher installation cost, meaning that the 8 operations costs are basically offsetting the 9 higher cost of investment at each level until 10 you get to Level 7, and then you go up to 11 Level 8 and we can discuss why that is. We'll 12 need some help from Navigant on that, but that 13 Max Tech is truly Max Tech. It's a very 14 efficient machine, but it's also a very 15 expensive one, and so the life cycle costs

16 tend to rise. 17 This is only for one case on the 18 screen here. This is for basically average

19 U.S. conditions for a bottler owned machine in 20 a manufacturing facility. We looked at a 21 whole range of situations, different 22 locations, different ownership and so on. The

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 62 1 detail of all of that can be found in Appendix 2 F of the technical support document if you're 3 looking for it. 4 We did a similar thing on payback, 5 and there, again, you get a pretty flat 6 payback period. All of the payback periods 7 are less than five years, again, until you get

8 to that Level 8 Max Tech. 9 And that's an extra slide, and 10 that's it for LCC right now. I think I 11 probably should stop there and wait for

12 comments. 13 MR. BROOKMAN: Yes. So questions 14 or comments on this series of slides, inputs 15 and these LCC graphics? Andrew.

16 MR. deLASKI: I'm not sure where 17 this comes in, where this will get discussed, 18 and maybe this is the right time, maybe not.

19 So let me know. 20 In my opening remarks I brought up

21 this issue or this concern about for the Class 22 B machines, the cost really falls off a cliff,

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 63 1 the TSL-4 and TSL-5. TSL-4 is cost effective, 2 sort of that chart you showed for Class B with

3 the elbow-like. 4 MR. SCOTT: Much earlier, yeah. 5 MR. deLASKI: Can you describe 6 what's going on? What is the factor that's 7 driving that up? 8 MR. SCOTT: I'd prefer to let 9 Navigant handle that one for sure. They're 10 the technological guys on this one.

11 MR. JASINSKI: Sam Jasinski. 12 MR. BROOKMAN: Yes, Sam. Go

13 ahead. 14 MR. JASINSKI: Yeah, that again 15 has to do with the LED pricing increase, 16 again, because of those changes that I 17 mentioned earlier about having to use more LED 18 fixtures in Class B as opposed to the ANOPR. 19 The cost effectiveness of that design option, 20 LED lighting design option increases and 21 that's where you see that big jump at TSL-5

22 for Class B machines.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 64 1 MR. deLASKI: So looking at 2 Appendix B in the TSD, it looks like you 3 assumed a $110 increase for LEDs in a glass 4 front machine and a $420 increase in solid 5 front is the way I just calculated here. 6 That strikes me as a huge 7 differential, more than one and a half times. 8 Is it that much more light that is needed?

9 MR. JASINSKI: Based on some of

10 the comments that we've received from 11 manufacturers and stakeholders, the difference 12 in the light, the amount of light that is

13 sufficient for each machine is that drastic. 14 MR. BROOKMAN: Yes, please.

15 Trent.

16 MR. ROTH: Trent from Dixie-Narco. 17 We have four lights, as many as

18 four in the closed front machine or our Class 19 B machine and light up the signage. There's 20 no space between the door and the inner door 21 liner, which you have space to do. So you 22 don't get a lot of spreading of the light. So

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 65 1 we do use significantly more light bulbs in a 2 closed front machine than we do in a glass

3 front machine. 4 So that's where they're getting 5 that, being able to shine a light through and 6 drive the branding awareness that you have 7 through a plastic panel that you sign the 8 light through takes more light. So that's why 9 you have that the way it is. 10 LEDs, we'll talk about LEDs later, 11 but we don't see significant energy savings 12 today with LEDs at all in glass fronts. We 13 use more energy today. We use about ten 14 percent more energy when we use LEDs versus 15 fluorescent lighting today in the box front 16 because it's still evolving. 17 Now, we have not explored 18 refractors and different ways, reflectors and 19 other ways to improve that lightability. We 20 have not gone through that exercise, and I

21 would think that would drive that. We haven't

22 done that.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 66 1 But today the costs for LEDs and 2 LEDs or focused light is difficult, especially 3 when you get in a very tight environment with

4 an LED in a closed front. I don't think 5 you're going to see significant savings.

6 But it will evolve and it will be 7 there. So that's why you see that today the 8 way it is.

9 MR. BROOKMAN: Steven Cousins. 10 MR. COUSINS: Yeah, Doug. I was 11 going to agree with what Trent had said and 12 elaborate even further. Lighting with a Class 13 A versus Class B machine is done differently 14 because the intent and purpose is different. 15 With Class A machines, the lighting is really 16 directed internally so that the product is

17 what's illuminated so that the consumer can

18 make better choices. 19 On the Class B machine, the 20 lighting is directed externally because we're 21 trying to capture customers who may be long 22 distances away, and we're really doing

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 67 1 trademark merchandising with a Class B

2 machine.

3 We also have customers. Our 4 primary account customers of Class B machines 5 want to use our merchandising lighting for 6 other purposes, and we're cognizant of that. 7 So actually when Navigant said a one and a

8 half factor in terms of illumination -- and we

9 do have standards around that -- I would 10 expect that it would be more like two and a 11 half just as an intuitive. I don't have --

12 MR. BROOKMAN: Internal standards

13 or --

14 MR. COUSINS: Internal standards. 15 Pepsi may have internal standards as well.

16 MR. BROOKMAN: You wish to achieve

17 a certain level of illumination and 18 brightness, right? And that's what you're 19 referencing. 20 MR. COUSINS: That's right. 21 MR. BROOKMAN: Okay. 22 MR. COUSINS: So I guess what I'm

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 68 1 echoing here is that the purpose of the 2 lighting is different between Class A and 3 Class B, and yes, there is significantly more 4 lighting with a solid door, opaque landscaped 5 sign front than there would be with a glass

6 front machine. 7 MR. BROOKMAN: Andrew, I'll return 8 to you, but Glen wishes to speak also. 9 MR. SELFRIDGE: Well, while we're 10 temporarily on this subject, I would also

11 reinforce the difference between Class A and 12 Class B. I would also say that our Type A 13 machine also uses what Navigant calls Super 14 T8s, which actually runs 4-foot tubes on 22 15 watts a piece. 16 So is it possible that your 17 analysis was based on the more conventional 32 18 watt lamp and that you are believing that 19 you're capturing a lot more energy savings 20 than reality would provide when you move in 21 that direction? Because we're already 22 substantially below what you might have used

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 69 1 for your analysis. 2 MR. BROOKMAN: I see. Okay. 3 MR. SELFRIDGE: So the advantage

4 isn't as clear. 5 MR. BROOKMAN: Okay. Edwin, do 6 you wish to follow on? No. 7 MR. HORNQUIST: No, thanks. 8 MR. BROOKMAN: Thank you.

9 So additional comments on this 10 series of slides and this subject matter

11 before we move on? 12 MR. SCOTT: Okay. Seeing none. 13 MR. BROOKMAN: Thank you. 14 MR. SCOTT: All right. Next what 15 I'm going to talk about is the shipments 16 analysis that goes into the national impact 17 analysis. Then I'll stop for a second and let

18 Sriram talk after that about how the trial 19 standard levels were chosen, and then I'll 20 come back up and talk about the evaluation of

21 those. 22 Okay. So the purpose of the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 70 1 shipments analysis is to obviously estimate 2 the number of BVMs that we expect to be 3 shipped over time, which has direct bearing on 4 the national impact analysis because over time 5 how many machines out there are being replaced

6 and with what matters. 7 And then so what we're doing there 8 is doing a forecast of shipments, and it was 9 originally derived from historical shipments, 10 and we still look at those; the replacement 11 requirements based on equipment lifetimes; and 12 then the estimate of equipment mix of baseline 13 and higher efficiency technologies in the 14 stock as the older stock is gradually 15 replaced. 16 And actually, Bob, you did a nice 17 job this morning of kind of summarizing some

18 of that. 19 MR. McGARRAH: Sorry about that. 20 MR. SCOTT: No, that's fine. 21 So what we did at the ANOPR stage

22 was look at a bunch of material from

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 71 1 consulting companies with reports, some 2 industry periodicals, and we had come up with 3 a small, but -- well, first of all, there had 4 been something of a collapse in the shipments 5 that Bob alluded to earlier from, say, the 6 late 1990s into the early 2000 period, and we 7 acknowledge that, and then we said at the 8 ANOPR period, yeah, but we expect that to turn 9 around and we should have some growth in new 10 shipments. 11 Well, we were told quite 12 forcefully at the ANOPR stage that, no, 13 essentially all the shipments now are going to 14 be for replacement and, furthermore, they're 15 going to be at a fairly low level.

16 And we were able to take what data 17 we had together with the comments, and we 18 arrived at a constant number approximately of 19 replacements only at about 90,000 units per 20 year, and the details of that are in the 21 shipments chapter which is, I believe, Chapter

22 10. Let me look at that for a moment here.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 72 1 Yeah, Chapter 10 of the technical 2 support document, and so then the next 3 question was, okay, you have that many being 4 shipped. What's their distribution across

5 size classes and Class A and Class B machines? 6 We had been led to believe by some

7 of the material that we reviewed before the 8 ANOPR stage that Class B equipment was still 9 the majority of equipment being shipped. 10 Again, at the ANOPR stage we were told no, 11 that somewhere between about 50 and 60 percent 12 of the shipments are now actually Class A 13 machines. That left 45 percent for Class B. 14 Again, in response to comments at 15 the ANOPR stage, we had a size distribution at 16 that point of 33 percent large, 33 percent 17 medium size, and 33 percent small machines. 18 We were told, no, small machines have never 19 been all that popular, and now there are very, 20 very few of them shipped, verging on zero 21 percent.

22 There was a little bit of back### (202) 234-4433 Neal R. Gross & Co., Inc. Page 73 1 and-forth about the question of the size 2 distribution between medium and large 3 machines. There were about four pieces of 4 different data in that testimony that led us 5 to believe that the median sized equipment was 6 probably about 75 percent of the shipments. 7 Twenty-five percent then would have been 8 large. 9 And so the revised shipments 10 forecast is as you see on the slide, about 11 90,000 a year, reaching out to 2042 a total of 12 about 2.79 million units shipped over that 13 period. 14 That's not enough to sustain the

15 what we believe to be the current stock of

16 around two and a half million units. So what 17 happens over time is that the stock level 18 declines to about a million units, a little 19 less than that by 2020 and then stabilizes 20 through the end of the time period, 2042. 21 And I'll stop right there on the 22 shipments analysis.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 74 1 MR. BROOKMAN: Questions, comments 2 on this analysis? 3 MR. SCOTT: Mostly we're looking 4 for confirmation at this point of did we get 5 it right, approximately at least.

6 MR. BROOKMAN: Glen. 7 MR. SELFRIDGE: You know, for 8 purposes of discussion it's probably all 9 right, but the industry is in further 10 collapse. 11 MR. BROOKMAN: Do you wish to say

12 more about that? 13 MR. SELFRIDGE: Not to go on, but 14 I don't know where it goes from here. What we 15 said last year is kind of reasonable. Now 16 going forward it may be not as reasonable. 17 MR. BROOKMAN: Mike accurately 18 reflected the information that was given to

19 him. You think it could be worse.

20 MR. SELFRIDGE: I believe that 21 just because of the current financial

22 situation and all that it is worse than was

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 75 1 discussed.

2 MR. BROOKMAN: You don't see the 3 decline -- you see the decline to go beyond

4 one million units?

5 MR. SELFRIDGE: I don't know. 6 This thing is for discussion. These may be 7 okay, but they may be totally under estimated. 8 MR. BROOKMAN: Trent, Steve?

9 Trent. 10 MR. ROTH: This is Trent Roth,

11 Dixie-Narco. 12 I would, I guess, have to look to 13 Coke and Pepsi for direction, but going from 14 where we are today on a recurring basis, I 15 would say around three million installed base 16 is currently out there. It might be a little 17 bit lower, but it's around there. Down to a 18 million installed base would be very low. I 19 mean, we lose a lot of potential market here,

20 but we're not the ones that make the 21 purchases. We make the machines. So I don't 22 know the direction, but that would be a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 76 1 substantial loss of opportunity to be able to 2 sell products through this channel. So I 3 don't know that it would get that low. 4 I think it's going to go lower 5 than what we have today probably because 6 manufacturing locations are going out of 7 business or primarily that manufacturing 8 pressure we have with schools and carbonated

9 drinks. I do see a decline in the number of 10 where we are today on an installed basis, but 11 getting to a million is extremely low. 12 And I think the operators, not 13 just Coke and Pepsi, the operators out there 14 that have locations will demand equipment to

15 fulfill those locations. So I don't see it 16 getting to a million. I don't see it getting 17 that low. I just think there's too much 18 market share and too much gain. 19 MR. BROOKMAN: Just to confirm,

20 the time frame was 2020 to a million 21 MR. ROTH: Yeah, but that's still 22 production in ten years.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 77 1 MR. BROOKMAN: Ten years. Steve. 2 MR. COUSINS: I would say it's 3 very uncertain to project that the population 4 of installed base of vending machines is going

5 to be stable from where it is now. That's not 6 going to be the case. 7 Yeah, there continues to be a 8 decline of installed base of beverage vending 9 machines, and there will be, and even in our 10 system we're not really sure where that's 11 going. 12 You know, Bob alluded to the fact

13 that if we continue on the trend that we are 14 on, 15, 20 years from now there may not be -- 15 you know, full service vending may not exist 16 anymore. That's just based on the trend.

17 We believe that there will be 18 continued reduction, but it will stabilize 19 somewhere, but where it is not going to 20 stabilize at the point of where we are now.

21 There will be continued reduction.

22 MR. BROOKMAN: Bob McGarrah.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 78 1 MR. McGARRAH: I concur with 2 everybody, but I'd like to make an 3 observation. My 45 years in the vending 4 industry allows me access to presidents of 5 most of these vending companies. They help 6 out an old guy every once in a while, and in 7 recent conversations with those folks, they 8 tell me that the industry current number of 9 manufacturers could not stay in business if 10 all they're producing is under 100,000 11 machines a year. That just is not a scale 12 that they can operate on. 13 So there's going to be further 14 reduction. We've had plant closings. We've15 had tremendous consolidation. Crane/Dixie16 Narco is consolidating to the South for 17 economic reasons obviously. Royal has closed 18 one of their manufacturing operations several 19 years ago and is leasing out part of their 20 current manufacturing operation. Vendo, the 21 last third of suppliers, moved into a little 22 plant down in Texas. I don't know what

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 79 1 they're doing now. I haven't talked to those 2 folks recently. So this consolidation if it's 3 going to be below the 100,000 level is very, 4 very telling for the industry. It's going to 5 have a tremendous effect on the availability 6 of choice for the Cokes and Pepsis of the 7 world. They'll be narrowed down to possibly 8 one major and one minor source of equipment. 9 I just don't think that's good, 10 but that's up to them. They do the buying. 11 MR. BROOKMAN: Okay. Thank you. 12 Yes, Trent. 13 MR. ROTH: Trent Roth, again,

14 Dixie-Narco.

15 Two comments I would make. Is the 16 majority of the machines in the estimate -- 17 and I don't have the exact numbers; we've done 18 some work on this -- but the majority of the 19 machines, actually the majority, I'm talking 20 about 80, 85 percent of the units that are out 21 there today are approaching ten years old. I 22 mean because of the huge influx in numbers

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 80 1 that took place in 1998 and 2000, either those 2 are going to go away because they're getting 3 near the end of their life cycle, also with 4 product changes that have taken place and the 5 changes from stacked units or the Class B 6 units, because of the products that go inside 7 them; they're either going to have to be 8 replaced by Coke or Pepsi or Coke or Pepsi 9 slowly are starting to evolve out of the 10 business. Full operators still have those 11 qualifications to drive those as operators. I

12 don't know if there will be a switch in the 13 business because I can't predict the future, 14 but are full line operators going to allow

15 those locations to dwindle? I don't think so 16 either. I mean, they are certainly going to 17 try to keep the place locations, but again, a 18 lot of the equipment purchases need to be off 19 at some point because frankly, those machines

20 will be too old to maintain and not cost 21 effective to maintain in the coming years just 22 because of the aging value that's out there.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 81 1 So I don't believe we're going to 2 see the peaks that we ever did in 1998 or

3 2000. The fact that we did would be bad for 4 the industry because I think that's a lot of 5 what we're paying today the price. I still 6 think a million is too low, and I do think 7 you're going to have to see an influx of new 8 equipment here shortly just because of the 9 aging asset value. 10 MR. BROOKMAN: Thank you.

