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UNITED STATES 

+ + + + + 

DEPARTMENT OF ENERGY 

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CLOTHES WASHER STANDARDS 

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Thursday, 22 July 1999 

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The workshop met in Room BE-089, 1000 

Independence Avenue, S.W. at 9:00 a.m. Douglas 

Brookman, facilitator, presiding. 

PRESENT: 

DOUGLAS BROOKMAN, Facilitator 

PHIL MANTHEI, Alliance Laundry Systems 

ALAN KESSLER, Amana Appliances 

GENTLE HALLOR, Amana 

DENNIS DONOVAN, Amana 

RICHARD STILWELL, Maytag Appliances 

DOUG HORSTMAN, Maytag Appliances 

STEVE SOUSEK, Maytag Appliances 

EARL JONES, General Electric Company 

CHARLES SAMUELS, AHAM 

EUGENE FOLEY, AHAM 

WAYNE MORRIS, AHAM 

DICK BEST, Whirlpool Corporation 

BRAD FLORA, Whirlpool 

CURT REICHMAN, Whirlpool 

MARK DAHMER, Whirlpool 

BARRY ROGERS, Fisher & Paykel Limited 

DAVID MODTLAND, Frigidaire Company 

GLENN SCHWANTES, Fridgaire Company 

ALAN TARRANT, Frigidaire Company 

CHARLES STEPHENS, Oregon Dept. of Energy 

STEVEN ROSENSTOCK, Edison Electric Institute 

BILL PRINDLE, The Alliance to Save Energy 

BRYAN BERRINGER, DOE 

MICHAEL MCCABE, DOE 

NEAL R. GROSS 

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PRESENT : (CONT . ) 

DANIEL REICHER, Assistant Secretary for Energy 

Efficiency and Renewable Energy 

DEBORAH MILLER, DOE 

MARK MAZUR, DOE 

MARK SCHWARTZ, DOE 

EUGENE MARGOLIS, DOE 

BARBARA TWIGG, DOE 

STEVEN NADEL, ACEEE 

RICHARD TOPPING, ADL 

MIKE RIVEST, ADL 

STEVE GROVER, Quantum 

2 

PETER BIERMAYOR, Lawrence Berkley National Laboratory 

JIM MCMAHON, LBNL 

ROBERT HENBUSTER, LBNL 

STEVE WIEL, LBNL 

LAURA VANDEE, LBNL 

MARK RIVEST, Arthur D. Little 

DICK TOPPING, Arthur D. Little 

ARNIE FONDE, Arthur D. Little 

NELSON MACKEN, Arthur D. Little 

BILL BRADLEY, National Handyman 

ANDY PERSILY, NIST 

NATASHA CASTRO, NIST 

TOM BEE, Staber Industries 

TOM ECKMAN, Northwest Power Planning Council 

LUTHER MYERS, Textile Innovators 

ANN WILKINS, National Resources in Canada 

GLENDA TAYLOR, National Resources in Canada 

JACK LINARD, Unilever Home and Personal Care 

IAN FLANAGAN 

LAUREN CASENTINI, Pacific Gas and Electric Company 

GLEN SCHLEEDE, Energy Market and Policy Analysis 

ERIC ESSMAN, Clorox 

DAN BARZEL, Circuit City Stores 

DON BRUNDAGE, Southern Company 

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A-G-E-N-D-A 

Agenda Item 

Opening Remarks . 4 

Overview of Clothes Washer Rulemaking Status 

Bryan Berringer 18 

Test Procedure Issue, Bryan Berringer 

Plan of Action, Dick Topping, ADL 

Consumer Analysis, Steve Grover, Quantum 

Shipments Analysis, Jim McMahon, LBNL 

Review of Tools, GRIM Spreadsheet 

Mike Rivest, ADL 

Next Steps - Schedule Next Workshop 

Closing Remarks - Adjournment . 

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

2 (9:16 a.m.) 

3 MR. BROOKMAN: Thanks to all of you for 

4 being her~ on time so we can get started here on time. 

5 We have a full agenda for this morning and we intend 

6 to run until about 1:00 today. 

7 My name is Doug Brookman. I will be 

8 facilitating today's meeting. Let me now introduce 

9 the Assistant Secretary, Dan Reicher. 

10 ASSISTANT SECRETARY REI CHER: Good 

11 morning, everyone. Again, I'm sorry for being late. 

12 I was at a congressional-oriented meeting across town. 

13 I got caught in a bad traffic jam, which seems to be 

14 an increasing problem in this city. It took about 30 

15 minutes to go three miles. But I am here. 

16 I want to thank you all for coming to this 

17 important meeting. This is a workshop to look at the 

18 clothes washer standard. It is a narrower workshop, 

19 as you all know, than we originally intended. But 

20 with the issue that has arisen regarding the test 

21 procedure, we have narrowed down the focus. 

22 We want to do two things this morning. 

23 That is, to discuss the test procedure issue, discuss 

24 a plan of action that is underway to quickly and 

25 appropriately resolve this test procedure issue, and 

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1 then also take a good amount of time to discuss the 

2 consumer and shipment analysis. We have some 

3 important analytical work that's now available. We 

4 think it's very useful to discuss that as part of the 

5 process rule, a more open communication about all the 

6 things that provide the basis for a potential 

7 standard. 

8 The outcomes of the workshop are, as I 

9 said, to discuss the plan of action, better understand 

10 the analyses done to date, and there are several of 

11 them, and I think it's worthy of some good discussion, 

12 and to talk about a schedule for the actual broader, 

13 more formal workshop that we intended to have today, 

14 but because of the test procedure issue that's arisen, 

15 we have not scheduled for today. 