11 Steven Cousins. 12 MR. COUSINS: I would guarantee

13 that. You have to look at the financial 14 proposition with vending. I mean, the break 15 even point on unit volume case load per year,

16 that continues to fall or that continues to 17 rise rather, and the points of availability 18 continue to rise as well, and beverage 19 companies like Coke and Pepsi, we're 20 constrained with how much we can agree to

21 cost. 22 So the break even point for a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 82 1 vending machine over the past ten years has 2 just continued to climb and climb, and that's 3 not going to change we don't think. 4 So what we've been doing as a 5 system is that we're retiring machines and not 6 replacing them because in some of those 7 occasions those machines were marginally 8 profitable, and that proposition continues to 9 change and has changed dramatically, and Glen 10 made a point around this, you know, given the 11 recessionary times that we've entered into. 12 Now, I'm not saying that the 13 business is going to go away. I don't think 14 it's going to go away, and you made a very 15 good point that the base of the machines is 16 aging, but I guess my key point here is that 17 to assume that the base of machines is going 18 to remain where it is today would be a 19 mistake. I think it is going to continue to 20 fall. We don't know where it is going to go, 21 but it will stabilize, but it will continue to

22 fall.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 83 1 I do agree with you, Trent. It's 2 not going to fall as low as a million

3 machines. It's not. I don't think it will 4 fall as low as two million machines either,

5 but it will continue to fall. 6 MR. BROOKMAN: Yeah, Trent, go

7 ahead. 8 MR. ROTH: I agree with what Steve

9 said. It will continue to fall. I don't 10 think it has stabilized yet. I do think the 11 purchases will eventually have to come up a

12 little in order to maintain that base of two 13 million or one million. I just think one

14 million is too low. I think it needs to be 15 higher than that. 16 MR. SCOTT: Can I inject something

17 here? 18 MR. BROOKMAN: Please, go ahead,

19 Mike. 20 MR. SCOTT: Yeah. Okay. So what 21 I hear is probably won't fall to a million. 22 That's an inevitable consequence of what the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 84 1 stock is right now and what 90,000 a year 2 shipments gets you to. 3 So at some point between 2012 and 4 2020, 90,000 has to go up to some other level

5 to maintain that level of two million. Is

6 that a reasonable number? 7 MR. ROTH: Yes. I mean, correct. 8 You're absolutely correct, and that's why we 9 say have an 80,000 installed base. Eventually 10 it's going to force those purchases just to 11 maintain a level that's 30 percent less than 12 what it is today. 13 MR. SCOTT: Okay. So to be clear, 14 we have to go above 90,000 to get up to 15 stabilize the stock at something over a

16 million. 17 MR. ROTH: At some point to do 18 that, yes. 19 MR. SCOTT: Okay. 20 MR. BROOKMAN: Andrew, let me hit 21 another industry person and I'll come back to 22 you.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 85 1 Go ahead, Bob.

2 MR. McGARRAH: Just a certain 3 dimension to what 100,000 machines means, it 4 means $150 million investment, and Coke and 5 Pepsi could address this better than I could. 6 I haven't been there in ten years. But I 7 talk to the bottlers, and those folks are 8 postponing fleet purchases for trucks and 9 vehicles. They're postponing a lot of things 10 now because of the economic turndown, and the 11 first thing they're going to be doing is 12 replacing those trucks and replacing those 13 business essential pieces, and then he will 14 come in at some point after that and post mix 15 equipment will come in at some point after

16 that. 17 So I don't see even a good 18 economic turnaround getting this vending 19 business jump-started as we used to call it 20 for at least five years, and that is going to 21 have a major impact on the manufacturers. One 22 hundred and fifty million dollars is not chump

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 86 1 change.

2 MR. BROOKMAN: Consistent with 3 your earlier comment, it will get to the point 4 where they wouldn't have the actual capacity 5 to produce at the levels required. 6 MR. McGARRAH: Well, that's the 7 manufacturers, but that's something that could 8 happen, yes.

9 MR. BROOKMAN: Trent. 10 MR. ROTH: This is Trent Roth,

11 Dixie-Narco.

12 We will be able to manufacture at 13 the levels because we're only running one 14 shift today. We have opportunity to increase 15 that as we expand or we need to expand. I 16 mean, that's part of what we do. 17 Today, as Bob has brought up, we 18 are the ones combining facilities from our 19 staff facility down to our cold drink 20 facility. That's part of an acquisition that 21 took place three years ago and claimed 22 purchasing assistance by Dixie-Narco, and

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 87 1 that's part of an evolution that was fully 2 expected to happen. We had to leverage our 3 assets as a company regarding what 4 manufacturing location. 5 So that's what's happening, but 6 we're all working one shift today. We have 7 opportunity to grow.

8 MR. BROOKMAN: Andrew. 9 MR. deLASKI: I just wanted to 10 comment on the shipments issue. It strikes me 11 that dropping from a current stock of three 12 million down to 30 percent in ten years is an 13 awful dramatic shock drop and also is probably

14 not realistic. 15 I also acknowledge that there's a 16 ton of uncertainty around shipments, but if 17 the stock is twice the size of what your 18 estimate is, that's twice the energy savings. 19 So it has impact in terms of the impact of 20 the rulemaking. 21 The other thing I would just 22 comment on is there's a tendency in the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 88 1 analysis to sort of look at what happened 2 recently and just sort of extracted things,

3 and it sounds like to some extent what will 4 happen perhaps is that at one point we were 5 able with what was happening in the late '90s 6 when they had the curves going up, if they 7 were going to keep on going up like that, now

8 there's been a reaction to that and now the 9 curve is going down. So, okay, it's going to 10 keep on going down. 11 Well, in reaction maybe what we 12 have here is a bit of a cycle like this given 13 the aging stock and that, yeah, some of these 14 actually may be delayed because of the 15 economic times, but they're not going to be 16 put off forever. At some point the machine is 17 going to be replaced.

18 MR. BROOKMAN: Nina. 19 MS. TARLEY: I just wanted to make 20 two comments. One, we might have to retire a 21 group of equipment not only because of the 22 age. As Trent said, most of the group is

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 89 1 approaching the life cycle age, but also due 2 to the actual consumption depending on where 3 the DOE mandatory eligibility requirements 4 are. Some of the older equipment will not be 5 able to meet it. So rather than investing the 6 money in upgrading we will have to retire

7 them. 8 And another comment is I really 9 foresee the shifting of business to the Class

10 A versus Class B. 11 MR. BROOKMAN: Okay. 12 MR. SCOTT: May I pursue that a

13 little further?

14 MS. TARLEY: Please. 15 MR. SCOTT: Currently we show that 16 over half are now -- we had numbers 50 percent 17 to 60 percent. There were two different 18 estimates given of current shipments being A 19 Class machines. Going forward, since that's 20 the number we're using going forward, is that 21 approximately correct or do you all want to 22 weigh in and say, "No, no, no, that's

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 90 1 different," or there's a trend in the number 2 or something? 3 MS. TARLEY: I wish I could agree 4 to both. It's very difficult to say. 5 MR. BROOKMAN: Thank you, Nina. 6 Steve Cousins, do you have a 7 crystal ball? 8 MR. COUSINS: No. I would say

9 this. It would be a bad one because where 10 Coca-Cola thought we would be four or five 11 years ago, we're not there, and we felt at one 12 time that we would phase from B Class to A,

13 and now that doesn't seem to be the case. I 14 mean, now I think we're buying more solid

15 front machines. 16 I mean the trend is going up to 17 the solid front. I guess what I'm saying is 18 there is no crystal ball that is really going 19 to tell us, you know, exactly where we're 20 going to go. 21 MR. BROOKMAN: Bob -- no, go 22 ahead. Keep going.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 91 1 MR. COUSINS: I wanted to fall 2 back on this whole thing about the population 3 phase. You know, to have the opinion that 4 just because the machine is there that the 5 business is going to stay, there was a time 6 ten years ago we only had to sell 20 cases for 7 a vending machine to make a profit in a year. 8 You know, now we're talking 100 cases, and it 9 keeps going up. 10 Now, you think about if you can go 11 to a vending machine and buy a 20 ounce 12 package cheaper than you can buy it from the 13 convenience store, and there are more 14 convenience stores and they're selling 15 beverages now every place you can imagine; the 16 point I'm making is this. It's not a matter 17 of -- there's a financial proposition here, 18 and there are things that are driving the 19 profitability model through a vending machine, 20 and to think that that model doesn't change is

21 erroneous. 22 I mean, that's one of the reasons

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 92 1 why the base of equipment is falling. So to 2 say that, oh, we're always going to maintain, 3 you know, a certain population of machines out 4 there, you know, because of the profit picture 5 or the financial model is not going to change,

6 that's a mistake. 7 MR. BROOKMAN: Thank you.

8 Bob McGarrah. 9 MR. McGARRAH: Just to comment, 10 the Pogo comic strip had the saying, "We have 11 met the enemy and they are us," and this 12 project, controlling the energy on the vending 13 machine, started way before the economic 14 crisis, and I would suspect that Coke and 15 Pepsi, in light of some regulation changes 16 coming down the road, may have consciously or 17 unconsciously pulled back their purchases not 18 wanting to be stuck with machines that a ten 19 or better year life that may or may not meet 20 standards in five years.

21 I can't talk to that. I don't 22 work there anymore, but that at one time was a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 93 1 consideration that we would make in doing our 2 purchases. Is there any technology coming, 3 particularly on the fountain side when 4 regulations came in regulating five gallon

5 transfer tanks? 6 So when those things happen, the 7 large companies tend to pull back and say,

8 "Let's see where this settles." 9 How many of us are running out and 10 buying a car today until we see where the 11 electric, hybrid, what is coming? So that 12 could be a conscious or unconscious thing 13 that's happening. 14 So we could have created part of

15 this ourselves. 16 MR. BROOKMAN: Okay. Andrew. 17 MR. deLASKI: Just to follow up on 18 a comment from Pepsi, I thought I heard you 19 say that you thought that the standards might 20 cause you to retire equipment early, and I 21 don't understand that comment just because the 22 standards only apply to new sales. So they

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 94 1 don't affect what you do with your existing

2 stock.

3 You could refurbish the machine. 4 You could put it back into use. That's not 5 going to be affected by standards on new 6 equipment that sold, manufactured. 7 MS. TARLEY: Yeah, that is 8 correct, and let me just comment to your 9 question as well as the last comment. I don't 10 think that -- well, I can't speak for Coke 11 obviously -- but Pepsi, I don't think we 12 consciously or subconsciously decided to hold 13 back due to regulations. However, what does 14 affect very much our decisions to buy new 15 equipment or refurbish current equipment is 16 the various rebate options, and I could talk

17 with PG&E as one of them. 18 Because of right now a lot of 19 states and utility companies are developing in 20 the midst of developing the rebate options, 21 that definitely will affect what we do 22 refurbish or what we do purchase because

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 95 1 everybody knows the energy efficient equipment 2 costs money, and options to buy anything that 3 will make the current equipment more energy 4 efficient also costs a lot of money, and 5 you've already heard a lot of comments about 6 the current economic situation and the payback 7 on the products.

8 MR. BROOKMAN: Please. Use the 9 microphone and say your name for the record. 10 MR. CHASSEROT: My name is Marc

11 Chasserot from shecco. 12 I just had a question regarding 13 shipments. Has anyone looked into the new 14 wave of, you know, vending machines working 15 with hydrocarbons and CO as a refrigerant, 2 16 you know, and what impact that will have on 17 shipments in the future? 18 Because new technologies are 19 coming in the market and there are lots of 20 others working with this around the world as 21 well, and they're coming to the U.S. I don't 22 know if anyone has looked at that.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 96 1 Thank you. 2 MS. TARLEY: Well, Nina Tarley, 3 Pepsi Co. 4 Pepsi did install several CO 2 5 vending machines in Washington. Actually some 6 of them you probably can see across the

7 street. 8 As far as the energy consumption 9 if that's the question, we don't think that 10 CO will save a lot of energy. We don't think 2 11 the hydrocarbons either will save a lot of 12 energy. They are wonderful, new refrigerants. 13 Pepsi Co. is very, very much interested in 14 pursuing those options, but I don't know if 15 that will have any significant effect on the 16 energy consumption. 17 MR. BROOKMAN: Thank you. Thank 18 you.

19 Trent.20 MR. ROTH: Trent Roth, Dixie21 Narco. 22 I agree with what Nina just said.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 97 1 We are experimenting with other refrigerants. 2 We did not see energy efficiency of CO 2 3 anywhere near what we've already accomplished 4 in 134(a), and to kind of argue with what 5 Greenpeace got into last time was the fact 6 that they challenged our carbon footprint 7 because actually it was a big deal and we use 8 a lot less carbon footprint when we can get a 9 134(a).

10 So we know it's out there. We're 11 aware of it. We're not just a U.S. based 12 company. We do stuff globally, and right now 13 it does not seem to be the way to go.

14 What would drive that will be the 15 appliance industry, quite frankly. If you 16 start building, you know, millions of 17 household refrigerators using CO the 2 18 resources from the manufacturers of 19 compressors, then that industry may change, 20 but the vending industry is not large enough 21 to drive that change with CO . Then it would 2 22 be the appliance industry. So right now we

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 98 1 need to wait for that wind to change to really

2 drive efficiencies. 3 MR. BROOKMAN: Marc, follow-on. 4 MR. CHASSEROT: Yeah, just a few 5 points. I mean, I can submit some 6 presentations in time for the deadline, but I 7 have presentations from Coke over the last 8 year or show showing that, for example, CO 2 9 vending machines are much more efficient than 10 current technology. 11 MR. BROOKMAN: Okay. Well, let's

12 hear from Coke.

13 MR. CHASSEROT: But that's not the 14 purpose of this meeting.

15 MR. BROOKMAN: Sure. 16 MR. CHASSEROT: We're not talking 17 about energy efficiencies, but just to 18 highlight that.

19 MR. BROOKMAN: I'm sure the 20 Department would welcome submissions, but

21 let's hear from Coke. Steve Cousins.

22 MR. COUSINS: Nina and Trent are

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 99 1 right. CO , actually you're all right. It 2 2 depends on the conditions by which we're 3 operating with CO . We're operating 2 4 transcritical CO . We don't have evaporators. 2 5 We have gas coolers, and what's happening is 6 that the efficiencies go haywire from our 7 testing somewhere around 82 degrees

8 Fahrenheit. 9 So if the operating environment 10 ambient is higher than 82 degrees Fahrenheit, 11 CO is significantly less efficient than 2 12 134(a). The cooler the ambient, the more

13 efficient it becomes. 14 So operating at what we consider 15 to be 75 degrees Fahrenheit, it can be more 16 efficient. But Trent made a very good point, 17 which is the availability of the pumps that 18 can operate at the right capacity for the 19 efficiencies that we're looking for, and today 20 there is, at least for the North America power 21 grid, there's very small commercial 22 availability, and because of that you don't

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 100 1 have the -- in a practical sense you don't 2 have the efficiency with CO commercially 2 3 available that you have with 133. 4 Theoretically, it can be done, but

5 the commercial base is not there. 6 MR. BROOKMAN: Okay. Yes, go

7 ahead. Marc. 8 MR. CHASSEROT: Well, I can send 9 some information that would maybe disagree to 10 a certain extent with what's just been said, 11 but I mean, we work with different companies 12 in Japan and in Europe as well. The oldest 13 ones like Sanyo and Embraco, I know not 14 European, and Danfoss, and they are basically 15 telling us, "We're just waiting for those 16 orders from Pepsi and Coke." Their technology 17 is ready. 18 But that's maybe not the purpose 19 of this meeting, but just so that you know. 20 MR. BROOKMAN: I'm sure they heard 21 you though.

22 MR. CHASSEROT: And one other

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 101 1 point, can I make one final point? 2 MR. BROOKMAN: Yes, please. 3 MR. CHASSEROT: In Japan, for 4 example, this is a market. This is already 5 commercial this year, the vending machines. 6 They're already selling close to 100,000 units 7 in Japan alone right now. So I mean, this is 8 a technology that's already existing. 9 I know that Japan is slightly 10 different from the U.S., but still it's just 11 for you to know. 12 MR. BROOKMAN: Let me go to Steve 13 first, Nina. Steve Cousins. 14 MR. COUSINS: All of the companies 15 you mentioned don't make CO systems for the 2 16 North America power grid. None of them do. 17 MR. CHASSEROT: I'm sorry. I

18 didn't --

19 MR. COUSINS: None of those 20 companies you mentioned make CO compressors 2 21 for 115 volt, 60 hertz, which is for North 22 Americans. They're building 220/50, 90/50.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 102 1 They're building these for other power grids,

2 not for North America. 3 So what I said a moment ago is 4 theoretically CO can be more efficient in a 2 5 very practical sense. It's not commercial

6 here in North America where we can use it.

7 And as Trent mentioned a moment 8 ago, the commercial proposition is not there 9 yet. If domestic goes into that front, then

10 it becomes available to us on the commercial 11 side, but it's just not commercially there 12 right now. 13 MR. BROOKMAN: Let's go to Nina

14 and then over to Glen. 15 MS. TARLEY: I do agree with my 16 distinguished colleague. One point of

17 clarification I would like to make. 18 In three simple you are correct. 19 CO , depending on the temperature, could 2 20 potentially be slightly more energy efficient, 21 but we're not comparing apples to apples here. 22 I want to make very clear when you develop a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 103 1 new piece of equipment, be the glass front 2 versus back then or your CO machine, you use 2 3 brand new compressor. You use brand new, most 4 efficient motors. The whole system in itself

5 is more efficient. 6 That's why some of the glass from 7 the vendors consume less energy than standard, 8 not because glass front consumes less energy. 9 Because the system is more energy efficient. 10 And the same with CO . We develop 2 11 brand new compressors. We develop brand new 12 systems that allows us the best air flow. It 13 is that way we are able to save some energy on 14 the CO vending machine versus the current R- 2 15 134(a). 16 But it's not basically because CO 2 17 is more energy efficient; because the system 18 itself is more energy efficient. 19 MR. BROOKMAN: Okay. Thank you.

20 Glen. 21 MR. SELFRIDGE: Only one comment 22 in passing. Hydrocarbons were also mentioned.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 104 1 It's the same type of an issue in North 2 America in terms of regulatory. People don't 3 want refrigerators at the moment; it's illegal 4 actually to build them that way by using a 5 hydrocarbon refrigerant. This may change over

6 time. 7 Again, it would be people like the 8 GEs of the world or the . This is not Europe. 9 We have a completely different set of codes, 10 standards, opinions on safety as compared with 11 Europe and the rest of the world. So that is 12 not something we can assume. 13 MR. BROOKMAN: Okay. Thank you. 14 So in a little bit we're going to 15 take a break just so you're knowing that we 16 will do that. This has been a very productive 17 conversation, and I really appreciate 18 everybody speaking up and contributing all of 19 this information, all of this knowledge to the 20 Department. 21 So I'm going to return to the 22 slides, and then we'll see where we stand

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 105 1 after one or two more slides.

2 Mike. 3 MR. SCOTT: Okay. I have one more 4 detail I want to nail down. Sorry about this. 5 That final bullet on Slide 24, we 6 assumed that the side distribution was going 7 to be 75 percent medium, 25 percent large, 8 zero percent small. That's actually a 9 reasonably important assumption for the 10 downstream analyses, the net present value 11 analysis and so on. 12 Did we get it right? 13 MR. BROOKMAN: What do you think? 14 Yeah, Trent. 15 MR. ROTH: Can you define the -- 16 I'm just looking for it -- can you define 17 please what large and small is? 18 MR. SCOTT: I think we can get 19 some help from Sam on that.

20 MR. ROTH: Sure.

21 MR. JASINSKI: So in terms of 22 refrigerated volume for Class A, a small

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 106 1 machine would have 19 cubic feet. Medium

2 would be 31. 3 MR. SCOTT: No, that's from the A

4 number. 5 MR. JASINSKI: Oh, sorry. I'll 6 give you the updated one. Seventeen for 7 small; 22 cubic feet for medium; and 34 cubic 8 feet for a large. That's Class A. 9 Class B would be 17 for a small, 10 22 for a medium, and 26 for a large. I also 11 have can capacities if you'd like those.12 MR. BROOKMAN: So, Sriram, follow13 on?

14 MR. SOMASUNDARAM: Yeah. That's 15 in the Table IV-1 on page 26026, vendable 16 capacity as well as the refrigerated volume? 17 PARTICIPANT: Zero, two, eight. 18 MR. SOMASUNDARAM: Zero, two, 19 eight, yeah. Top of the page 2602.

20 MR. BROOKMAN: So I can read those 21 numbers back again if you want me to. Have 22 you got them?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 107 1 Okay. So then Mike is asking you 2 for whether these distributions, whether they 3 are appropriate or not, 75 percent medium, 25 4 percent large, zero percent small for both

5 Class A and B. 6 Zero is too small? Yeah, there 7 will be some shipments that are small, yeah. 8 MR. SCOTT: Do you want to put a 9 number on it? Five percent, 10 percent? 10 MR. ROTH: I guess if I look at 11 the manufacturers, but I don't think any falls 12 in small. I don't think there's anything

13 else -- 14 MS. TARLEY: No, I don't think 17

15 exists. 16 MR. COUSINS: I'm okay with those

17 numbers. 18 MS. TARLEY: Yeah, but why define 19 a category which doesn't exist? We don't have 20 anything 17.

21 MR. BROOKMAN: Seventeen cubic

22 doesn't exist.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 108 1 MS. TARLEY: No. 2 MR. BROOKMAN: Oh, I see. What

3 would be the smallest?

4 MS. TARLEY: I think 19 or 20 5 probably would be. 6 MR. BROOKMAN: Okay. So then 7 there's a reason why it's zero. 8 MS. TARLEY: All right. 9 (Laughter.) 10 MS. TARLEY: That's right.

11 MR. BROOKMAN: Because it doesn't 12 exist, right? 13 MS. TARLEY: In Category A. 14 MR. BROOKMAN: Yeah, right.

15 MR. SELFRIDGE: I think as I

16 recall there is one. 17 (Simultaneous conversation and 18 laughter.) 19 MR. BROOKMAN: Okay. So we've

20 heard from Steve. Steve thinks the numbers 21 are okay. Other comments on the numbers? 22 Glen, go ahead. Glen, we didn't hear you.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 109 1 I'm sorry. 2 MR. SELFRIDGE: Nothing. A Class 3 B machine, a very small machine does get down

4 into that. 5 MS. TARLEY: Yes, correct, but not

6 in Class A. 7 MR. BROOKMAN: Okay, and also a 8 very small number? 9 MR. SELFRIDGE: Very small

10 numbers. 11 MR. SCOTT: One percent, five 12 percent? 13 MR. ROTH: Are we saying 25 14 percent in the large category?

15 MR. SCOTT: Yes. 16 MR. ROTH: That may be higher. I 17 mean, ours is the large category. So I don't 18 know. It could be higher than that. 19 MR. SCOTT: Okay. I'm trying to 20 be really clear about this. Class A machines, 21 we've got zero, 75, 25 as we go up. What

22 should the distribution be?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 110 1 MR. BROOKMAN: 60/40? 2 MR. ROTH: 60/40? I don't know. 3 MR. BROOKMAN: 60 medium, 40 4 large? 5 MR. ROTH: 60/40. 6 MR. SCOTT: Okay. What about B? 7 (Pause.)

8 MR. BROOKMAN: So there's still

9 time to receive written comments on this 10 matter, right? 11 MR. SCOTT: That's a good idea.

12 MR. BROOKMAN: Yeah.

13 MR. SCOTT: Because it drives so 14 much of the downstream analysis, early would 15 be really good on comments about that. 16 MR. BROOKMAN: Okay, right.

17 MR. ROTH: This is Trent.

18 I would recommend that we use NAMA 19 as maybe somebody that could filter out what 20 we sell so that maybe as manufacturers we 21 could get a third party and have them compile 22 it. We could -- somehow they could compile it

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 111 1 and then we could get back to what they --

2 MR. BROOKMAN: Is there a 3 representative from NAMA in the room?

4 MR. MONROE: I'll ask.

5 MR. BROOKMAN: You'll ask? 6 MR. MONROE: It will be up to the 7 manufacturer, I guess, to give us this

8 information. 9 MR. BROOKMAN: Did you hear what

10 Mike said? This drives a whole bunch of 11 important analysis and they need it quickly. 12 Okay? Good. 13 Yes, I see some Navigant folks 14 wanting to speak up. Please say your name. 15 MR. MILLARD: Yeah, Matt Millard. 16 It would also be very helpful if

17 we could have the volumes attached to the 18 shipment estimations because there's a lot of 19 uncertainty as far as what some people

20 consider -- 21 MR. COUSINS: You can forget about

22 that.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 112 1 MR. MILLARD: -- what some people 2 consider small and medium. So just saying 3 that small is a certain percentage and medium

4 is -- 5 MR. BROOKMAN: But if they 6 aggregate it they can't do that? 7 MR. McGARRAH: There's only two 8 buyers. 9 MR. BROOKMAN: Okay, yeah. 10 MR. ROTH: You're talking cubic 11 volume, not -- 12 MR. MILLARD: Right, right, cubic 13 volume. Refrigerated volume. 14 MR. ROTH: We're talking about 15 refrigerated volume.

16 MR. BROOKMAN: Thanks for 17 clarifying that. 18 MR. MILLARD: Sorry.

19 MR. BROOKMAN: Go ahead. 20 MR. SOMASUNDARAM: My comment was 21 going to be we have asked NAMA for those data 22 since the ANOPR meeting, and we haven't got

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 113 1 anything from the industry. So I just would 2 put that word of caution. 3 MR. BROOKMAN: Yes. So would you 4 say your name for the record?

5 MR. MONROE: Ned Monroe.

6 MR. BROOKMAN: Ned Monroe. Thank 7 you, Ned. 8 So appreciate your efforts to try 9 to get that done for the Department.

10 Bob. 11 MR. McGARRAH: Let me just comment 12 on that. There's two people that are buying 13 99 percent of the machines. So they give 14 their numbers anonymously to NAMA and they 15 extrapolate their number and they know what 16 the other guy is buying. It ain't going to 17 happen. They're not going to give you the

18 number. 19 MR. BROOKMAN: Okay. So that's 20 good to know. 21 MR. McGARRAH: That's like telling 22 your market share behind the table. It's a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 114 1 very competitive industry. We fight all the 2 time as an industry in a friendly way, and 3 it's just numbers that I can't believe them 4 sharing because they're the two major buyers. 5 MR. BROOKMAN: Trent, go ahead.6 MR. ROTH: This is Trent, Dixie7 Narco. 8 I guess I might even ask the 9 Department of Justice here, too, but I believe

10 it's a minimum of three. There are three 11 manufacturers. There's Vendo, Royal and us 12 are supplying numbers. They should be able to 13 show aggregate market share or aggregate

14 numbers based on that. 15 It has always been my 16 understanding you had three manufacturers. 17 You have to get at least three in order to be

18 able to share that. 19 MR. BROOKMAN: Okay

20 MR. SCOTT: This is Mike Scott 21 again, and just to be clear, we're not asking 22 for shipments volumes at all. We're asking

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 115 1 for distribution across size classes here, 2 percentage, not numbers. 3 MR. MILLARD: Right. This is Matt 4 Millard again. 5 I was referring more to 6 refrigerated volume because what some people 7 may consider a small machine other may not. 8 MR. BROOKMAN: Okay. So I think 9 we have cleared this up now. Let's do the 10 final slide and then we're going to take a 11 break. On approach. 12 MR. SCOTT: Okay, on approach, and 13 we're going to be talking -- actually this 14 would be a really good place to break because 15 this is the approach for the national energy 16 savings calculation.

17 MR. BROOKMAN: You want to break

18 now?

19 MR. SCOTT: We should do the TSLs 20 first. So I think this would be a good place

21 to break. 22 MR. BROOKMAN: Okay. So let's

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 116 1 take a break. It's now 11 o'clock on the

2 nose. 3 I think we're going to extend the 4 break for 20 minutes in case those of you want 5 to go halfway to the Capitol for coffee. 6 Really, the most convenient place is closed 7 downstairs. If you want to get coffee, you 8 need to go to the main cafeteria, which is 9 downstairs and about a half a block that way. 10 So let's try and resume at 11:20. 11 Do you have a question or comment? 12 MR. HORNQUIST: Just a quick 13 question. This is Edwin Hornquist, Southern

14 Cal. Edison. 15 I was just noticing that the 16 refrigerated volume referred to here is -- 17 well, the title is "Refrigerated Volume." In 18 the class fee the refrigerated volume is, as I 19 understand it, a compartment within this. Is 20 that the entire system?

21 PARTICIPANTS: No. 22 MR. BROOKMAN: I'll tell you what.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 117 1 Maybe you could just ask on the break. Let's 2 go to a break and then if we need to take this 3 back up when we resume we will. 4 Okay. Can you just consult with 5 the Navigant folks? 6 MR. HORNQUIST: Yeah.

7 MR. BROOKMAN: Yeah. We'll resume 8 at 11:20 right here. 9 (Whereupon, the foregoing matter went off the

10 record at 11:03 a.m. and went back 11 on the record at 11:19 a.m.)

12 MR. BROOKMAN: Let's start.

13 Let me start off on behalf of the 14 . I don't work for the Department, but we're 15 trying to get them a good research, and so let 16 me start off on behalf of the Department 17 saying thanks for that conversation we had 18 prior to the break. I thought that was very, 19 very useful. I appreciate everybody speaking 20 up and saying what they know to be the issues. 21 That's very helpful to the Department. 22 So we're going to then proceed.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 118 1 Edwin, did you get your question answered? 2 MR. HORNQUIST: Well, it raised 3 other questions. Never mind. So I just want 4 to understand what the refrigerated 5 compartment within the Class B machines 6 represents. Is that the refrigerated volume 7 that the refrigeration cites to, or is it the 8 entire volume where the entire product, even 9 the product that is not refrigerated or 10 presumably not refrigerated in my mind, is

11 assumed to be?

12 MR. ROTH: This is Trent. 13 MR. BROOKMAN: Thanks, Trent. 14 MR. ROTH: I'll try to answer that 15 one. I'll take technical help if I get out of

16 line.

17 We refer to the volume as the

18 entire volume within that cabinet. That is 19 the volume that is being cooled. Now it is 20 slightly different. We direct all the air

21 flow to the bottom one-third of the cabinet.22 So we're cooling those cans in the bottom one### (202) 234-4433 Neal R. Gross & Co., Inc. Page 119 1 third, but there's transfer of the cold air 2 because of the stacking, what we call stack. 3 We literally take -- I'll get more exact later 4 -- but for instance, our 504 Dixie-Narco stack 5 unit, we stack 504 cans into eight columns -- 6 seven columns straight up and down. So we're7 directing the air flow to the bottom one8 third. The whole cabinet is refrigerated 9 because you're going to get transfer of cold 10 air through conduction from the cold cans. 11 You are cooling all of those cans. 12 The ones at the bottom are kept at 36 13 degrees, plus or minus one degree, as stated 14 in the ASHRAE standard. The upper cans may 15 reach 50 degrees or somewhere in there, but 16 they still are being cooled because as those 17 get hot, you know, in the environment, they're 18 still going to require or steal cold are from 19 those cold cans on the bottom third, but the

20 bottom itself is the entire cabinet because 21 that is, in fact, refrigerated. It's just how 22 you're directing the air flow.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 120 1 So the cabinets are all 2 refrigerated. We're just focusing the air. 3 Does that help? 4 MR. HORNQUIST: Yes, absolutely. 5 So the question would be if the delta T 6 between the temperature that you're cooling 7 one-third of the product is lower or higher

8 than the delta T for two-thirds of the 9 product, because the refrigeration sizing 10 obviously is taken into consideration -- 11 MR. ROTH: Refrigeration sizing 12 has more to do when you talk about this with 13 the cool-down requirements, and I'll use 14 specifically Coke since they have the toughest 15 cool-down requirements, but the size of our 16 compressor is more or less based upon not 17 keeping that product at 36 degrees plus or 18 minus one, but how fast can we cool the entire 19 product down and let's put in more, and that's 20 really driving what our size of our compressor 21 is, maintaining product at 36 degrees.

22 MR. BROOKMAN: And that's

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 121 1 something they specify for different classes

2 of -- 3 MR. ROTH: That's specifies as a4 requirement, a test requirement, for pull5 downs. 6 MR. HORNQUIST: So when you take 7 it from something like 70 or something degrees

8 to -- 9 MR. ROTH: What temperature do we 10 take it from? Seventy-something?

11 MR. COUSINS: Condition C 12 currently in Coke? It's actually full reload 13 recovery requirement that drives the 14 refrigeration load. So -- 15 PARTICIPANT: Ninety. 16 MR. COUSINS: -- yeah, that's what 17 we consider at the moment, but I guess to 18 elaborate on that driver, based on how we do 19 business, based on how we do business and when 20 a machine gets visited and reloaded and how we 21 set up full service vending for the amount of 22 packages that need to be restocked, we have a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 122 1 requirement that we want the machine to be in 2 business at the first peak purchase period 3 after the reload, and that drives our

4 standard. 5 So that the temperature and the 6 time requirement which forces these guys to 7 size the equipment a certain way is based on

8 that? 9 MR. HORNQUIST: I'm curious. 10 What's the time that you require? Can you

11 tell me that? 12 MR. COUSINS: No, I can't. 13 (Laughter.) 14 MR. BROOKMAN: Okay. Well, thank 15 you. That was useful. 16 So now we'll proceed with Sriram. 17 MR. SOMASUNDARAM: Right. Sriram 18 Somasundaram, Pacific Northwest National 19 Laboratory. 20 A slight reorder of slides. We 21 stopped at , and I'll have Mike Scott come 22 back up after I talk about the next two

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 123 1 slides, 28 and 29, and then he'll tell you 2 about the approach that we took to do the NPV 3 analysis and then report the results of it. 4 The reason we thought this might

5 be more useful for the discussion here is that 6 we assess the NPV, the net present value, or 7 the national energy savings analysis impacts, 8 only on the TSLs that we pick at this stage of 9 the analysis. 10 So we have to first pick the TSLs 11 of the standard levels for which the analysis 12 will be continued and report the results for, 13 and the way we pick those, if some of you 14 remember, the ANOPR analysis we reported what

15 were called the candidate standard levels.