16 What we are committed to are the 

17 following: is resolving the test procedure issue 

18 quickly. It is an issue that we still don't 

19 completely understand the scope of, but with some 

2 o testing that's underway, we expect to have the kind of 

21 information we need in the next few weeks, to better 

22 understand the scope of this issue. We intend to keep 

23 the rulemaking on schedule in terms of the issuance of 

24 the notice of proposed rulemaking, in terms of the 

25 final standards. Obviously the test procedure issue 

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1 is important to that. 

2 We intend to share new information as we 

3 have been doing, as it becomes available. We have 

4 been trying to do all we can to make sure that as we 

5 get analytical information, as we get information 

6 about for example, the test procedure issue, we get it 

7 to you in a quick fashion, and there is good dialogue 

8 on it. 

9 As we indicate in the fourth bullet, 

10 communicating early and often. There was some 

11 sentiment that we should cancel today's meeting. I 

12 felt strongly that the more that we can talk to each 

13 other, even if it isn't on the full range of issues 

14 regarding the clothes washer rule, the better. 

15 What we need from you is your support of 

16 the action plan that's put into place to resolve the 

17 test procedure issue quickly. We really need to get 

18 through this. I don't think it is to anybody's 

19 advantage to have this hang and be a source of 

20 confusion with respect to the standard. 

21 Depending upon the outcome, to retest the 

22 products, to verify the recommended test procedure 

23 changes, if that becomes necessary. We need you to go 

24 back and depending upon the outcome of the look we're 

25 taking at the test procedure to go back and test, if 

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1 that becomes necessary. 

2 Provide updated cost data as that becomes 

3 warranted. Again, based on what we may find from the 

4 reanalysis. And obviously, to continue the open 

5 communications that we have very much appreciated from 

6 you. This has been a good process going forward. 

7 There has been a lot of interchange. We feel like we 

8 are out of the old black box mentality that I think 

9 used to too often pervade these kinds of rule makings. 

10 So I am looking forward to this discussion 

11 over the next several hours. I think it's an 

12 important one. I think when we finish it, we will 

13 have a good sense of where we are and where we need to 

14 get to, so that ultimately we can move forward with an 

15 appropriate rulemaking, one that really does look to 

16 all the key issues and resolve them in a reasonable 

17 and open fashion. I thank you, all of you for coming. 

18 MR. BROOKMAN: It is customary for us, all 

19 of us, to have a chance to introduce ourselves. So I 

20 would like to ask that everybody introduce yourself 

21 and say your affiliation. I'll start here and work my 

22 way around. 

23 MR. MANTHEI: Phil Manthei from Alliance 

24 Laundry Systems . 

25 

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MR. KESSLER: Alan Kessler, Amana 

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1 Appliances. 

2 MR. STILWELL: Dick Stilwell, Maytag. 

3 MR. SAMUELS: Chuck Samuels, AHAM. 

4 MR. BEST: Dick Best, Whirlpool 

5 Corporation. 

6 MR. ROGERS: Barry Rogers, Fisher & 

7 Paykel. 

8 MR. MODTLAND: Dave Modtland, Frigidaire 

9 Home Products. 

10 MR. STEPHENS: Charlie Stephens, Oregon 

11 Office of Energy. 

12 MR. ROSENSTOCK: Steve Rosenstock, Edison 

13 Electric Institute. 

14 MR. BERRINGER: Bryan Berringer, 

15 Department of Energy. 

16 MR. McCABE: Michael McCabe, Department of 

17 Energy. 

18 ASSISTANT SECRETARY REI CHER: Dan Reicher, 

19 Department of Energy. 

20 MS. MILLER: Deborah Miller, Department of 

21 Energy. 

22 MR. MARGOLIS: Eugene Margolis, Office of 

23 General Counsel, Department of Energy. 

24 

25 

MR. BIERMAYER: Peter Biermayer, Lawrence 

Berkeley National Laboratory. 

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1 MR: McMAHON: Jim McMahon, Lawrence 

2 Berkeley National Lab. 

3 MR. HENBUSTER: Robert Henbuster 

4 (phonetic), Lawrence Berkeley National Lab. 

5 MR. RIVEST: Mike Rivest, Arthur D. 

6 Little. 

7 MR. GROVER: Steve Grover, Quantum 

8 Consulting. 

9 MR. BRADLEY: Bill Bradley, National 

10 Handyman. 

11 MR. TOPPING: Dick Topping, Arthur D. 

12 Little. 

13 MR. PERSILY: Andy Persily, National 

14 Institute of Standards and Technology. 

15 MS. CASTRO: Natascha Castro, National 

16 Institute of Standards and Technology. 

17 MS. TWIGG: Barbara Twigg, Department of 

18 Energy. 

19 MR. BEE: Tom Bee, Staber Industries. 

20 MR. ECKMAN: Tom Eckman, Northwest Power 

21 Planning Council. 

22 

23 Corporation. 

24 

25 Corporation. 

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MR. FLORA: Brad Flora, Whirlpool 

MR. RIECHMAN: Curt Riechman, Whirlpool 

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1 MR: DAHMER: Mark Dahmer, Whirlpool 

2 Corporation. 

3 MR. FOLEY: Eugene Foley, AHAM. 

4 MR. MYERS: Luther Myers, Textile 

5 Innovators. 

6 MS. WILKINS: Ann Wilkins, National 

7 Resources in Canada. 

8 MS. TAYLOR: Glenda Taylor, National 

9 Resources of Canada. 

10 MR. LINARD: Jack Linard, Unilever Home 

11 and Personal Care. 