16 There were a few standard levels that we had 17 decided would form the basis of this step of 18 the analysis at the end of the ANOPR analysis. 19 And so if we go back to that step 20 and then we say, "Okay. What levels still 21 make sense to pursue for the NOPR analysis?" 22 and the methodology used to select these trial

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 124 1 standard levels at this stage are that we pick 2 the most energy efficient level, the Max Tech 3 level as sort of the end of the range. So 4 the TSL-7 or the TSL-6 as the case may be, in 5 fact, is the Max Tech level. 6 Then we also pick some

7 intermediate levels between that and the

8 baseline. The baseline in this case is the

9 ENERGY STAR Tier 1 that went into effect or 10 something close to that is the baseline level, 11 which is what all the energy savings get 12 compared to. 13 So in between these two extremes, 14 we picked the efficiency levels that either 15 have a lowest life cycle cost or a payback 16 period of three years or less, efficiency 17 levels with some noteworthy technologies, for 18 example, like the LED lighting or a condenser 19 motor switch technology from PSC motor to an 20 ECM motor, for example, would be an example of 21 a noteworthy technology.

22 And then if we still have some

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 125 1 gaps between those efficiency levels, we will 2 pick some intermediate levels to fill the gaps 3 that may or may not have a combination of 4 technologies that result in those energy 5 consumption levels.

6 So with that introduction to the 7 selection process, we came up with seven TSLs 8 for Class A beyond the baseline and six TSLs 9 for Class B beyond the baseline. 10 And having picked an energy 11 consumption level for each of those TSLs, we 12 then developed correlations as a function of 13 refrigerated volume for medium and large size 14 machines using the two point lines or drew a 15 line across those two points for both Class A 16 and Class B, and that's how we came up with 17 these correlations for MDEC, which is maximum 18 daily energy consumption as a function of the

19 volume for Class A and Class B. 20 As you can see, even though, for 21 example, we call it the TSL-5 for both Class A 22 and Class B, but as you can see, the levels

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 126 1 are not the same. The energy consumption will 2 not be the same because you see the 3 coefficients will be and the intercept values 4 are different. So please remember that. 5 So having set these, having picked 6 these trial standard levels, Michael will now 7 describe how we assess the impacts of each of

8 those levels. 9 MR. BROOKMAN: And fortunately for 10 your purposes, both of these slides are on the 11 same open page. So you can refer back and

12 forth. 13 MR. SCOTT: Good plan.

14 MR. BROOKMAN: That was well done. 15 MR. SOMASUNDARAM: So let's go

16 back to 26. 17 MR. BROOKMAN: The approach.

18 Mike. 19 MR. SCOTT: Okay. With that as an 20 introduction, what we then did was estimate 21 the national energy savings and the national 22 impact analysis present value of savings for

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 127 1 those TSL levels, and one of the things that 2 we want you to note is that the national 3 energy savings are calculated for that 30-year 4 period that I indicated earlier, plus the 5 national present value by the convention that 6 the Department uses is that we count the 7 present value of the economic savings from all 8 equipment purchased during the 30-year period 9 so that 2012 to 2057 actually includes the 10 lifetime of everything purchased in 2042 as 11 well as everything before then. 12 We then came up with a base case 13 for the national energy standard or national 14 energy savings and national impact analysis, 15 and to do that we had to make an assumption or 16 series of assumptions about what would have 17 been shipped in the absence of the standards, 18 and as originally we had a fairly complicated 19 way of estimating what those efficiency levels 20 would be that the market generated, we were 21 told at the ANOPR stage that, no, it's really 22 a much simpler problem than that. All you

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 128 1 have to remember is that there are two big 2 purchasers and some smaller purchasers, and 3 they essentially have wanted TSL -- sorry --

4 trial standard level -- trial standard level? 5 – ENERGY STAR level Tier 1, which is our Level 6 1 in this diagram, since it was available,

7 since ENERGY STAR went into effect. 8 And then by the year 2012 just 9 about everything that would be purchased by 10 the larger purchasers anyway would be Tier 2, 11 and that roughly is equivalent to Level 2 for 12 Class A equipment and it's Level 3 for a Class 13 B equipment. 14 We did allow for some purchases in 15 between Tier 1 and Tier 2, but it's a 16 relatively small amount. So essentially we've 17 got a 10/90 split for the unregulated market. 18 Then when standards are imposed as 19 we show in the third bullet on this slide, 20 everything below the level of the standard 21 gets rolled up to the standard level. So, for 22 example, with no standard with a medium

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 129 1 equipment, we would have a ten percent at 2 Level 1, 90 percent at Level 2. But then with

3 a Level 4 standard it would all be Level 4 or 4 higher.

5 There was no indication that there 6 would be any equipment purchased above

7 whatever the maximum level was for ENERGY STAR 8 or, alternatively, the equipment purchased 9 under the standard. So Levels 5 through 8 10 were not affected by the standard unless the

11 standard is set at that level. 12 Okay. So once a standard is in 13 place, then the old equipment, the stock of 14 the equipment goes out of the inventory 15 according to its base case efficiency mix, 16 that or actually there's equipment that's

17 older than that that's still less efficient 18 according to the base efficiency mix, and then 19 new equipment is sold under the standard to 20 replace the equipment according to the new 21 efficiency mix. 22 And then we simply keep track of

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 130 1 all of that using national average customer 2 prices for the equipment, annual energy prices 3 and annual repair and maintenance captured 4 from the LCC analysis. And that's all 5 calculated then over the period under which 6 we're working here. 7 So then flipping over to Slide 30, 8 the net present value results, for Class A 9 equipment the standard that the Department 10 arrived at look at net present values and the

11 other features of the various trial standard

12 levels.

13 TSL-6 was the level chosen for 14 this analysis, and it provided a maximum NPV 15 of $0.105 billion at a seven percent discount 16 rate, roughly double that at the three percent 17 discount rate, and all trial standard levels 18 lower than TSL-7 showed a positive NPV. 19 For Class B equipment, TSL-3 20 provided a net present value of essentially 21 zero at the seven percent discount rate. All

22 trial standard levels lower than TSL-4 had a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 131 1 positive NPV, but everything TSL-4 and above

2 did not. 3 I guess this is the point at which 4 we can either answer questions about the NPV 5 analysis or alternatively the issue on which 6 DOE seeks comments, specifically on the trial 7 standard Level 6 and 3, respectively. 8 MR. BROOKMAN: Well, let's see if 9 there are any questions on the foregoing 10 slides. On the approach slide, the selection 11 of trial standard levels, and the matrix, the

12 trial standard levels listed for Class A and 13 B, and also for 30, NPV results. Questions, 14 comments on those? That's quite a lot of

15 content there. Bob.

16 MR. McGARRAH: I'm a little

17 confused here. Current machines and machines 18 purchase by Coke and Pepsi since 19 -- 19 MR. BROOKMAN: Bob, get closer to

20 that mic.

21 MR. McGARRAH: Bob McGarrah. 22 Current machines purchased by Coke

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 132 1 and Pepsi and purchase by them probably since 2 2003 meet ENERGY STAR Tier 1. Many of them 3 meet ENERGY STAR Tier 2, certainly the ones in 4 the past several years. And I'm trying to

5 understand how the set level -- 6 MR. SCOTT: How the analysis --

7 MR. McGARRAH: -- the set level 8 that you're going to establish relates to

9 ENERGY STAR Tier 2. 10 MR. SCOTT: Okay. Well, for A 11 Class machines, TSL-6 is more efficient than 12 ENERGY STAR Tier 2, which is, I think Level 2; 13 is that right? 14 MS. TARLEY: Can you tell what 15 percentage? When you say more efficient, by 16 what percent? 17 MR. SCOTT: We're talking kilowatt 18 hours per day.

19 MR. LLENZA: So it's like 30 20 percent? 21 MR. SCOTT: Oh, I'm sorry. You 22 wanted to know the percentage?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 133 1 MS. TARLEY: Yes. 2 MR. LLENZA: It's about 30, 31 3 percent, something like that. 4 MS. TARLEY: Thirty-one percent? 5 Thank you.

6 MR. BROOKMAN: We'll check out

7 that. 8 MR. SCOTT: He's looking. Just a

9 minute.

10 MS. TARLEY: I calculate around

11 20. 12 MR. BROOKMAN: So, Nina, that last 13 comment, say it again. You calculate it's

14 about 20? 15 MS. TARLEY: That's my 16 calculations show, but --

17 MR. BROOKMAN: I think Trent also

18 wanted to chime in.

19 MR. ROTH: We calculated -- this 20 is Trent Roth -- we calculated 20 percent 21 reduction. We went 20 percent for Tier 1 and 22 Tier 2. It looks like we're going 20 percent

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 134 1 for Tier 2 to the schedule. 2 MR. SCOTT: Oh, okay.

3 MR. ROTH: So from Tier 1 it would 4 be greater, but it looks like 20 percent 5 increments as you went down, and this is a 6 percent decline.

7 MS. TARLEY: For Class A.

8 MR. ROTH: For Class A. 9 MS. TARLEY: Class B it's higher.

10 MR. BROOKMAN: And are those 11 increments, they're consistent? 12 MR. ROTH: Yeah, they are 13 consistent. In Tier 1, energy is higher in 14 2004. 2007 was about a 20 percent level. 15 MR. BROOKMAN: So then, Sam, 16 having looked at the data, for the record,

17 what-- 18 MR. SCOTT: We're still getting

19 one more number. 20 MR. BROOKMAN: Okay. Come to a 21 conclusion. I'm coming back to you. 22 MR. SCOTT: This is the advantage

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 135 1 of paper and pencil, the old school way.

2 MR. JASINSKI: This is Sam 3 Jasinski from Navigant.

4 Our calculations show that for 5 Class A the proposed TSL-6 is roughly 30 6 percent more efficient than ENERGY STAR Tier 2 7 and for Class B, the proposed TSL-3 is roughly 8 five percent more efficient than ENERGY STAR

9 Tier 2. 10 MR. BROOKMAN: I see, Nina, you're 11 shaking your head. 12 MS. TARLEY: Yeah, my number won't 13 be definitely much higher. 14 MR. BROOKMAN: So maybe they'll

15 continue to do their calculations over here

16 and I'll return to Bob. You were in the

17 middle. 18 MR. McGARRAH: I was just trying 19 to put a dimension on this. 20 MR. JASINSKI: Well, as a 21 clarification, we did it for the medium size

22 class in each class.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 136 1 MR. BROOKMAN: Okay. So pardon 2 me, Bob. Let me continue with this. Trent.3 MR. ROTH: This is Trent, Dixie4 Narco. 5 It's just important to note that 6 you're not going to get an exact translation

7 to those. 8 MR. SCOTT: Right.

9 MR. ROTH: We switched from can 10 capacity to cubic capacity. So although I can 11 show you where the formulas seem to line up, 12 and we'll do that a little bit later, but it 13 does change. 14 Also, when you get to Class B -- I 15 know we're only talking Class A -- Class B, 16 you're going to get a significant difference 17 because we're going from 90 degrees, 65 18 percent relative humidity, to 75/45. So there 19 you really are not going to compare apples to 20 apples at all. 21 But in the Class A one, you need 22 to understand that the variables will change

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 137 1 slightly by model, by manufacturer and how 2 much we're coming down because the can 3 capacity and cubic capacity are not in direct

4 correlation with each other. 5 So we will get some variance on 6 that, but that's all right. 7 MR. BROOKMAN: Okay. 8 MR. ROTH: And that's the way it

9 is. 10 MR. BROOKMAN: Okay. Thanks for

11 that clarification. 12 Do you wish to say anything more 13 now, Nina? 14 MS. TARLEY: No, no. 15 MR. BROOKMAN: You all set? Okay, 16 okay. Well, they'll continue to take a peak

17 at that.

18 Bob.

19 MR. McGARRAH: Tell me what I'm 20 saying wrong. The current standard that 21 you're proposing will be between 20 and 31 22 percent higher than ENERGY STAR Tier 2 for

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 138 1 Class A machines.

2 MS. TARLEY: Lower.

3 MR. JASINSKI: More efficient.

4 MR. McGARRAH: More efficient.

5 MR. JASINSKI: Yes.

6 MR. McGARRAH: And for Class B 7 machines, it will be five percent more

8 efficient than ENERGY STAR Tier 2.

9 MR. JASINSKI: Yes.

10 MR. MILLARD: This is Matt Millard 11 again. 12 As Trent said, it's more difficult 13 for me to develop that relationship because we

14 estimated what the ENERGY STAR level would be 15 if it dropped down to 75 degrees. 16 MR. JASINSKI: For clarification, 17 this is Sam Jasinski; for clarification, 18 ENERGY STAR ratings are based on a 90 degree 19 Fahrenheit ambient temperature test for Class 20 B machines, and the Department of Energy test 21 procedure mandates a 75 degree ambient 22 temperature.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 139 1 MR. McGARRAH: I want to simplify 2 it so I can explain it to people where it is

3 from where we were at ENERGY STAR II to where 4 we're going to be with this new regulation, 5 and I think you did a pretty good job of 6 saying -- I don't mind a range. A range is 7 good -- the current proposed standard will be 8 20 to 31 percent greater for Class A machines 9 than ENERGY STAR Tier 2, and one to five 10 percent greater, meaning requiring more 11 efficiency, than ENERGY STAR Tier 2 for B

12 machines.

13 MR. JASINSKI: That's correct. 14 MR. McGARRAH: Could we just write

15 that down?

16 MR. BROOKMAN: You don't think

17 it's written down somewhere? 18 MR. McGARRAH: No. I'm having 19 trouble translating this.

20 MR. BROOKMAN: I see. 21 MR. McGARRAH: No, to be honest 22 with you.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 140 1 MR. BROOKMAN: Okay. Then we'll 2 mull on that point. Are there other questions

3 and comments then on this series of slides?

4 There's a lot of content here. 5 Yes, Trent. 6 MR. ROTH: It might help you, Bob.

7 This is Trent from Dixie-Narco. 8 I'll give you a specific example 9 so you will maybe -- these are large glass. 10 We have a 405 can capacity at Tier 2 levels.

11 We have a threshold of 5.56 kilowatts an hour 12 for a daily hit. Under the new regulations in 13 Class A, based on our cubic capacity, we have

14 a new threshold that we have to hit of 4.48 15 kilowatts per day. So that's roughly a 20 16 percent reduction.

17 MR. McGARRAH: From six to four.

18 MR. ROTH: From 5.56 to 4.48. So 19 that's the best translation I can give you -- 20 MR. McGARRAH: No, that's good. 21 That's exactly -- 22 MR. ROTH: -- all our models, but

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 1411 roughly in Class A it represents to us, Dixie2 Narco, approximately 20 percent.

3 MR. McGARRAH: I think for me it's 4 important to dimensionalize it so I can talk 5 to the average folks and say, "This is what 6 you're looking at. If you go to ENERGY STAR 7 Tier 2, you're going to have to get this much

8 more efficient with the new machine." That's

9 all.

10 MR. ROTH: The threshold is that

11 much more. There are those of us that are 12 well beyond that already.

13 MR. McGARRAH: Yeah. 14 MR. BROOKMAN: Okay. Thank you.

15 Thanks for that illustration. That was 16 helpful. 17 MR. McGARRAH: Very. 18 MR. BROOKMAN: Now, any additions

19 on these slides? Because we're about to move 20 to wanting to seek specific comment on Slide

21 30 and then 31. 22 Andrew, did you have something?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 142 1 MR. SELFRIDGE: I had. 2 MR. BROOKMAN: You had something, 3 Glen. Thank you. I left somebody out.

4 MR. SELFRIDGE: And what I had 5 basically was, number one, I had mentioned 6 this before. California Energy Commission on 7 their public site is required by California 8 Law of 75 degrees and 90 degree results by 9 model number for every machine that's legal to 10 sell in the State of California, public 11 information, you can use it. 12 Secondly, if you look at our list, 13 there are no energy management systems that 14 are used during the ASHRAE test. Okay? To 15 come up with those numbers, as Trent 16 mentioned, a year ago others do that and it's 17 perfectly legitimate. Okay? 18 But if you're looking at something 19 like LED lighting and were to pick Trent's 20 number, the lighting is already backed out of

21 it similar to what I had talked about with our 22 Super T8s.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 143 1 So be careful on your calculations 2 of baseline because you've got some errors 3 here that are becoming more and more apparent 4 as you move through on Class A.

5 MR. JASINSKI: Sam Jasinski. 6 Just for the record, those 7 California Energy Commission numbers were used 8 in our analysis. They can be -- you can find 9 them in Chapter 3 of the TSD. 10 MR. BROOKMAN: Okay. Thank you. 11 Thank you for that.

12 Andrew.

13 MR. deLASKI: I do have a comment. 14 Mike, I thought I heard you say, and this is 15 reaching back a little bit -- correct me if 16 I'm wrong -- that the TSL chose for a Class B 17 TSL-3 was the entire levels were NPV negative.

18 MR. SCOTT: That's correct.

19 MR. deLASKI: And I would note 20 that that's true at the seven percent discount 21 rate, but not true at the three percent

22 discount rate.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 144 1 MR. SCOTT: That's also correct.

2 MR. deLASKI: And that there's no 3 reason that one should be predisposed to 4 emphasize one or the other. I would argue 5 that the actual cost of capital the Department 6 chose for the purchase of the machine was 7 lower than seven percent so that the three 8 percent rate should be considered in the 9 Department's analysis and is required to be 10 considered by OMB.

11 I also would note that the mean 12 LCC is positive at TSL-4. So that not only is

13 those two economic indicators are at a 14 somewhat higher level and that your 15 presentation at the seven percent rate, you 16 know, there's no reason you have to start with 17 just that one rate. 18 MR. SCOTT: Just one point about 19 the LCC analysis. I'd have to look back at it 20 myself to be sure of this, but note that if 21 you're bringing LCC into the calculations by 22 TSL level, one thing the Department likes to

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 145 1 look at is the proportion of potential 2 purchasers of the machine who show a net gain

3 or show a net loss on an LCC basis.

4 Recall that I said we do a lot of 5 this on a distributed basis with probability 6 distributions, and so we do get some scatter. 7 MR. deLASKI: I'm looking at the 8 scatter right here, 80 percent, and that's it. 9 MR. SCOTT: Okay. 10 MR. deLASKI: So that to me points 11 to pretty strong evidence that TSL-4 is at a 12 higher level as being an appropriate level for 13 those based on basically all of the economic 14 criteria except this. 15 MR. BROOKMAN: You've anticipated 16 where we're going with the agenda. You can 17 see on Slide 31 that the Department of Energy 18 seeks comments specifically on proposed trial 19 standard level TSL-6 for Class A, TSL-3 for 20 Class B. So let's hear any additional

21 comments on those. 22 MR. LLENZA: I just wanted to make

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 146 1 a comment.

2 MR. BROOKMAN: Charles Llenza. 3 MR. LLENZA: Any of our numbers 4 that you may have some kind of disagreements 5 like in the trending, we would like your 6 comments specifically addressing, if we've 7 made some errors in your opinion, because what

8 we would like to do is look at them and if

9 we've made an error we would like to correct

10 them for the final. 11 MR. BROOKMAN: Right. Steve. 12 MR. COUSINS: Right, and that's on 13 our agenda for this afternoon, isn't it? I'm 14 looking at the discussion at 1:45 on the TSL 15 and I guess we can provide written comment on. 16 MR. BROOKMAN: Right, right. So

17 we're ahead of schedule. 18 (Laughter.) 19 MR. COUSINS: Are you saying we

20 can discuss that now?

21 MR. BROOKMAN: Yes. 22 MR. LLENZA: Yes, we can.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 147 1 MR. BROOKMAN: Okay. Steve 2 Cousins, go ahead. 3 MR. COUSINS: Well, you know, I

4 heard the comment. I think Sam made it that 5 in large measure we refer to California energy 6 numbers and other publicly available numbers 7 to help establish the relationships in the

8 TSLs.

9 I would submit that those numbers 10 that you're looking at don't represent an 11 apples-to-apples comparison, particularly 12 because, well, one of the reasons you 13 elaborated on this morning, which was the 14 light level between an A and a B are 15 dramatically different. 16 Also, the test methods that's17 used, ASHRAE 32.1, doesn't reflect an apple18 to-apple comparison between the types of

19 machines because the ASHRAE 32.1 does not 20 regulate or dictate the control of the 21 operating methods for all the powered elements 22 in the equipment. Well, lighting, for

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 148 1 example.2 So you know, there are some drive3 around temperature, but not necessarily around 4 lighting. So what I'm cautioning us on, we 5 have to go and take a look at it, but my

6 caution is that some of the data that we 7 referred to, for example, may reflect a 8 machine with all of the powered elements 9 operating and the data for another machine in 10 the database may not represent it operating 11 with all the powered elements energized. 12 MR. BROOKMAN: Okay. Glen, you 13 had something?

14 MR. SELFRIDGE: Steve made a nicer 15 clarification to my comment. 16 MR. BROOKMAN: Okay, good. 17 MR. ROTH: Are you talking, Steve, 18 specifically about our ability to turn two of 19 the three lights off during the test method in 20 which you would have energy savings during 21 periods of non-usage where we only turn two 22 lights off and leave the top light illuminated

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 149 1 on the glass front on a Class A machine? Is 2 that what you mean where we have power savings 3 due to that as reflection of the way the test

4 method is done? 5 MR. COUSINS: I'm going well 6 beyond that. I'm also talking about idling 7 condenser motors, cycling the evaporator motor 8 at a certain period. So it's not just 9 lighting. It's also the other motors that are

10 involved. 11 MR. ROTH: But as long as it stays 12 within the ASHRAE 32.1 and keeping product at 13 36 degrees plus or minus one degree and all 14 the specifications, that's all available to be 15 able to do as long as it does not have the 16 ability to turn off. You can't have an 17 operator override the system and be able to 18 turn the system off. That's all part of 19 saving energy, isn't it? 20 I can't understand why --

21 MR. COUSINS: Because Nina will 22 jump up and tell you that a million control

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 150 1 schemes are patented. We have patents around 2 control schemes on operating fans, and 3 operating lights. So the availability of 4 being able to manipulate some of these things 5 to achieve energy benefits is not broadly 6 available to everyone.

7 Here's the base of what I'm 8 looking at here. Here's the base of what I 9 want to communicate, and I think Glen made

10 reference to this when we first started our 11 discussion. If you look at the refrigeration 12 element, if you look at the cooling element 13 between a Type A and a Type B, yeah, 14 intuitively and if you look at it carefully, 15 if you look at apples to apples comparison, 16 the heat load for an A cap is going to be 17 large or the cooling load for an A is going to 18 be larger than for a B. 19 Yet when you look at the 20 relationships in the TSLs, the expected 21 results is actually the reverse of that. I'm 22 not talking about the lighting. I'm just

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 151 1 talking about the cooling load itself. 2 Light levels are driven by the end 3 user, and the controls schemes that drive 4 those are driven in large measure by who owns 5 IP. So when I look at these numbers, they

6 don't make sense to me. 7 MR. BROOKMAN: Trent, go ahead.

8 MR. COUSINS: And I think the 9 reason why they don't make sense is because 10 the database is not based on apples-to-apples 11 comparisons.

12 MR. ROTH: When I first looked at 13 the numbers, we heard a lot of comments and 14 tried to understand are they correct or not? 15 I think they make very good sense, and I'm 16 trying to understand why, and I'll try to give 17 you a comparison of why I think they did. I'm 18 going to have to walk through some math 19 equations, but it's not too hard. 20 When you look at a stack, we're 21 going to use our 504 stack unit. It's our 22 closed front, Class B machine. We used to

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 152 1 have a formula based on ENERGY STAR where we 2 used can capacity which we changed to cubic 3 capacity. Again, the only variable that 4 changed and determines the threshold in which

5 one of these units needs to achieve is the 6 capacity of the machine. It used to be the 7 can capacity and now it's the cubic capacity. 8 But that is the variable today 9 that choose what threshold you have to meet. 10 What I tried to do is say, okay, 11 when is the comparison to a stack unit now 12 that we changed this in comparison to the 13 glass. When I look up 504 or our stack unit 14 with 504 cans, it has very high can 15 capacities. So the pressure will be pretty 16 high in the Tier 2 ENERGY STAR levels. 17 And when you look at a cubic 18 capacity comparison compared to the numbers 19 that we have in a glass front, it's half the 20 capacity. So our threshold number is 21 extremely lower because of that. 22 Now, I understand the argument

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 153 1 that we're only cooling one-third. We're not 2 really only cooling. We're keep one-third at 3 36 plus or minus one degree, but the upper 4 two-thirds of that cabinet is still pull heat 5 through induction or pulling that heat out of 6 there. So immediately focusing the air flow 7 on that one piece of it, but our number is 8 already cut substantially because -- 9 MR. COUSINS: For your machines 10 because of the product capacity. I mean, his 11 machine may hold more capacity for the same

12 size cabinet. 13 MR. ROTH: But then I would expect 14 a relationship between the cubic capacity and 15 the can capacity to slightly change. You take 16 a larger machine. I mean, what I was trying 17 to get at, when you use the formula and you 18 use cubic capacity rather than the can 19 capacity as the baseline of the formula,

20 because we cut it in half with stack units and 21 you're saying the argument is we're only 22 cooling one-third which should be easier to

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 154 1 achieve the energy levels, that's already 2 being done in the formula strictly because the 3 capacity is cut down. 4 Our cubic capacity in the 504 is 5 about 17 cubic feet, where our glass front is 6 about almost 35 cubic feet. So just 7 inherently the way the formula is written, it 8 cuts that threshold floor down. So that's why 9 the energy levels that we think are fair, and 10 you add the lighting back in on top of that 11 that we need to do from the sign face. We

12 think the numbers are correct. 13 MR. BROOKMAN: Glen, please.

14 MR. SELFRIDGE: I want to address 15 this to Trent. I believe, having seen both

16 cabinets and tested both and worked with both 17 companies -- 18 (Laughter.) 19 MR. SELFRIDGE: -- Twenty-seven 20 years, 20-something years, that you have 21 perhaps misinterpreted the requirement for the 22 calculation of refrigerated volume that was

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 155 1 accepted by this entire group at the first 2 meeting, because your volumes are significant 3 higher than that. 4 As a matter of fact, I don't think 5 the study was provided by you particularly,

6 but within the CSA 804 new review over the 7 last couple of years, your people supplied 8 test data anonymously with the volumes, and it 9 worked out to formula that was accepted by the 10 Canadians at this point under the new 804 11 standard that clearly show what everybody else 12 happens to know to be the truth that the Type 13 B machine is inherently going to use less 14 energy.

15 MR. ROTH: I'll address that.

16 MR. COUSINS: Based on the data 17 I've seen, yes.

18 MR. SELFRIDGE: Huh?

19 MR. COUSINS: Based on the data

20 that we've seen. 21 MR. BROOKMAN: Steve is talking 22 about the data, and now Trent, back to you.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 156 1 MR. ROTH: I mean, we don't see 2 that. Our glass fronts are significantly more 3 efficient than our stack units. We've posted 4 the EPA on large glass front 3.95 kilowatts an

5 hour. 6 MR. COUSINS: Yeah, I don't deny 7 that. They are more efficient, but that 8 doesn't mean they use less energy because of 9 the required cooling load. 10 MR. ROTH: Our glass front holds

11 405 cans. Our stack unit holds 504. Our 12 glass front is significantly, I mean a 13 kilowatt and a half less energy. 14 MR. COUSINS: But what I'm saying 15 is for that same volumetric capacity there are 16 machines that will hold more packages than 17 your machine will hold, and there's a larger

18 heat load as a result.

19 MR. BROOKMAN: But isn't that true 20 with -- for the record I want to clarify. 21 Trent, Steve, Trent, Steve, now back to Glen.

22 Go ahead.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 157 1 MR. SELFRIDGE: One last comment

2 and I think I can move on. I believe that the 3 numbers that you have published with EPA 4 include the ASHRAE test number where you're 5 using the automatic management system.

6 MR. ROTH: Trent.

7 That is correct. What we've done 8 is we have three lights in our glass front. 9 We have a top light and we have two right-hand 10 lights. We turn those two lights off during

11 the test method because it is factor set that 12 if there's a period of non-usage, those lights 13 will go off. 14 The lighting though, the majority 15 of the glass fronts in the marketplace today 16 are ours. We're going back in the period. 17 They only had one light in there. We added 18 two lights when we came up with our new 19 design. So we didn't decrease the lighting to 20 what normally was in there. We just increased 21 the lights in our current machine today to

22 allow similar test methods as what we do with

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 1581 computer screens today. When there's non2 usage, it will turn off.

3 So then those are included on 4 there, but the lighting is similar to what we 5 had in lighting a number of years ago in all 6 of the glass fronts that we had.

7 MR. BROOKMAN: Glen.

8 MR. ROTH: But it does account

9 towards others who are able to do that.

10 MR. SELFRIDGE: One last comment 11 on that clarification. I have no disagreement 12 with what Dixie is doing that's allowed on the 13 32 months period. But in the question of 14 agreeing or disagreeing, in fact, we may have 15 to go there. 16 But the point is that you take our 17 Type A machine, pull the lights out of it 18 entirely and it consumes three and a half 19 kilowatt hours a day. And I think we got it 20 rated as a 5-6 or something. So the 21 differences in the lighting and all of this is 22 gushing, hits around the assumptions that

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 159 1 might have gone into these volume calculations 2 on the type A machine being skewed. Okay? 3 MR. COUSINS: Yeah, right. 4 MR. SELFRIDGE: Because they heard

5 me. 6 MR. COUSINS: Well, yeah, that's

7 what I said. Steve Cousins. 8 That's where we don't really have 9 an apples-to-apples comparison with the 10 numbers that have been used to develop these 11 relationships because there's a more focused, 12 more attention and more development on the 13 Type A machines, and the operational schemes 14 around it. You know, it makes me question 15 what we have here, and I think what we would 16 have to do, at least what I would have to do 17 in providing comments before the written 18 period is over which is to point where I think 19 are the specific problems in the data set.

20 MR. BROOKMAN: In the 21 comparability? 22 MR. COUSINS: Yeah, and how we

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 160 1 should address that. 2 MR. BROOKMAN: Okay. Trent.

3 MR. ROTH: This is Trent. 4 I just have one question. It 5 might be directed toward Navigant Consulting 6 or some DOE, but I don't look at these 7 thresholds of where our equipment is today. I 8 mean, I know where we are today. I know where 9 we stand because you know we've done those 10 depositions, but isn't the goal for us not to 11 -- to include all of the equipment where we 12 are today, accept that standard and let's move

13 forward? 14 I think we've wasted three years 15 of trying to get where we're at today. I 16 mean, if we're just going to say that we need 17 to do this threshold and everybody agrees we 18 need it, everybody is happy, it all falls in 19 with the same correct number today, then I 20 think we wasted three years. I mean, where 21 are we going to be three years from now? We 22 haven't looked at a lot of things to drive

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 161 1 energy reduction down. We really haven't done 2 anything seeing if you've got stacks at all or 3 Class B. We've done very little for Class A

4 so far.

5 It all comes back down to cost

6 later on. 7 PARTICIPANT: Short equation. 8 MR. ROTH: And how much do you 9 need to add to get it down there? 10 But I don't think we're looking at 11 everything it needs today. I think it's all 12 in the baseline, but are we really looking at 13 where we're going to be three years from now? 14 That's the question I have. What are these 15 regulations based on?

16 MR. BROOKMAN: Do we want to --

17 Charles?

18 MR. LLENZA: This is Charles 19 Llenza, Department of Energy. 20 The Department has identified a 21 path to get there. It does not mean that the 22 industry does not find other paths to get

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 162 1 there, and so what the Department is saying is 2 that we see a path to get there and basically 3 the industry can either use that path or 4 provide an alternative path. 5 What Trent Roth is saying is true. 6 The industry can then look at other means of 7 getting there. We're just saying that this is 8 one method or one avenue to get there based on 9 what we see today.

10 MR. BROOKMAN: Bob.

11 MR. McGARRAH: With all due 12 respect, I think the industry is just there. 13 We're proposing over this past three or four 14 years, the standard that's being proposed I'm 15 hearing, the industry is either there or maybe 16 a little beyond it, and we're not going to 17 propose or enact this for three more years, 18 two years, 2012. 19 So the industry is -- 20 PARTICIPANT: Let's for argument 21 purposes say that you're there. Are you 22 there, Trent?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 163 1 MR. ROTH: Class A equipment, 2 ASHRAE 32.1, we see the stack. 3 MR. McGARRAH: Okay. So you're --

4 PARTICIPANT: The stack in the 5 Class B equipment? 6 MR. ROTH: No, we don't. We have 7 to use work in order to achieve the standard, 8 achieve the Class B standard, and how much

9 work would we have to do? We haven't even 10 worked on that yet. So I don't know the 11 answer to that question in Class B. We 12 achieve it today on Class A.

13 MR. McGARRAH: That's what I was 14 trying to relate to ENERGY STAR Tier 2, 15 looking at ENERGY STAR Tier 2 for a long time, 16 and have been making improvements on ENERGY 17 STAR Tier 2 right up to today, and two years 18 from now the standard that I'm hearing is 19 being proposed, which is 20 to 31 percent 20 better than ENERGY STAR Tier 2, I believe some 21 of these folks may already be there. 22 So the standard two years hence

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 164 1 really doesn't meet the mandate of the Energy 2 Policy and Conservation Act, which is to -- 3 shall we all say it together? -- achieve 4 significant energy savings. If we're there 5 now, the proposal that we have is wide. 6 MR. BROOKMAN: Trent, you okay? 7 Okay. 8 So any other comments specifically 9 surrounding trial standard Level 6 for Class A

10 and trial Standard Level 3 for Class B?

11 So I think we have covered that 12 much. Let's move on with the presentation, 13 LCC subgroup analysis. 14 MR. SCOTT: Okay. Well, the 15 purpose of the subgroup analysis is to 16 evaluate the economic impacts of standards on 17 customer subgroups. This is people with the 18 -- they're returning the ?? and paying the 19 utility bills. So the impact on customer 20 subgroups who may be disproportionately 21 compared with the general user population, 22 actually the original concern for this comes

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 165 1 out of more the residential side of the house 2 where the concerns for people like low income 3 purchasers of household equipment. However,

4 we do it on the commercial side as well. 5 The DOE identified potentially 6 disadvantaged businesses and we exemplified 7 those by independent manufacturing sites that

8 own BVMs at their sites. So think about a 9 factory floor somewhere where somebody has 10 actually bought the vending machines. They 11 own them and they operate them. 12 These owners would experience the 13 highest financing costs of any of the groups 14 of potential purchasers of the machines that 15 we were able to locate, and they also, because 16 they pay a manufacturing facility, they're 17 going to be typically paying an industrial 18 energy price rather than a commercial one. 19 They also have the lowest energy prices and 20 therefore the lowest savings with the same 21 energy savings.