12 MR. WIEL: Steve Wiel, Lawrence Berkeley 

13 National Lab . 

14 MS. VANDEE: Laura Vandee (phonetic), 

15 Lawrence Berkeley National Lab. 

16 MR. SCHWANTES: Glenn Schwantes, 

17 Frigidaire Home Products. 

18 MR. TARRANT: Alan Tarrant, Frigidaire 

19 Home Products. 

20 MR. MORRIS: Wayne Morris, the new AHAM. 

21 (Laughter.) 

22 MR. FONDE: Arnie Fonde (phonetic), Arthur 

23 D. Little. 

24 

25 Little. 

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MR. MACKEN: Nelson Macken, Arthur D. 

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1 MR. SOUSEK: Steve Sousek, Maytag. 

2 MR. HALLOR: Gentle Hallor (phonetic) , 

3 Amana Appliances. 

4 MR. DONOVAN: Dennis Donovan, Amana 

5 Appliances. 

6 MR. FLANAGAN: Ian Flanagan (inaudible) . 

7 MS. CASENTINI: Lauren Casentini, Pacific 

8 Gas and Electric Company. 

9 MR. SCHLEEDE : Glenn Schleede, Energy 

10 Market and Policy Analysis. 

11 MR. ESSMA: Eric Essma, Clorox Company. 

12 MR. BARZEL: Dan Barz el, Circuit City 

13 Stores . 

14 MR. HORSTMAN: Doug Horstman, Maytag. 

15 MR. BRUNDAGE : Don Brundage, Southern 

16 Company. 

17 MR. BROOKMAN: For those of you in the 

18 back of the room, those are you that are at this end 

19 of the room -- I just turned my mike on. Is that 

20 better? The acoustics in here are pretty bad, so we 

21 are going to have to try and speak up. I am going to 

22 ask everybody to use the mikes. 

23 Jonathan, when they use the mikes around 

24 the table, you can pick them up okay? Okay . 

25 

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ASSISTANT SECRETARY REICHER: Two people 

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1 who aren't here but who are going to join us, and I 

2 just want to emphasize the importance that they bring 

3 to this, is Mark Mazur, who is the head of our policy 

4 off ice here at DOE, and has been very instrumental in 

5 the work you have been doing on standards. And then 

6 Mark Schwartz, who has been the deputy general counsel 

7 in the energy area here at DOE. He has also been very 

8 involved. The three offices are very working very, 

9 very closely together on these standards. They will 

10 be joining us later. 

11 MR. BROOKMAN: So the Assistant Secretary 

12 referenced and talked about the purpose of this 

13 workshop. I am going to just run through this agenda 

14 briefly. Then we are going to proceed with the day's 

15 work. 

16 The first substantive section of the day 

17 is to do an overview of clothes washer rule making 

18 status. Bryan is going to talk about that, and talk 

19 about revisions to the analysis. In the 9:45 to 10:15 

20 timeframe, talking about the test procedure issue. I 

21 guess Dick Topping, you are going to talk about a 

22 prospective plan of action. 

23 ·10: 15 to 10: 45, consumer analysis by Steve 

24 Grover. We'll take a break mid-morning this morning. 

25 After the mid-morning break, about 11:00, we'll talk 

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1 about the shipments analysis issue. Jim McMahon will 

2 be talking about that. 

3 We will proceed from there to our review 

4 of the tools and specifically the GRIM spreadsheet. 

5 Mike Rivest will be talking about that. We'll close 

6 out the day by addressing any remaining issues and any 

7 other next steps, and maybe talk about the schedule 

8 for work going ahead. We intend to end today around 

9 about 1:00. That is the general plan. 

10 There are a few housekeeping i terns, let me 

11 say briefly and quickly, I hope. Draft reports, 

12 slides, and other materials are available at the 

13 table. If you haven't received them already, Sandy 

14 and Brenda are out there at the check-in table. 

15 Anyone attending today's workshop or anyone who 

16 submitted comments will be added to the mailing list 

17 for future mailings. 

18 The comments received here today and those 

19 already submitted during the written comment period 

20 will assist the Department in developing the Notice of 

21 Proposed Rulemaking. The comment period, looking 

22 ahead, ends around about August 3. Is that correct? 

23 I think for this workshop, comments in by August 3. 

24 

25 

My name is Doug Brookman. I will be 

facilitating this workshop. In approximately two 

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1 weeks, a complete copy of the transcript, plus all the 

2 comments received will be available for inspection and 

3 copying in the Department of Energy's Freedom of 

4 Information Reading Room, which is located on the 

5 first floor, and specifically that is lE-190. 

6 Those that wish to purchase a copy of the 

7 transcript can do so from Jonathan and his company. 

8 So you should get his business card before you leave 

9 here today. 

10 Also, we posted up the website address for 

11 those of you that don't already have it. It's long. 

12 It's complicated, but it's there. So please 

13 virtually all of this information is available on the 

14 website. Many of you have access. I encourage that 

15 as an efficient way to get to information. 

16 We are going to take a break mid-morning. 

1 7 The Department has graciously provided coffee and 

18 snacks. They will be available here. So you don't 

19 need to go anywhere else. The restrooms are located 

20 down the hall as you exit, all the way to the left. 

21 I suspect all the way at the other end of the hall on 

22 the right there are restrooms, both male and female, 

23 down there as well. 

24 All written comments and data submissions 

25 will be available for public inspection at the same 

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1 reading room I referenced earlier. Ten copies of 

2 comments or data are requested for submittal to the 

3 Department. The Department would also appreciate an 

4 electronic copy of comments or data. WordPerfect 6.1 

5 is the format that they like to use. In fact, I think 

6 it is the only format that they use. 