22 And we used our basic LCC

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 166 1 spreadsheet model just for that group of 2 people to determine the impact on that 3 customer subgroup, sort of the worst case 4 group, and we did find that LCC savings and 5 the simple payback period was -- well, the LCC 6 savings were lower and the payback periods 7 longer for that identified customer subgroup. 8 However, we didn't feel that they 9 were disproportionately impacted by the 10 standard. It was not as good, but it wasn't 11 radically different. That analysis is found 12 in Chapter 12 of the TSD, and there's also

13 some discussion of it in the NOPR. 14 MS. TARLEY: I have a question. 15 For the benefit of the group, could you state 16 what is approximate cost of energy to run a 17 machine per day or per year? Do you know?

18 MR. SCOTT: I do not. 19 MR. BROOKMAN: Gentlemen, the 20 total amount of energy to run a vending 21 machine per day or year? 22 MS. TARLEY: Cost of the energy.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 167 1 I happen to have the numbers. 2 (Laughter.) 3 MR. COUSINS: The cost you mean? 4 MS. TARLEY: Yes, it's the cost. 5 On the evidence the vending

6 machine costs somewhere between 58 cents to 94 7 cents per day. That's the cost of diving the 8 machine which per year translates to somewhere 9 between $200 to $380 per year. 10 MR. SCOTT: Okay. That sounds 11 about right to us. You're getting nods from 12 over there at Navigant's table.

13 MS. TARLEY: Just so we can

14 understand what's involved. 15 MR. BROOKMAN: Okay. Thank you. 16 Have you finished? 17 MR. SCOTT: Yeah, I'm finished

18 with that one.

19 MR. BROOKMAN: So comments on LCC 20 subgroup analysis? And thanks for that date. 21 Any additional thoughts on LCC? 22 It's now 1210. Manufacture impact

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 168 1 analysis followed by these other kinds of 2 analyses. Do you want to break for lunch now 3 because I think we have -- well, yeah? Do you

4 want to break for lunch now? 5 I think people are starting to get 6 hungry. Okay. So now it's 12:10. We're 7 going to pause and take an hour for lunch. 8 Please wear your badges in the building. 9 A whole bunch of us are going to 10 head downstairs and go to the cafeteria which 11 is across the street underneath, get on the 12 ground floor and go down a long corridor and 13 then back up to the floors above. 14 If you try and go out of the 15 building off campus, you may have a hard time 16 getting back here in time. So I'd like very 17 much to encourage people to see the cafeteria. 18 It's newly renovated. It's looking pretty 19 good. 20 PARTICIPANT: Is the food any

21 better?

22 MR. BROOKMAN: I don't know if the

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 169 1 food is any better or not, but we'll find out,

2 won't we?

3 So we will resume at 1:10. 4 Thank you. 5 (Whereupon, at 12:10 p.m., the 6 meeting was recessed for lunch, to reconvene 7 at 1:10 p.m.)

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### (202) 234-4433 Neal R. Gross & Co., Inc. Page 170 1 AFTERNOON SESSION 2 (1:19 p.m.)

3 MR. BROOKMAN: Welcome back. So 4 what's the verdict? Do you know the food has 5 improved any? The cafeteria looks better. 6 What do you think? Maybe the look does it all 7 by itself. 8 (Laughter and simultaneous 9 conversation.) 10 MR. BROOKMAN: Okay. So let the 11 record reflect that people are generally 12 impressed by the new cafeteria, but we're 13 still questioning, we're still evaluating the

14 food. 15 We're moving on ahead where we 16 left off with the slides in your packet, and 17 we are now by my count on Slide 33, 18 manufacturing impact analysis 19 MR. KINGMAN: I'm Jeff Kingman 20 from Navigant Consulting, and this is a 21 follow-up to the ANOPR presentation where we 22 presented some of the initial concerns of

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 171 1 manufacturers.

2 For the NOPR we continue to do 3 that but also follow through with a full cash 4 flow analysis to quantify the impacts on the 5 industry. 6 The main point of the 7 manufacturing impact analysis, or MIA, is to 8 assess the impacts of energy conservation

9 standards on the BVM manufacturers. For this

10 DOE relies on a number of sources of

11 information. 12 We rely on information provided

13 from manufacturers and other stakeholders. 14 Another part of the analysis is the other 15 analyses that were completed previously like 16 the engineering and the MIA. 17 Another point of the MIA is just 18 to estimate the impacts on manufacturer's 19 subgroups. This is separate from the LCC 20 subgroups. The subgroup we analyzed for this 21 NOPR is small manufacturers, and in order to

22 determine if a manufacturer is a small

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 172 1 business we used the SBA definition, which 2 included parent companies and subsidiaries. 3 For BVM they have to have less than 500 total 4 employees. 5 During the MIA process, DOE 6 attempts to or the contractor attempts to 7 interview any manufacturer that's interested 8 in speaking. That includes small businesses 9 if they are interested as well. 10 And the third point of the MIA is 11 to examine the impact of cumulative regulatory 12 burden on the industry. For this DOE looks at 13 federal regulations and other regulations that 14 could potentially affect the manufacturers.

15 In order to conduct the MIA DOE 16 uses all available information to develop 17 manufacturer's financial parameters and the 18 costs of comply with the standard. These 19 inputs are then incorporated into the 20 government regulatory impact model, or GRIM. 21 The GRIM outputs cash flows for 22 the analysis period and calculates the impacts

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 173 1 on the industry, which is called the industry 2 net present value by assembling the discounted 3 cash flows over the period. This is done for 4 the base case, which is absent standards, and

5 for standards cases at each of the trial

6 standard levels.

7 And the differences for each TSL 8 between the base case and standards case, 9 INPV, is a quantitative representation of the 10 manufacturer impacts due to standards. 11 Additionally, the interview 12 process is used to refine inputs the GRIM and 13 to develop other subanalysis, such as the 14 subgroup analysis, cumulative regulatory 15 burden, and the impacts on employment. 16 This slide is just an illustration 17 of the phases that DOE goes through in order 18 to conduct the MIA. Phase 1 is the part that 19 was conducted during the ANOPR, which is when 20 DOE uses publicly available information, such 21 as SEC 10-K reports and annual reports for 22 manufacturers to complete a market and

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 174 1 industry profile.

2 Phase 2 and 3 are what we 3 conducted during the NOPR. The first big part 4 is developing a strawman GRIM, which is using 5 the previously available information that's 6 available publicly and also develop an 7 interview guide. 8 During Phase 3 is when DOE's 9 contractor actually conducts the interviews to 10 develop the other subanalyses, such as the 11 small business impacts and the cumulative 12 regulatory burden. And it's also used to 13 refine some of the GRIM inputs. 14 And for the MIA presented in the 15 NOPR, we used two different scenarios in order 16 to bound the impacts on the industry. To 17 assess the lower end of the range, we 18 considered a preservation of gross margin 19 percent scenario, and that, a single uniform 20 gross margin percentage mark-up is applied 21 across all efficiency levels and equipment

22 classes.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 175 1 In this scenario as product costs 2 increase with efficiency, the scenario implies 3 that the absolute dollar margin will also 4 increase, and to assess the higher end of the 5 range of potential impacts, DOE considered the 6 preservation of operating profit scenario, and

7 in this scenario DOE models manufacturer 8 concerns about the over capacity of the 9 industry and the inability to set some of the 10 prices they charge our customers. 11 In this scenario, manufacturers 12 spend the necessary investments required to 13 convert the facilities to produce the 14 standards of required equipment. Despite this 15 effort operating profit does not change from 16 the base case and decreases as a percentage of

17 revenues. 18 The equipment and capital 19 conversion costs necessary to reach each TSL 20 are included in both mark-up scenarios. 21 And at the beginning of the 22 presentation, DOE requested comment on a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 176 1 number of issues that related to the MIA, and 2 I think we can go back now and revisit some of

3 those. 4 Should I go back in the slides? 5 MR. BROOKMAN: Yes, that will be

6 fine.

7 MR. KINGMAN: The first issue was 8 just any comments on the impact of industry 9 net present value at the proposed standard

10 levels. 11 The next one is what impact TSL-6 12 could have interested parties, including small

13 businesses. Another one was whether or not 14 the proposed standards risk any industry

15 consolidation.

16 And a final one was how small

17 business manufacturers will be affected due to 18 new energy conservation standards. 19 MR. BROOKMAN: So there you can 20 see a series of questions. We touched on some 21 of these at least, I think. So maybe we could 22 start with the first block there, industry

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 177 1 NPV, and comment on that. 2 Please, Nina. 3 MS. TARLEY: Nina Tarley, Pepsi Co. 4 Yes, the comment I want to make is 5 just a little bit of history of the vending 6 machine when it comes to a logical assumption. 7 Before 2004, vending machines were energy 8 hogs because nobody paid attention to energy.

9 As soon as ENERGY STAR started reviews of 10 Tier 1, there was a humongous effort and not 11 to say that Pepsi Co. made it mandatory that 12 all vending machines meet the Tier 1 ENERGY 13 STAR, and they all complied. The result if I 14 recall correctly, somewhere around 22, 23 15 percent energy.

16 Then in the middle of 2007 the 17 ENERGY STAR introduced Tier 2, and again Pepsi 18 Co. led the industry by mandating that all of 19 our vending machines meet the Tier 2, and that 20 was tough. Getting to Tier 1 was relatively 21 easy. Getting from Tier 1 to Tier 2 was a 22 massive effort, cost a lot of money and

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 178 1 energy, no pun intended. 2 But as a result, another 28 3 percent reduction in energy consumption was

4 achieved.

5 MS. PINTO: Excuse me. An

6 additional 28?

7 MS. TARLEY: That's correct. 8 That's correct. That was a major, major

9 effort between the Tier 1 to Tier 2. So 10 overall if you compare the current model 11 versus 2003-2004, we saved 51 percent energy. 12 Pepsi Co. did. 13 So I just wanted to give this 14 background so everybody understands that now 15 that people are talking another 20, well, 16 let's say, anywhere between ten to 30 percent 17 reduction in energy consumption, we're talking 18 about probably cost and effort. 19 And also not quite related, but 20 some of you might have heard there is another 21 nail in the coffin of the vending industry. 22 Regulation is being discussed as we speak

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 179 1 about mandating nutrition labels on the 2 vending machines that will specify the caloric 3 effect of every single item in the vending 4 machine. This is being discussed and we 5 expect to -- Mike might have some more updated 6 information, but it is going, I believe, to 7 Congress and then to Senate for approval, 8 which every vending machine will require to 9 have a label stating --

10 MR. BROOKMAN: Not on the bottle 11 itself, but on the actual machine? 12 MS. TARLEY: Correct, on the 13 outside of the vending machine. That is 14 correct, yes. So anyway. 15 MR. BROOKMAN: Okay. So that's 16 interesting. Thanks for that history. 17 Appreciate that. 18 So then you can see the specific 19 questions that DOE would like you to comment 20 on. Maybe we can start with why the private 21 market has not been able to capture the energy 22 benefits proposed.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 180 1 Nina has responded to that, but 2 that's specifically in TSL-6, and whether and 3 to what extent parties estimate they'll be 4 able to transfer cost of implementing TL-6 on 5 to consumers. Maybe we could start with that

6 one and do both of those two. 7 What do you thing? Bob?

8 MR. McGARRAH: I'll take a shot at 9 it. I don't think you're going to be able to 10 do it because the energy savings goes to the 11 person that pays the electric bill. The 12 utility programs that run programs for energy 13 saving equipment, the incentive dollars goes 14 to the person who pays the energy bill. The 15 manufacturers, machine owners, the Cokes and 16 Pepsis of the world get zero share of that 17 savings benefit, which is the reason the 18 machines have been energy hogs for so long, 19 because there was nothing to benefit even the

20 manufacturer or the machine owner. So who 21 cares what the gas mileage is if I'm not 22 buying the gas?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 181 1 So until we can get something 2 going there -- I shouldn't say "until" -- but 3 when we get something going there, then these 4 very stark, scary, under a million vending 5 machines in the marketplace in 12 years, maybe 6 that won't happen, but if there's a financial

7 incentive to the machine owner and the machine 8 manufacturer to get an energy efficient 9 machine, and I don't say get the benefit, but

10 share the benefit so that there's a mutual 11 benefit to the person that pays the electric 12 bill obviously and a benefit to the folks that

13 run and build the machines.

14 MR. BROOKMAN: Steve. 15 MR. COUSINS: For a long time the 16 cost increases to the system have not been

17 transferred on to the consumer. Material cost 18 increases, cost increases to the commodities 19 or the products that are sold to the

20 commodities. 21 I guess the point I'm making is 22 this. Any up charge or any increased cost

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 182 1 because of more energy efficient technologies 2 that are put into the machine, that cost will

3 not be transferred over. 4 Historically the industry just

5 doesn't -- we haven't had the means to 6 actually be able to transfer cost or move cost

7 downstream. 8 MR. BROOKMAN: You change your 9 calculation about how many bottles or how much 10 product needs to be sold and keep it 11 profitable. 12 MR. COUSINS: Essentially, yes. 13 That's what's happening, and that's one of the 14 things that's driving less and less machines 15 in the marketplace. 16 MR. BROOKMAN: Okay. Yes, Trent.17 MR. ROTH: Trent Roth, Dixie18 Narco. 19 I'm just trying to understand 20 this. You're asking the added cost it will 21 take us to get to TL-6, how would that be 22 passed on to the --

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 183 1 MR. KINGMAN: Yeah, I think this 2 question is asking from starting from the

3 manufacturer down the distribution chain how 4 those costs will be passed along. 5 MR. ROTH: Well, for A model, a 6 Class A, we didn't have any additional costs 7 in getting to that from where we were, from 8 the last one. We didn't pass on any costs. 9 Whatever costs there were, and I'm not sure 10 what that was, we did not pass any costs on in 11 Class A. We kept it at the same price to our

12 customers.

13 MR. COUSINS: So there's no cost

14 difference between Tier 1 and Tier 2 Class A. 15 MR. ROTH: From a Tier 2 to go

16 into where the NOPR is from us? No. 17 PARTICIPANT: Somebody get that.

18 MR. ROTH: But that would mean how

19 much added cost? I mean there wasn't a lot 20 that we had to do to get to that piece. I 21 mean, that's saying Tier 1 to Tier 2, yeah, we 22 had to make changes.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 184 1 MS. TARLEY: Yeah, that was 2 Steve's question. 3 MR. ROTH: Sorry, yeah. 4 MR. SELFRIDGE: Actually Tier 0 to 5 Tier 1 was fairly substantial when you 6 consider the up charges for ECM, an operator 7 paying for special compressors and all the 8 other things that went into the magnetic 9 ballast. The accelerator cost, it cost us a

10 lot.

11 MR. ROTH: It did.

12 MR. BROOKMAN: From Tier 1 to Tier 13 2, and so, Glen, thank you that. I just 14 wanted to acknowledge the last comment was

15 from Glen.

16 MR. ROTH: It did cost us more. 17 This is Trent. It did cost us. I'm just 18 trying to understand the question. 19 MR. HORNQUIST: The question on 20 the table is -- this is Edwin Hornquist -- is 21 at the TSL level. It's not Tier 1, Tier 2. 22 It's the incremental cost from TSL-1 through

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 185 1 6. 2 And you're saying that there is no

3 cost? 4 MR. ROTH: No, I corrected myself.

5 There is a cost because we did have to 6 implement ECM. I was trying to understand the 7 question. We did have to incur costs trying 8 to get to that level.

9 MR. BROOKMAN: In this case TSL-6 10 is ENERGY STAR 2, Tier 2? 11 MR. KINGMAN: No, it's the

12 baseline.

13 MR. BROOKMAN: It's the baseline 14 Sorry.

15 MR. LLENZA: Charles Llenza. Tier 16 1 is the baseline. Sorry. 17 MR. BROOKMAN: Okay. We want to 18 move to the question you see there at the top

19 of the screen. 20 MS. PINTO: Excuse me, Doug. This

21 is Francine Pinto.

22 MR. BROOKMAN: Go ahead.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 186 1 MS. PINTO: I want to go back to 2 this other point about the impacts on 3 manufacturers. I didn't feel like I got a

4 clear answer that I can understand. 5 If the TSLs that are proposed, the 6 proposals, were to become the final rule, what 7 is the impact on manufacturers? I just want 8 to get that sense from you all. This will be 9 finalized the way it is proposed. How does it 10 impact you? 11 MR. ROTH: In three years? 12 MS. PINTO: In the three years, 13 right.