7 No faxed comments will be accepted. 

8 There's a new aspect to the submitting comments. That 

9 is, e-mail comments will be accepted, provided that a 

10 signed hard copy is also sent to the Department. So 

11 I think that is a new way of doing, receiving comment, 

12 I believe. 

13 Those e-mails and hard copies should be 

14 sent and addressed to the Department, care of Bryan 

15 Berringer in the Federal Register notice for the 

16 supplemental ANOPR. 

17 Those persons that are submitting data or 

18 information they deem to be confidential, should 

19 follow the same basic procedures, one complete copy 

20 and 10 copies. The Department will then make a 

21 determination about whether that information indeed 

22 should be classified as confidential. Right? Yes. 

23 No smoking is allowed in this room or in 

24 this area here. There is smoking available downstairs 

25 outside. 

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1 before, someone will help you find it. .I said where 

2 the restrooms are. That's basically the housekeeping 

3 items. 

4 For those of you who haven' t already 

5 signed in or handed your business card to Sandy or 

6 Brenda at the front desk, at the break, please do so. 

7 Questions before we proceed? A few people 

8 did not get a chance to introduce themselves at the 

9 outset. Steve, would you introduce yourself? 

10 MR. NADEL: Steve Nadel, American Council 

11 for an Energy Efficient Economy. 

12 MR. BROOKMAN: Did anyone not get a chance 

13 to introduce themselves? 

14 MR. HAWKINS: I didn't. Larry Hawkins, 

15 General Electric Appliances. 

16 MR. BROOKMAN: Thank you. Thanks for 

17 joining us. Thanks to all of you for being here on 

18 time. You are looking pretty bright this morning all 

19 together, being how it's a rainy, muggy day, and it's 

20 a good start. 

21 Over the span of process improvement and 

22 processed reinvention, norms have emerged for these 

23 meetings. I would like to ask for your consideration 

24 

25 

for them to be followed today. We have a lot to 

cover. We are going to try and stay very focused on 

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1 it. 

2 I am going to· ask that everyone speak one 

3 at a time. Please use the microphones. Say your 

4 name. I will be queuing people to speak. It is 

5 important that everybody share the air time and be 

6 concise. Sometimes that may require you to take a 

7 note. Just kind of zero in on what you are trying to 

8 say. 

9 As for the conduct of the meeting itself, 

10 the actual mechanics of it, I do a complicated system 

11 relatively speaking, as facilitators go. That is, I 

12 queue people to speak, but I also try and allow for 

13 the exchange, for the follow-on. Because what we are 

14 trying to create here is the kind of exchange that 

15 creates a lot more light than heat, just to use a 

16 metaphor. 

17 So please bear with me. If for any reason 

18 I queue you up to speak and then I drop you out, don't 

19 let me get away with it. That occasionally happens. 

20 So that is the general game plan. Are 

21 there questions and comments or concerns at the 

22 outset? I see none. 

23 Let me ask you one final question. On the 

24 agenda, are there any additional topics that need to 

25 be taken up today that do not fit in the framework of 

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1 this age'nda? That are necessary to take up today that 

2 do not fit in the framework of this agenda. Okay. I 

3 see no comment on that. 

4 Then let's proceed. Bryan, you are up 

5 first. Take it away. 

6 MR. BERRINGER: Can everybody hear me in 

7 the back? Okay, for those who don't know me, I am 

8 Bryan Berringer, the Project Manager for the Clothes 

9 Washer Standards Rulemaking. Basically I would just 

10 like to overview what we have done to date as far as 

11 since the last workshop, since the supplemental ANOPR. 

12 So I'll just sort of highlight that. 

13 Basically what's new? We haven't -- all 

14 the information was put on the website, the 

15 information, the analysis that's available for today. 

16 It's also in the back there. I apologize, I did have 

1 7 some slides I wanted to make up as far as the 

18 analysis, but I'll tell you what pages if you have the 

19 handouts that are available. 

20 Basically, the first thing that's since 

21 the supplemental ANOPR and for the ANOPR analysis, we 

22 basically did not make any changes to the engineering 

23 

24 

25 

analysis. The big changes were the life cycle cost 

analysis. We included the marginal energy rates, 

which was a recommendation by the Advisory Committee, 

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1 which substitutes where before we were using average 

2 prices. 

3 In addition, we have also included the 

4 water rates as one of the major ones, major changes 

5 that's been incorporated in here. We have also 

6 included information as far as the LPG and the A099, 

7 as far as the electric, gas, and oil. Manufacturers' 

8 markups have been changed from a triangular 

9 distribution from a rectangular triangle 

10 distribution with different standards to a 

11 rectangular, if I said that correctly. 

12 MS. MILLER: Now explain it. 

13 MR. BERRINGER: It is explained thoroughly 

14 in the report. How about that? 

15 (Laughter.) 

16 MR. BERRINGER: Basically you can see 

17 these changes in the LCC report. If you don't have 

18 it, it is available in the back. There's limited 

19 copies. There is some information. You can see 

20 basically on page eight, the one graph sort of shows 

21 that they are using the marginal energy rates, and 

22 correct me if I'm wrong, there was very little change 

23 

24 

25 

between the analysis that resulted from the ANOPR to 

the NOPR analysis. So that can be seen sort of on 

page eight of the LCC report. 

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1 You can also see on page five, actual 

2 results as far as using the AO reference case, on page 

3 five. 

4 MR. BROOKMAN: Do they have the LCC 

5 report? 

6 MR. BERRINGER: They should have. This 

7 information was available on the web, and is also 

8 available in the back. 

9 MR. BROOKMAN: You are creating a 

10 reference point for them as you walk through the basic 

11 major changes you have made, the major revisions that 

12 you have considered in the LCC report. 