14 MR. BROOKMAN: Go ahead.

15 MR. ROTH: Trent from Dixie-Narco. 16 It goes for both classes. I'm not 17 sure what we have to do to get to Class B 18 because we haven't tested the equipment, and

19 I'm not sure what we have to do. I don't know 20 an answer to that at this point. 21 MS. PINTO: Okay. 22 MR. ROTH: Class A particularly

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 187 1 for us, nothing. We're there. 2 MS. PINTO: Okay. 3 MR. COUSINS: Steve Cousins here,

4 Coca-Cola. 5 With regard to what our system 6 does and the impact that that has on these 7 manufacturers is closely connected to cost 8 because historically our available capital and 9 the capital investment has either been fixed 10 or is shrinking. 11 So even though you can achieve 12 these numbers technologically with A, for 13 example, you know you can hit the target, the 14 cost implications may have some impact on the 15 volume that we purchase.

16 MR. BROOKMAN: Trent. 17 MR. ROTH: The only question I'd 18 say is if you're buying them today I don't 19 know where the change is taking place. What 20 you currently are buying today are the ones 21 that we pushed down 22 MR. COUSINS: So you're assuring

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 188 1 me it's not going to be any cost increases 2 over the next three years?

3 MR. ROTH: Not at all. 4 MR. COUSINS: All right. Write

5 that down for me.

6 MR. ROTH: Not at all am I 7 assuring that, but it has nothing to do with 8 what we've done. The machine, we made a 9 transition this year and took it to this new 10 level. We did not have a price increase this 11 year as a result.

12 MR. BROOKMAN: Glen. 13 MR. SELFRIDGE: Yeah. Assuming as 14 I say Dixie-Narco has done this basically the 15 way they said they did here on the energy 16 management system, it's not an expensive add 17 to the existing machine, then we can pass it 18 on at substantially no cost provided there was 19 no intellectual property hanging back into the 20 background with that petition, but what that 21 level does do to you, it leaves you with 22 basically no lighting machine, no nothing else

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 189 1 to play with as you move on down the road five 2 years from now, ten years from now as you have 3 with any other one. 4 You are actually taking functional 5 equipment and you are disclosing it. Okay? 6 So to get to the new machine, there is going 7 to be some cost associated with that one way 8 or the other, perhaps not greatly huge at 9 least in our case. But unless we would adopt 10 the energy management system which we can do 11 if there's no intellectual property; we could 12 get to that Level 6. 13 But it's very misleading because 14 you adopt the ENERGY STAR? It takes out a 15 substantial component and nobody in the world 16 knows about it, except this little room.

17 MR. BROOKMAN: Francine. 18 MS. PINTO: When you say it takes 19 out a substantial component -- Francine Pinto

20 -- what does that mean?

21 MR. SELFRIDGE: What that means is 22 the machines have lights and if you walk up to

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 190 1 a machine, this is the mass run Type A 2 machine, and the lights are off when you can't 3 see the project. 4 Number two, you believe the 5 machine is not functioning. The beverage 6 companies lose their visibility if you want a 7 little fancy thing. 8 MS. PINTO: So are you saying -- 9 this is Francine Pinto -- that in order to get 10 to the proposed level you have to eliminate 11 all the lighting?

12 MR. SELFRIDGE: You have to 13 eliminate the lighting for the period of the

14 ASHRAE test.

15 MR. BROOKMAN: That is the 16 manufacturer wanting to follow on. 17 Trent, go ahead. 18 MR. ROTH: I'm just trying to 19 clarify. Currently today in our machine we 20 have three lights in our machine, fluorescent 21 lights. During a period it can be down one 22 hour with a period of inactivity. Two to

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 191 1 three lights shut off. The top light remains

2 illuminated. 3 The top light is the same lighting 4 we've had on glass fronts prior to what came 5 out with the BevMax 2 back in 2004. On every 6 other glass front we ever produced out there, 7 and I can say there's more of those out there 8 than every other glass front made by every 9 other manufacturer combined in the marketplace 10 today with just one light at the top, it did

11 not inhibit sale. It did not --

12 MR. SELFRIDGE: And the door 13 light? 14 MR. ROTH: The doorlight, that was 15 inside. That didn't illuminate anything. 16 That was just for -- 17 MR. SELFRIDGE: Merchandising. 18 MR. ROTH: Yeah, for 19 merchandising, but it did not have anything to 20 do with lighting the interior of the cabinet. 21 It's the same lighting we have today when we 22 go down to two lights.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 192 1 So we made a very clear effort to 2 make sure that when we turn the two lights off 3 the consumer would not be turned away from 4 that product thinking the product was on order 5 because that wouldn't do us any good as well. 6 So, yes, we do two, three lights 7 on, but I need to be very clear that we did 8 that. We made a conscious effort to split the 9 ballast to be able to make that happen, but 10 that was one way we could do to insure that 11 during periods such as, in fact, in schools 12 when the machine is not being used that we're 13 saving energy, and that is part of what the

14 ASHRAE does allow.

15 That is what we do. 16 MR. COUSINS: And there's nothing 17 wrong with that. 18 MS. PINTO: No, I'm just trying to

19 understand.

20 MR. COUSINS: Yes. The ASHRAE 21 methodology does allow that, but the ASHRAE, 22 as a result, the ASHRAE methodology does not

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 193 1 reflect the real life use of the machine. 2 Because if two of the three lights are off in 3 actual use, that means that the machine is 4 really not being used. If the machine is not 5 being used, we're taking the machine out of

6 trade.

7 In actual use in accounts where 8 we're making money, those lights are going to 9 be fully operational, and not just the lights; 10 any other powered element whether it be, you 11 know, the evaporator fan, for example. 12 Everything is going to be fully operational. 13 So the way the ASHRAE methodology 14 is right now is that if you have the correct 15 control scheme, it may make the machine appear

16 to be efficient. Whereas in actual use it's 17 not really as efficient.

18 MR. BROOKMAN: So in school 19 applications, in warehouses where they're only 20 doing one shift, it's eight or ten hours or 21 something like that, and then the machine is

22 not in active use.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 194 1 MR. COUSINS: And is a minority of

2 our accounts.

3 MR. BROOKMAN: I see. 4 MR. COUSINS: But my point is that 5 there's nothing wrong with what you guys have 6 done, but the ? is not making it because that 7 doesn't reflect how the machine is being used, 8 but ASHRAE testing will allow that at this

9 time. 10 MR. BROOKMAN: Okay. So, 11 Francine, does that answer your question?

12 MS. PINTO: Just to reflect back 13 what I'm hearing, and correct me if I'm wrong, 14 so there's effort involved in meeting these 15 levels. I know you've already met them, but 16 I'm not hearing any overwhelming major 17 problem. Am I getting that right or not? 18 MR. HORNQUIST: I have a question.

19 MR. BROOKMAN: Let's let Glen 20 respond first. 21 MR. SELFRIDGE: I just want to say 22 one. As I've said, and I'll just repeat one

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 195 1 more time, Trent is right and they are right. 2 I said this morning if we have to meet that 3 level we can do exactly what Dixie is doing, 4 and it has not been discussed today. What I

5 want to know from all of this is if the 6 legislation goes forward, if we can do that 7 and Dixie doesn't have some kind of pending 8 operations or whatever that would suddenly 9 come up to doing a similar thing. Because we

10 have a need and now we have an answer. Our 11 lights are on all the time. But this is a 12 fairly sticky one going with control lights on 13 and paying for the refrigeration.

14 MR. BROOKMAN: Let me ask this. I 15 may be stepping beyond the scope of this. Is 16 Dixie-Narco able to say where there is a 17 patent pending? That's relevant to this,

18 isn't it? 19 MR. ROTH: If we turn the lights 20 off, I don't know the answer. 21 MR. BROOKMAN: Okay. 22 MS. PINTO: So it is important.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 196 1 MR. BROOKMAN: That's why I asked 2 it, yeah. Let me go to these two, Andy, just 3 for a second. Go ahead, Steve. 4 MR. COUSINS: Yeah. The only 5 point I wanted to elaborate on, and Glen 6 touched upon it already. I was saying earlier 7 and challenging Trent. If achieving the TSLs 8 is done by going to more costlier energy 9 efficient component versus non-cost involved 10 control schemes, that that's -- let me back 11 up. 12 I'm not sure how you can hit the 13 targets. Okay? I don't know if you can hit 14 it with more efficient components or if you 15 need to do something beyond that, but the way 16 my system behaves is that the equipment is 17 more expensive. We just buy less of it, and 18 if the only way we can hit these target is by 19 more efficient components which are costlier, 20 then the net result is we'll probably buy less 21 equipment. 22 MR. BROOKMAN: Right. You're got

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 197 1 pretty much a fixed budget or something, 2 capital expenditure. 3 Edwin, I dropped you out. Do you

4 still? 5 MR. HORNQUIST: Well, yeah, it was 6 just a comment and a question. I'm wondering 7 if what you're saying, Steve, is that a very 8 small portion of your equipment as operated is 9 the market that you serve, would benefit from

10 this control scheme. 11 MR. COUSINS: No, I wouldn't put 12 it that way because if you look at the 13 equipment that we have, we use sophisticated 14 control schemes in the majority of our cold 15 drink equipment, but we look at guaranteed 16 energy savings versus potential or candidate 17 energy savings.

18 If there's an elaborate control 19 scheme with the equipment, that doesn't 20 guarantee. If we say, okay, we will become 30 21 percent more efficient by using this elaborate 22 control scheme, that's not a guaranteed 30

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 198 1 percent energy savings in the trade, and so 2 there's no guaranteed savings on the control 3 algorithm that may not reflect real world. 4 MR. HORNQUIST: So in this case 5 you have a scheme that is being used using the 6 test method, the ASHRAE test method, that 7 allows for this lighting to be taken down to 8 approximately a third that would otherwise be

9 used. 10 MR. COUSINS: Well, what we find 11 is that we will with that kind of arrangement, 12 we will have -- we definitely will have 13 additional energy savings with that kind of 14 arrangement, but it may not be the 30 percent 15 that an ASHRAE test or it may not be the same

16 extent that the ASHRAE test demonstrated. 17 Chances are it's going to be something less.

18 MR. BROOKMAN: In the actual 19 application. 20 MR. COUSINS: Right. 21 MR. BROOKMAN: Andrew, you're next 22 in the queue.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 199 1 MR. deLASKI: Yeah, I had a couple

2 of comments. I think we've heard from the 3 Department in the NOPR and also in the 4 comments today that we're stuck with 5 ASHRAE/ANSI for the moment. You know, final 6 will come out August 8th, but you know, so

7 we're kind of stuck with the method for the

8 moment. 9 And in my opening comments 10 remarked that why is there a need to reopen

11 that method and to make it reflect real world 12 conditions. I think we're certainly in favor 13 of that, and there are other technologies, 14 additional control to help reflect it 15 accurately with technology benefits. 16 I had another thought but I've

17 lost it. 18 MR. BROOKMAN: Okay. We'll come 19 back to you.

20 Bob.

21 MR. McGARRAH: To answer 22 Francine's question about patents -- Bob

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 200 1 McGarrah -- to answer that question, there are 2 patented products out there today in the

3 hundreds of thousand numbers for after market 4 equipment, for pieces of equipment that are in 5 the marketplace today. Wal-Mart, for example, 6 has a lot of actually the Pepsi machines with 7 an after market product that's saving 15 to 30 8 percent. 9 Austin Energy, the poster child 10 for energy efficiency, has purchased tens of 11 thousands of these after market products for 12 both vending machines and cooler for energy 13 savings up to 46 percent, and that's patented 14 product, but it's available to everyone. 15 You have the situation here, you 16 know, if Coke has a patent they're not going 17 to give it to Pepsi and vice versa because 18 that's a competitive marketplace advantage. 19 But there are companies out there 20 today that have patented products that are 21 available to everybody. The patent just says 22 you can't make it in your garage and sell it

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 201 1 to the same people I'm selling it to. 2 It's available and these products 3 are well under 100 per unit.

4 MR. BROOKMAN: We don't know the 5 full answer to the question is what I'm 6 hearing.

7 MR. McGARRAH: So there are 8 patents --

9 MR. BROOKMAN: That's an

10 illustration there. 11 MR. McGARRAH: There are patented 12 products that will get you energy savings if 13 you run into an IP or intellectual property 14 issue around some of the things that we're 15 talking about.

16 MR. BROOKMAN: Andrew. 17 MR. deLASKI: Going back to this 18 patent issue, when DOE proposed standards for 19 refrigerators in the '90s, there was an 20 assumption at one point that the new 21 refrigerator would use vacuum panels, and DOE 22 tried to guess, you know, what are the panels

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 202 1 that they would use for complying with various 2 standards or made their best estimate, and 3 they admittedly have been wrong.

4 It's difficult because it's not 5 until these guys go to work figuring out how 6 to do this as cheaply as they can to meet the 7 needs of these guys that you're likely to know 8 the answer to the question of how you're going 9 to get there. 10 Because there's one patent on one 11 particular way doesn't mean there aren't other 12 ways to get there. 13 MR. BROOKMAN: Right. 14 MR. deLASKI: That patent may be 15 perhaps a cheap way to get there, but it

16 doesn't mean someone else can't find another 17 way to get there, and there are probably 18 multiple paths that haven't even been 19 conceived of today. 20 And I think that is proven true on 21 one standard after the other, that, you know, 22 we're not going to sit here today and figure

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 203 1 out how they're going to do it. 2 MR. BROOKMAN: Yeah, okay. Thank 3 you. 4 So the question that I'd like to 5 push to the fore here is the one you see at 6 the top of the screen, impact on small 7 businesses, how small business manufacturers 8 will be affected due to the new energy 9 conservation standards as proposed, as 10 proposed. 11 Yes, please, and use the 12 microphone. Please say your name for the

13 record.14 MR. DOOM: Troy Doom, Dixie15 Narco/Crane.

16 Just one comment of what we've 17 been talking about so far for Class A has been 18 relative to glass front. Class B, the study 19 so far has been relative to stack, although it 20 does capture other ones. 21 But the impact relative to the 22 combination of vending or the snack portions,

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 204 1 there is a whole area in the proposal[page] 2 26024 that says it should include those, but 3 the manufacturing base in the detailed 4 analysis of the study hasn't really included 5 the impact into that whole arena because snack 6 machines are a different category. So that 7 is, I think, an open issue that will need to

8 be studied further. 9 MR. BROOKMAN: Okay. Thank you. 10 I'm not sure I got that. Did you 11 get that? 12 Would you repeat the last part of

13 that statement? Because I didn't follow it

14 for some --

15 MR. DOOM: Yeah. 16 MR. BROOKMAN: Use the microphone, 17 please. 18 MR. DOOM: Yeah, I guess it's on 19 page is it 26024? It shows basically a 20 comment about combination vending, which 21 essentially is a snack machine that has cooled 22 the lower portion. So that type of system

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 205 1 hasn't been fully analyzed as the glass front 2 and stack has and is not heavily purchased by 3 Coke and Pepsi. It's a whole other set of

4 manufacturers. 5 But it's saying that that is going 6 to be rolled into this proposal. So that's 7 really an open issue as far as industry impact 8 and that whole industry base that would need 9 to be further analyzed. 10 MR. BROOKMAN: Thank you. I 11 appreciate that. Okay. Thank you. 12 Yes, please. Use the microphone.

13 MR. CHASSEROT: Marc Chasserot

14 from shecco. 15 I just have a basic question. If 16 you're going to have these higher standards 17 that are going to force manufacturers to 18 improve their systems with more costly systems 19 and they're now saying they don't really have 20 the money for that, and yet at the same time 21 they're not the ones that are going to reap 22 the benefits from more efficient systems

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 206 1 because they're not the ones paying energy 2 bills, what is the Department of Energy going 3 to do in terms of incentivizing this so that 4 they have an incentive to actually introduce 5 these new products?

6 MR. BROOKMAN: I don't know 7 whether the Department wishes to. 8 MS. PINTO: Well, I mean, Francine 9 Pinto. Our authority is limited to 10 promulgating the standards.

11 MR. BROOKMAN: DOE would not take 12 the lead role in creating incentives. 13 MS. TARLEY: So you have the stick

14 without the carrot.

15 MS. PINTO: We don't have that 16 authority. 17 MR. BROOKMAN: Yeah. Okay. Thank 18 you. That was a clear answer. 19 So then do we get other comments

20 on how small business manufacturers will be 21 affected due to industry conservation

22 standards?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 207 1 Yes, Marc, go ahead. 2 MR. CHASSEROT: Can I ask again? 3 Who would be the appropriate authority then

4 for that? 5 MS. TARLEY: Utility companies. 6 MS. HORNQUIST: Utility companies.

7 MS. TARLEY: States. 8 MR. HORNQUIST: Congress. 9 MS. TARLEY: Congress.

10 MR. BROOKMAN: Yes. I don't think 11 anybody has got additional to say on impact.

12 So shall we then return to the slides? Yeah?

13 Aris wishes to address the

14 combination machines issue. 15 MS. PINTO: Oh, and I want to 16 answer. This is Francine Pinto again. 17 But we do care about the impact. 18 That's why we have these meetings. We put out 19 the analysis. The decision makers -- we're 20 the staff, but the decision makers have to 21 weigh benefits and burdens. We present them 22 with all sides of the issue so that they can

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 208 1 make an informed decision, and that's why the 2 process does take time and why we have all of 3 these analyses, and we try to get as much of 4 your input as possible.