13 Steve Rosenstock? 

14 MR. ROSENSTOCK: Steve Rosenstock, Edison 

15 Electric Institute. This is the June 1999 version. 

16 There hasn't been any others that have been 

17 MR. BERRINGER: No. This is what we are 

18 referring to, what was put on the web. We have not 

19 made any changes. 

20 The second, we talked was the NES results 

21 that's also -- there's a report available that was on 

22 the web. That's basically been re-run. We put the 

23 new shipments analysis in there. That is going to be 

24 further discussed by Jim McMahon later today, as far 

25 as what was done with the shipments. Also, we have 

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1 Steve Grover from Quantum to talk about the consumer 

2 analysis, the focus groups and conjoint analysis that 

3 fit into the shipments report, along with calibrating 

4 with the historical shipments. 

5 Additional changes were the fuel flight to 

6 source conversion, from a constant conservation factor 

7 to a time series projected conservation series 

8 changing from year to year. We also changed the H 

9 axis base case escalation rate. Before in the ANOPR, 

10 it was three percent. For the 1998 shipments, we are 

11 expected to increase by .5 percent per year. In the 

12 NOPR, we have changed that to 6.25 percent of 

13 shipments in 1998. We basically used three scenarios, 

14 a .25, a .5, and .75 scenario. So that is also in the 

15 reports. 

16 The water escalation prices before 

17 previous in ANOPR, we had a zero percent. We have 

18 changed that to a 3.04 percent per year for the NOPR. 

19 Also, there was a change in the 

20 manufacturing markups in this analysis. Before, the 

21 ANOPR used the shipment weighted average. One value 

22 was used for each standard. The NOPR used the range 

23 of markups to calculate for each standard level. 

24 

25 

So if you look at the NES report, on page 

eight, you can see some of the results. Again, that 

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1 is dated June 1999, available on the web, and in the 

2 back. Page eight is pretty much a summary. There's 

3 a number of scenarios. Upper and lower bounds were 

4 used. So on page eight, there it talks about the 

5 energy savings, the water savings, and the net present 

6 value results. So that pretty much summarizes the 

7 results for the NES. 

8 was there any questions pertaining to the 

9 NES report or results? 

10 MR. SCHLEEDE: Glenn Schleede. Question 

11 on the water and sewer prices that fed into the 

12 analysis. Are they marginal prices or average prices? 

13 MR. BERRINGER: I would def er that to LBNL 

14 If you could come to the mike here. We briefly 

15 discussed this at the last workshop, and went into 

16 pretty much detail on the water rates. But if you can 

17 just sit right there and introduce yourself. We've 

18 got Peter Biermayer from LBNL. 

19 MR. BIERMAYER: Peter Biermayer, LBNL. 

20 Those are marginal prices. Basically what we did is 

21 we subtracted out the sixth rate. Then it's based on 

22 a certain amount of water usage. It was sort of the 

23 average of 1,000 gallons of water per month. 

24 

25 

MR. SCHLEEDE : The fixed portions of 

consumer bills are excluded, correct? 

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1 MR. BIERMAYER: Yes. They are subtracted 

2 out. 

3 MR. SCHLEEDE: May I ask another question, 

4 on life cycle costs or do you want to hold that until 

5 later? 

6 MR. BROOKMAN: Does it fit here? 

7 MR. SCHLEEDE: I don't know if it does or 

8 not. I just don't want to miss it. 

9 MR. BERRINGER: This would be an 

10 opportunity. I just talked about that, so go ahead, 

11 if you could raise the question. 

12 MR. SCHLEEDE: Question. I didn't see 

13 anything in here on maintenance repair costs or 

14 maintenance and extended warranty agreements. First, 

15 did I miss it? Or is it still excluded? And second, 

16 if it is excluded, is it the Department's position 

17 that such costs are not a part of life cycle costs? 

18 MR. BERRINGER: Bryan Berringer. 

19 Basically, we have no information at all pertaining to 

20 that. At this point, unless we have sufficient data 

21 or analysis that would show the usefulness, and that 

22 this point we do not intend because we do not have any 

23 basis to do that. 

24 

25 

MR. SCHLEEDE : Is it the Department's 

position that those costs are not a part of life cycle 

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1 costs as used in the statute? 

2 MR. MCCABE: Michael McCabe. They are 

3 certainly a part of the consumers' costs. In the life 

4 cycle cost analysis, we are trying to capture, among 

5 other things, the difference in life cycle cost from 

6 one efficiency level to the other. The information 

7 that has been provided to DOE to date with respect to 

8 the maintenance costs, warranty costs, there's nothing 

9 to indicate that there would be any difference in 

10 those prices as would relate to energy efficiency. So 

11 it's assumed for the time being that they are the same 

12 across all range of efficiency. Therefore, it can be 

13 netted out . 

14 MR. SCHLEEDE: Where is that information 

15 available that you are relying -on? 

16 MR. MCCABE: We have not received anything 

17 on the life cycle cost difference. I said that was 

18 pretty much from the body of all the rulemakings. 

19 That's been one area where we have not gotten much in 

20 the way of data. 

21 MR. SCHLEEDE: I misunderstood what you 

22 just said. Earlier I thought you said that based on 

23 the information you have, there is no difference, no 

24 significant difference . 

25 

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1 that would show that there is any difference. 

2 MR. SCHLEEDE: So you basically haven't 

3 looked at. You have not collected data that would 

4 show whether there's a difference or not? 

5 MR. MCCABE: We have not received any data 

6 that would show there's a difference. 

7 MR. SCHLEEDE: And you still conclude that 

8 you don't have to consider it as a part of life cycle 

9 cost? That is the Department's position? 

10 MR. MCCABE: It is assumed that for the 

11 purposes of this analysis, that those costs are the 

12 same across the full range of efficiencies. So we're 

13 trying to capture changes in the life cycle costs, 

14 they wouldn't matter. 