5 So I don't want to make it sound

6 like we don't care about it because we 7 obviously do, but also have our authority that 8 we've been given by Congress. 9 MR. BROOKMAN: Aris, do you want

10 to address the combination units? 11 MR. MARANTAN: Yeah, regarding 12 combination machines, I believe what we have

13 in the notice identifies the combination 14 machines as covered in this rulemaking because 15 of the basis definition that was provided in 16 the legislation. 17 So if the vending machine has a 18 component that vends bottles or canned 19 beverages, it's considered refrigerated, 20 bottled or canned beverages; it's considered a 21 vending machine covered in this rulemaking. 22 And so combination machines, DOE

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 209 1 feels that that's covered. To address the 2 idea that it has both snacks and beverages, 3 the idea is that the standards equations takes 4 care of that because only a portion of that 5 vending machine, a smaller portion of that 6 vending machine is refrigerated by the 7 refrigeration system, not the entire inside of

8 the case. 9 MR. BROOKMAN: Questions on that? 10 Any follow-on? 11 MR. MARANTAN: I welcome any

12 feedback on that. 13 MR. BROOKMAN: Go ahead, Steve.

14 MR. COUSINS: Steve Cousins. 15 It's not really an issue for Coke 16 since we don't purchase these kind of 17 machines, but if you have a very small 18 refrigerated capacity because the packages 19 that you're vending in that snack machine is 20 pretty small, the limitations with what's 21 used, what's available by way of refrigeration 22 component, I know it may have to be studied,

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 210 1 but it may be a situation where the 2 efficiencies are going to be -- you're going 3 to be less efficient just because of the 4 availability of the refrigeration component. 5 I don't know if that's true or not, but I 6 would imagine that would be a factor that

7 would enter into this. 8 MR. BROOKMAN: That configuration 9 may diminish the inherent efficiency. 10 MR. COUSINS: You have to end up 11 using a larger refrigeration system because 12 the small one is not commercially available

13 for the true load that's there.

14 I don't know if that's the case or 15 not. Maybe these guys will have a better feel 16 for it, but that would have an impact I would 17 guess. 18 MR. BROOKMAN: Please say your 19 name again.20 MR. DOOM: Yeah, Troy Doom, Dixie21 Narco/Crane. 22 Yeah, I mean, one, I guess with a

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 211 1 smaller refrigeration area than the total 2 kilowatts per day requirement is going to be, 3 you know, less than the other vending 4 machines, but I think my point more was that 5 whole arena, the snack machines, the supply 6 base, you have your, you know, AMS, USI. 7 These are not machines that Coke and Pepsi 8 purchase. There's a whole other area that 9 benched marked in review for industry impact 10 that hasn't been done. So I'm not prepared to 11 comment on it. I just want to say that the 12 Class A and B, you know, refer to glass front 13 and stack. Class B is supposed to capture 14 that other category, but I think all of the 15 analysis and impact isn't available.

16 MR. BROOKMAN: Are there a lot of 17 them out there, those combination units? 18 MR. DOOM: I don't know, Sriram, 19 if you'd be able to comment on that. I'm not 20 sure of the percentage of the total base.

21 MS. TARLEY: This is Trent from

22 Dixie-Narco.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 212 1 I don't know. It's very small.

2 So I need to understand what the number is. I 3 don't. We can get that. It's small, to 4 understand the impact, because we have not 5 done anything on this combination. 6 MR. BROOKMAN: Aris, do you want 7 to say anything more on that before we move

8 on?

9 MR. MARANTAN: Just the fact that 10 it has been very hard to get any data on those 11 combinations. We understand the shipments to

12 be small as well. 13 MR. BROOKMAN: Okay. 14 MR. SOMASUNDARAM: Okay. Sriram 15 Somasundaram, Pacific Northwest National Lab. 16 I'm here to wrap up the slide 17 presentations pretty much. There are three or 18 four more steps of impact analyses that we do 19 at this stage of the rulemaking primarily to 20 assess the impact of setting these standards 21 on the electric grid in this case because it 22 is electricity consuming equipment.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 213 1 So we investigate the effects on 2 utilities from reduced energy consumption of 3 these higher efficient equipment, and we do 4 this using the NEMS-BT model, the national 5 energy modeling system, tailored for DOE's 6 building technologies program, and it is 7 published or it's maintained by EIA, which is

8 another arm of DOE. 9 The output of this analysis is 10 changes in electricity sales and prices by 11 region of the country, and changes to the mix 12 of electricity generation in the country and 13 changes in installed capacity and generation 14 of electricity. 15 And those are also reported as 16 part of the rulemaking in the different 17 chapters of the TSD. 18 And this particular utility impact 19 analysis is in Chapter 14. 20 The next step is to do the 21 employment impact analysis. There is a direct 22 and indirect impact on employment. Direct

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 214 1 impact on employment is captured in the 2 manufacturer impact analysis that NCI reported

3 earlier. 4 The indirect impact is captured 5 using a model called ImSET or impact of sector 6 energy technologies that was developed by 7 Pacific Northwest National Laboratory, and 8 this particular model estimates the changes in 9 employment and the industry output and wage 10 income to this BVM industry. 11 And because of setting the 12 standards in the beverage vending machine 13 market to the overall United States economy 14 resulting from changes in expenditures in the 15 various sectors of the economy, so it does a 16 sector-by-sector assessment of economic 17 changes. It also estimates changes in cost 18 and benefits using from the national energy 19 savings analysis and together with the direct 20 employment impact's capture in the MIA, 21 reports the change in employment in the 22 national economy, overall national economy.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 215 1 Other than in the manufacturing 2 sector being regulated, which is the beverage 3 vending machine industry, as a consequence of 4 these energy conservation standards. 5 And as you probably saw in the 6 results reported in the notice, the impact on 7 the indirect employment is very small because

8 of these standards. 9 And this is in Chapter 15 of the

10 TSD. 11 The next step is the environmental 12 assessment, where together with the utility 13 impact, as I talked about the impact on the 14 electricity sales and prices and generation 15 capacity, there is then an environmental 16 aspect associated with that, and that's what's 17 captured here. Again, using the NEMS output

18 model and NEMS-BT model. 19 We calculated a reduction in power 20 plant emissions of carbon dioxide, nitrogen 21 oxides and mercury. The sulfur dioxide 22 emissions are not included in this particular

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 216 1 study or impact analysis because of the 2 emissions cap set by the Clean Air Act

3 amendments of 1990. So SO is considered 2 4 already capped, and emission changes in this 5 particular rulemaking was estimated as too 6 small to affect values of emissions, allowance

7 allowed under the CAP.

8 We also converted the amounts of

9 each of these emissions into a monetized value 10 using a dollar value per unit of emissions, so 11 CO , NOx and those are all reported in Chapter 2 12 16 of the TSD. 13 Finally, we also are required to 14 conduct a regular impact analysis which 15 primarily investigates the national impacts 16 due to non-regulatory approaches and 17 alternatives to this regulatory process.

18 So the four different non19 regulatory options or alternatives we consider 20 in our qualitative analysis were either no new 21 regulatory action at all or some process of 22 commercial customer rebates to the purchasers

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 217 1 of this equipment, or commercial customer tax 2 credits, say, from the federal government, and 3 finally we looked at the approach of 4 alternative call voluntary energy efficiency 5 targets, such the ENERGY STAR program that 6 already exists for this particular product. 7 We conducted a qualitative 8 comparison of all these four non-regulatory 9 alternatives to the regulatory process and 10 came to the conclusion that this particular 11 market structure, the particular BVM market

12 structure did not allow for a successful 13 quantitative analysis of these alternatives on 14 whether more energy efficient equipment can be

15 used or sold in the market. 16 So we report the qualitative 17 analysis results in Chapter 17 of the TSD as

18 well as in the final section of the rule. 19 So that pretty much concludes the 20 NOPR analyses, and I think if there aren't any 21 questions, I might pause here to see if there 22 are any questions on these four steps.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 218 1 MR. BROOKMAN: Yeah, I think 2 that's a good practice. 3 So you can see the final three or 4 four, four different elements of analysis that

5 are all considered and rolled into the 6 proposed standard. So comments, issues 7 related to these, if there be any? Okay.

8 MR. LLENZA: This is Charles 9 Llenza, Department of Energy. 10 My team in the Department here

11 would like to revisit a little bit of the12 earlier discussion here, whether or not by de13 facto the industry is now meeting the proposed 14 standard levels. Can you just restate your 15 position once again in terms of our proposed

16 standard levels?

17 Could we hear one more time to

18 make sure we understand this?

19 MR. ROTH: Trent Roth from Dixie20 Narco. 21 Class A on your proposed levels 22 right now the ASHRAE testing, we currently

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 219 1 meet those levels. In Class B we do not. 2 MR. BROOKMAN: Okay. Glen.

3 MR. SELFRIDGE: For Class A we do 4 not currently meet those levels, but given no 5 intellectual property problem, we could meet 6 them fairly easily. 7 For the Type B machine we do not 8 meet them, but we could without tremendous

9 effort. 10 MR. BROOKMAN: Okay. That's good. 11 I just want to confirm. There's no other 12 manufacturer in the room, right? No. Okay. 13 I just wanted to. 14 MR. LLENZA: Okay, good. 15 MR. BROOKMAN: Thank you very much 16 for that, yes. 17 MR. SOMASUNDARAM: So finally, 18 this is the most important step, that we would 19 like comments, latest by July 28th if not 20 earlier, and this is the process by which you 21 can send us your written comments, either by

22 E-mail or --

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 220 1 MR. LLENZA: This is Charles 2 Llenza, Department of Energy again. 3 Sometimes we send a lot of things 4 to Brenda, but I think if we're sending 5 comments electronically, if you use the portal 6 there, the E-mail portal for beverage vending 7 rulemaking, it goes into a docket system and 8 it's the better place to use if we're going to 9 do electronic, and of course, you've got the

10 mail and the courier for the other one. 11 Also, my link is there in case you 12 want to, you know. If you have some further 13 questions or something, you could shoot me an 14 E-mail. I would be glad to help you out on

15 that.

16 MR. BROOKMAN: Steve. 17 MR. COUSINS: I have a question 18 with respect to the manufacturers. I just 19 heard you say that you think you can hit the 20 targets. My question is can you hit the 21 target for a self-styled solid front. 22 Do you know or you don't know?

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 221 1 MR. BROOKMAN: Glen? 2 MR. SELFRIDGE: Okay. I'll take

3 the first

4 MR. COUSINS: You don't even have 5 to answer the question. My concern is that, 6 you know, you quickly said you can hit the 7 target, but have you considered the definition

8 of an A and a B. 9 MR. BROOKMAN: A reconfigured

10 machine. 11 MR. COUSINS: Well, I'm saying it 12 may be machine configurations where you cannot 13 hit that target. 14 MR. SELFRIDGE: Okay. That's 15 possible if you had a closed front. 16 MR. COUSINS: Right. 17 MR. SELFRIDGE: (Speaking from an 18 unmiked location.) 19 MR. COUSINS: Well, I'm suggesting 20 your refrigeration levels may be higher. 21 MR. SELFRIDGE: The refrigeration 22 actually is lower. (Speaking from an unmiked

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 222 1 location.) 2 MR. COUSINS: Well, if I want to 3 increase storage capacity in a solid front 4 shelf styled arrangement, in other words, I 5 want to put cans in a shelf style machine and 6 I want to pack out, maximize for that purpose, 7 on a solid front machine, can you hit the 8 target? 9 My guess is you can't hit that 10 target. You can't hit the TSL target. That's 11 my guess. I would be very surprised if you 12 said you could. 13 So the only thing I'm cautioning 14 you on is you quickly said, yes, we can hit 15 the targets. I would challenge that maybe you 16 cannot hit the targets or the configurations 17 that we would purchase.

18 MR. BROOKMAN: Trent.

19 MS. TARLEY: This Trent from

20 Dixie-Narco. 21 I mean, I would agree that it 22 would be a very big challenge. A lot of it

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 223 1 will come back to you because as you as a 2 purchaser understand. How do we start to look3 at the requirements that, for instance, Coca4 Cola has for lighting, and knowing that we 5 have this, what are the things that we have to 6 change? 7 I think what you're saying on 8 Glen's comment, it's a Class A machine. 9 You're going to have when you add the lighting 10 in it, you're expecting light to decide the 11 same way you do on a B machine today. 12 MR. COUSINS: Yeah, I'm thinking 13 even with that light you may not hit the 14 target. 15 MR. SELFRIDGE: Well, this is Glen 16 again. I think you probably could. With that 17 particular machine, I would say probably we 18 could if we could dull the lighting, if you go 19 to refrigeration mode. The volume would be up 20 (speaking from an unmiked location). And 21 it's a variable capacity. But that just 22 brings me back to my original -- one of my

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 224 1 original concerns, was that the methodology 2 that uses the ASHRAE energy management system 3 is it takes the lights out of the equation, is 4 not allowing for any other technology. 5 If you take the lights out at 6 three and a half kilowatt hours right now, 7 today, on a medium size Class A, in terms of 8 refrigerating that thing, there's not much 9 space left to go. 10 MR. COUSINS: Well, yeah, that's 11 right. There's not much space.

12 MR. SELFRIDGE: And there are not 13 many options.

14 MR. COUSINS: What I'm concerned 15 about is if Coke says, "We want to have a U 16 Vend shelf style machine," you know, I

17 wouldn't want for the world to come back and 18 say, "Well, legally we can't build that for 19 you, and by the way, technology is not good 20 enough to allow you to do that." 21 MR. SELFRIDGE: Well, that's 22 exactly where I was headed with my overall

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 225 1 objection. Until we decide we could meet this 2 on a regular Type A machine by doing that, but 3 the other side of that coin is you're limiting 4 technology into you're clearing a lot of them

5 with that level because --

6 MR. COUSINS: And I want to look 7 at the numbers again. I'm not convinced that 8 -- yeah, maybe the majority of the machines 9 that we guy in the store in the past will be 10 okay with these TSLs, but, hey, I think I 11 would want to take advantage of what time I 12 have now between now and the 28th of July to

13 see if we can make it.

14 MR. BROOKMAN: So additional 15 questions and comments about these 16 presentation materials, this last bunch. Some 17 of it is fairly complicated. You saw also the 18 questions that the Department wanted you to 19 respond to specifically. Any additional 20 thoughts on those before we turn to the final 21 phase of the meeting today? 22 Yes, Nina.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 226 1 MS. TARLEY: Nina Tarley, Pepsi

2 Co. 3 My comment is on the discussion. 4 Pepsi Co.'s approach is that we would like to 5 save as much energy as possible in the most 6 cost efficient way. So if my choice is, for 7 example, an option that costs nothing and 8 allows us to save even small percentage of 9 energy and potentially to promote cheap even 10 larger, that's definitely our first choice. 11 As you know, there are a lot of 12 energy management devices available now in the 13 market. They all cost a lot of money, and 14 they're not allowed to be used during the 15 energy testing. So that always becomes not 16 the first choice because you're looking at 17 extra cost with some maybe guaranteed ban if 18 you took energy saving. But we're not allowed 19 to use it during the testing protocol. So 20 that's how we group, you know. 21 The objective is save the most 22 energy and the most cost efficient way.

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 227 1 MR. BROOKMAN: Okay. thank you. 2 Thanks for clarifying that and that

3 illustration as well. 4 Any additional comments at this 5 point? 6 (No response.)

7 MR. BROOKMAN: So now there's one 8 more opportunity to thank. Now there's an 9 opportunity for anybody to make closing 10 remarks to summary remarks, issues that you 11 wish to bring to the floor that you haven't 12 covered already? 13 (No response.) 14 MR. BROOKMAN: No closing remarks. 15 Okay. So then for my part I'm going to turn 16 it back to Charles Llenza, who is the senior 17 federal official, and I would just thank all 18 of you for what was a very productive 19 workshop. I appreciate the candor and the 20 sense of exchange, what happened here. 21 The final page in your packet it

22 an evaluation form. Please take one minute to

### (202) 234-4433 Neal R. Gross & Co., Inc. Page 228 1 fill it out. The Department reads them 2 carefully. They're always looking for a way 3 to do these meetings better. 4 So thanks to all of you. 5 MR. LLENZA: I just want to say 6 thank you for attending the meeting, we are 7 eager to receive your comments in written 8 form, and once again I just want to emphasize 9 these are the methods to getting your comments 10 back to us as soon as possible. 11 And thanks for attending the 12 meeting. That's all I have. 13 MR. BROOKMAN: Thank you. 14 (Whereupon, at 2:18 p.m., the 15 public meeting was concluded.)

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CERTIFICATE

This is to certify that che foregoing transcript

in the matter of:

Before:

Date:

Place: Public Meeting on Energy Conservation Standards for Refrigerated Beverage Vending Machines

US Department of Energy

June 17, 2009

Washington, DC

represents the full and complete proceedings of the

aforementioned matter, as reporced and reduced to typewriting.

Peter Sullivan

(202) 234-4433 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W. WASHINGTON, D.C 20005-3701 www.nealrgross.com