15 MR. SCHLEEDE: Thank you. 

16 MR. ROSENSTOCK: Steve Rosenstock, Edison 

17 Electrical Institute. Since this workshop is a 

18 different focus, I have made a lot of comments about 

19 the economic analysis outside of the shipments and 

20 consumer analysis. I don't know when the next -- is 

21 the next go-round of the life cycle cost natural 

22 energy savings going to be dependent on the test 

23 procedure? I gather that if there is a revision, it 

24 might change some of these numbers again. It might be 

25 done. There might be another revision? 

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1 MR. BERRINGER: Yes. Bryan Berringer. 

2 Right now we don't know if it's necessary to go back. 

3 That is sort of what Dan talked about in the 

4 beginning. If the test procedure shows that the 

5 cloth, once we specify the cloth, we may have to go 

6 back and have manufacturers re-test during what we 

7 call a spec. cloth with a certified cloth that 

8 everybody would feel comfortable. · So yes, all the 

9 analysis may have to go back and be redone, including 

10 the LCC and NES. 

11 MR. ROSENSTOCK: A lot of my comments were 

12 really not based on the test procedure, more on the 

13 analytic side of the workshop . 

14 MR. BERRINGER: Correct. 

15 MR. ROSENSTOCK: So I'm not going to 

16 really --

17 MR. BERRINGER: Thank you, Steve. We do 

18 have your written comments. If you have additional 

19 ones. We don't anticipate any of the methodologies of 

20 course changing. It would just be changing the 

21 numbers as far as input. 

22 MR. BROOKMAN: Additional questions? 

23 Steve Nadel? 

24 

25 

MR. NADEL: Yes. I'm not exactly sure 

whether this is the place for it, but I had a question 

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1 specifically about the costs that are used in the 

2 is this the appropriate place for that? 

3 MR. BERRINGER: This would be the 

4 appropriate place, yes. 

5 MR. NADEL: As I understand it, the 

6 analysis, even with the revisions, relies totally on 

7 the information submitted by AHAM a number of years 

8 ago. My question is what, if anything, have you done 

9 to modify or incorporate the results of the reversed 

10 engineering in this economic analysis? 

11 MR. BERRINGER: We have not incorporated 

12 any of that information. We feel that's sort of an 

13 apples to oranges. It is there for a basis for us to 

14 make decisions, but it was a Greenfield study that was 

15 used where also the analysis that was sent to AHAM was 

16 actually shipment weighted. So there is a factor 

17 there. Where we looked for the reverse engineering, 

18 we used a Greenfield study, and looked at the numbers. 

19 So we don't feel that there is a correlation, a direct 

20 correlation where we can feed those numbers into the 

21 engineering analysis directly. 

22 MR. NADEL: Okay. I guess to then move 

23 into a comment. I would say that the two have a cost 

24 difference of roughly a factor of two at the higher 

25 efficiency levels. In some way maybe it's a separate 

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1 analysis, but you need to look at an analysis that 

2 looks at what are the impacts assuming that the 

3 reversed engineering costs apply and not the 

4 manufacture estimates, particularly given that the 

5 manufacturers are not a totally disinterested party in 

6 this proceeding. 

7 MR. BERRINGER: Yes. Just to further on 

8 that. As you remember, in the reverse engineering we 

9 did take the H axis levels. We took two machines and 

1 O we averaged those numbers. So again, when you average 

11 that and also the baseline -- we took two units and 

12 averaged, you are looking at an H axis machine that 

13 might not necessarily exist. But we did that for the 

14 purpose of comparing that to the Whirlpool prototype. 

15 That was the main purpose of the reverse engineering. 

16 MR. NADEL: I guess I would submit that 

17 when we first discussed collecting data from 

18 manufacturers, there was a lot of concern among the 

19 non-manufacturer parties that that data needed to be 

20 corroborated by independent sources. It was at that 

21 time discussed that the reversed engineering would be 

22 that corroboration. 

23 So I think you need to either use the 

24 reverse engineering in a separate analysis and then 

25 the decisionmakers can decide which one to emphasize, 

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1 or come up with some other corroboration. 

2 Corroboration, from our point of view, is 

3 the primary purpose of the reverse engineering. If 

4 you change that purpose, then you need to find 

5 something else to corroborate, or figure out a way to 

6 use that to corroborate or do an alternative analysis, 

7 because they don't seem to corroborate very closely. 

8 MR. BROOKMAN: Thank you. Other comments 

9 before we proceed? Questions? 

10 Okay. The next basically new information 

11 is the consumer survey information. We again did the 

12 focus groups to see what attributes that they felt 

13 were important. We also followed that up with a 

14 conjoint analysis, which was one of the majors. We 

15 had a little working group that that was the route 

16 that was felt was the most logical way, was to do the 

17 conjoint. Steve Grover from Quantum is going to go 

18 into that in a little bit more detail later on, so I 

19 won't say any more about that. You can ask questions 

20 at that time on the consumer analysis. 

21 Also, new information as far as the 

22 shipment analysis, which will be presented by LBNL, 

23 Jim McMahon, later today, which is new. The clothes 

24 washer shipment estimates are the necessary inputs 

25 into the manufacturer impact analysis and the NES 

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1 calculations. So that feeds into those two analyses. 

2 A new spreadsheet was developed by LBNL, which 

3 incorporates the information from the DOE consumer 

4 analysis, and also again, using the calibrating to 

5 historical purchases. 

6 Again, we'll talk about that a little bit 

7 later, so that would be an appropriate time to speak 

8 more about the shipments analysis. You should also 

9 have the report, in the back or also available on the 

10 webpage. 

11 The manufacturing impact analysis, 

12 basically Arthur D. Little, Mike Rivest will talk 

13 about the GRIM spreadsheets that they developed. They 

14 are in the process. They have done the interviews. 

15 They are going back to the manufacturers and sort of 

16 getting verification that the sections they have are 

1 7 appropriate, that no confidential information is being 

18 divulged. So that's sort of in the review process. 

19 Again, all that information, if we find 

20 with the test procedure which we feel is critical, 

21 that analysis could change along with shipments, NES, 

22 LCC. So it's really dependent on what we find out 

23 with the test procedure. But that is in the process. 

24 We hope to at least get a draft report in the near 

25 future. 

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1 Then also the net national employment 

2 results, that's new information. Basically in that 

3 report, short report, also dated June 1999, you can 

4 actually see on the graph, it's figure one, what the 

5 results are. Basically we did the nine clothes washer 

6 scenarios with efficiencies ranging from zero to five 

7 percent. You can also for a given year, the change in 

8 number of jobs. The economy is relative to the case 

9 of no new standards. So that's sort of the key 

10 results there. 

11 Does anybody have any questions about the 

12 net national employment results? 

13 MR. BEST: Dick Best with Whirlpool. This 

14 particular study I guess we probably have some comment 

15 on, but we need some time to digest it. I think the 

16 first response is that it's a nice theoretical study, 

17 but it doesn't give any indication necessarily of what 

18 type of jobs are being replaced with what. I mean the 

19 fact that there's jobs changing in itself may not be 

20 that significant. 

21 MS. MILLER: Deborah Miller. Dick, do you 

22 have anything that you would suggest instead or after 

23 you have a chance to digest it, might you have some 

24 recommendations on how we might do it better? 

25 

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1 think about this one, because you know, quite frankly, 

2 here and we see it happening in many cities across the 

3 country, where you replace manufacturing jobs, they 

4 don't necessarily get equivalent jobs. They end up in 

5 service industries at much lesser employment levels, 

6 and those type issues. 

7 MR. BROOKMAN: David Modtland? 

8 MR. MODTLAND: Dave Modtland, Frigidaire. 

9 Just a comment on one of the assumptions that's in the 

10 back of the report. It says 

11 MR. BROOKMAN: I would like to ask that 

12 everybody try to speak up. 

13 MR. MODTLAND: A comment on the assumption 

14 in the back. It says we assume that there's neither 

15 an increase or a decrease in water utility related 

16 employment. I guess since the higher efficiency tends 

17 to be to conserve water as well, it seems that that 

18 may not be a valid assumption. I am wondering if the 

19 utility people had any comment on that. 

20 MR. BROOKMAN: Jim McMahon is going to try 

21 and address that. 

22 

23 

24 

25 

MR. MCMAHON: Jim McMahon from LBNL. The 

model that we were using did not have a breakout of 

water utilities. We have since done supplemental 

calculations based upon information about the number 

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1 of jobs per revenue in what utilities. We have a 

2 revised estimate that we'll be making available. So 

3 we will take care of that in the next round. 

4 MR. BROOKMAN: Glenn Schleede? 

5 MR. SCHLEEDE: It's a different subject 

6 than this, so do you want to continue on employment? 

7 MR. BROOKMAN: Thank you. Let's continue 

8 on with this. Thanks for that inhibition. 

9 MR. BERRINGER: Was there any more 

10 comments on the employment results? Again, we have 

11 some opportunities for written comments after the 

12 workshop. I know that this is new information. You 

13 need time to look at that and give us further, your 

14 input. Written comments are greatly appreciated. 

15 MR. BERRINGER: Glenn, what was your 

16 question pertaining to? 

17 MR. SCHLEEDE: Sorry. I need to go back 

18 on one on the water prices. Where can the data be 

19 seen that actually lies behind the conclusions 

20 reflected in here? The only thing referenced I found 

21 to it in the documentation is that it will be 

22 available in the TSD. But I see no real detailed 

23 explanation or none of the raw data. Where can I get 

24 all of that? 

25 

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1 available. We plan on putting that in the TSD, which 

2 would be the next step. We will put those results on 

3 the web page. 

4 MR. SCHLEEDE: Is there any possibility of 

5 getting it earlier? 

6 MR. BERRINGER: Jim McMahon, do you wish 

7 to respond? 

8 MR. MCMAHON: It's the Department's call. 

9 We can make it available. 

10 MR. BERRINGER: Is there any proprietary 

11 information that is contained in that? 

12 MR. MCMAHON: No. 

13 MR. BERRINGER: We can make that available 

14 shortly after the workshop then. 

15 MR. SCHLEEDE: Thank you. 

16 MR. ROSENSTOCK: Steve Rosenstock. Just 

17 a quick comment. As I recall at a previous workshop, 

18 there was some data presented, 1986 data versus 1996 

19 data for water rates. I guess that's been 

20 supplemented now. I am just curious if the data sets 

21 have been expanded now. I just remember there was 

22 that one basic data set that was presented at the 

23 

24 

25 

previous workshop. I don't know if that's been 

expanded for this analysis or not, but I just remember 

that was presented at that point. I don' t know if 

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1 it's been expanded or not. 

2 MR. MCMAHON: Jim McMahon at LBNL. Yes, it 

3 has been expanded. We'll make it all available. 

4 MR. BROOKMAN: Dave Modtland? 

5 MR. MODTLAND: Dave Modtland. A comment 

6 again on the national net employment results. Figure 

7 six seems to be a little counter-intuitive. That's 

8 dealing with the projected U.S. consumer savings in 

9 energy and water bills versus energy efficient leveJ,.s. 

10 It is showing that at 35 to 40 percent, you will save 

11 more money than a 45 percent efficient standard. 

12 MR. BROOKMAN: Please say the page number 

13 again . 

14 MR. MODTLAND: Page eight, figure six. 

15 MR. BROOKMAN: Thank you. 

16 MR. MCMAHON: Are you comparing the 45 

17 percent to the 35? 

18 MR. MODTLAND: Correct. 

19 MR. MCMAHON: Jim McMahon. I don't have 

20 a specific answer for you. We can get back to you. 

21 MR. ECKMAN: I have looked at that. It is 

22 because the water savings are larger at the 35 

23 percent. 

24 MR. BROOKMAN: Excuse me, Tom. Could you 

25 come to the mike and introduce yourself for the court 

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1 reporter? There is a standing mike right there in the 

2 corner . 

3 MR. ECKMAN: If you look at the 

4 engineering analysis -- Tom Eckman, Northwest Power 

5 Planning Council. If you look at the engineering 

6 analysis, the water savings are larger at the 40 and 

7 35 percent level than they are at the 45 percent 

8 level, and that is what is going to generate those 

9 differences. 

10 MR. BROOKMAN: Can you say why? 

11 MR. ECKMAN: I don' t know, because I don' t 

12 know what the technology is that gets you to 45 versus 

13 40 and 35. All we know is performance levels . 

14 MR. BROOKMAN: Thank you. 

15 MR. BEST: Dick Best, Whirlpool. One 

16 additional comment on the net employment impact. I 

1 7 believe this excludes one factor that needs to be 

18 added to the study. That is the employment impact on 

19 the clothes dryer industry. The reason is that a 

20 sizeable percentage of clothes dryers are sold as 

21 pairs with clothes washers. So any change in volume 

22 shipments in clothes washers will also have an effect 

23 on the shipment of clothes dryers, which will also 

24 

25 

impact the dryer industry. So I ask that that be 

considered for inclusion in this. 

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1 MR. BERRINGER: Okay, thank you. That is 

2 one of the things I guess we found reasonably during 

3 Mike Rivest's going through manufacturing impact 

4 interviews. That is why he had developed a separate 

5 spreadsheet for the dryer industry. So we will look 

6 at that. Thank you. 

7 Any othe:r: questions on these subjects? We 

8 have got one more left. The last subject was the 

9 environmental assessment, new results. It is a one10 page results. It's also available on the web. 

11 Basically what I would like to note is what happened 

12 is the analysis that they get basically from EIA, the 

13 NEMs, only goes to 20-20. So table one are the 

14 results that go 20-20, and what was done then was an 

15 extrapolation to 20-30, so as far as the results. 

16 Obviously as you get higher efficiencies, you get more 

17 -- you have better savings as far as the emissions. 

18 Are there any questions as far as the 

19 emissions results or what was done there? 

20 MR. ROSENSTOCK: Steve Rosenstock, Edison 

21 Electric Institute. I made some written comments, but 

22 I don't know how far you are going to go on the 

23 emissions area. Are you going to include other 

24 emissions that are out there as well? Are you going 

25 to look at the production side as well? Because this 

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1 analysis, if you are going to do emissions, right now 

2 it' s incomplete. It also doesn't take into effect 

3 that by 2003, more than 70 percent of the population 

4 will choose their electric supplier of choice. That 

5 could have a dramatic impact on just the electric side 

6 of the equation. 

7 MR. BROOKMAN: Steve, can you say what 

8 else should be included that's not in there presently? 

9 MR. ROSENSTOCK: I put it in my written 

10 comments. I just wanted to make a summary comment. 

11 It's in my written comments. 

12 MR. BERRINGER: Okay, thank you. 

13 Basically the emissions that we are looking at are, 

14 what we have typically done in the analysis and I 

15 think are mandated as far as looking at. So we will 

16 address those comments. 

17 Was there any other questions as far as 

18 the analysis? We have some test procedure, getting 

19 into that aspect. Again, there's a comment period as 

20 far as any of this information. The material is on 

21 the website. That is our main website page, just as 

22 

23 

24 

25 

a note. When you go into that, if you go into 

"Stakeholder Information" then "Product-specific 

Information" linked to that. Then you can go into 

"Clothes Washers." That is basically where all this 

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1 information is, as far as downloaded . 

2 There's alsQ the Excel spreadsheets are 

3 available on the web page also. That's something that 

4 wasn't provided. But if you have trouble downloading, 

5 please let us know and we'll try to get you copies of 

6 the spreadsheets. 

7 All right. With that said, I think we can 

8 move onto one of the next issues, is the test 

9 procedure. 

10 MR. MODTLAND: Dave Modtland. I guess I 

11 was expected in the status to have some type of 

12 overview of the schedule. Is that going to be covered 

13 sometime today or at the end? 

14 MR. BERRINGER: I think Arthur D. Little 

15 is going to touch on that in their presentation, a 

16 little bit. I can tell you basically jumping ahead 

17 would be we're looking at hopefully trying to find a 

18 specification or a process by the end of September, is 

19 what the timeframe we're looking at. That would be 

20 obviously specking out the cloth, coming up with a 

21 process, so we have a certified cloth and something 

22 that's a repeatable type of testing. 

23 Then at the end of September, we would 

24 look back to the manufacturers if we have some 

25 conclusive results, is ask -- get that cloth out to 

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1 the manufacturers and have it retested so we can have 

2 an idea if the analysis that was submitted by the 

3 manufacturers is still good. If there needs to be 

4 revisions, corrections done to that. 

5 MR. MODTLAND : I guess my question was 

6 more directed at the standards overall in general. 

7 MR. BERRINGER: The schedule as far as the 

8 standard rulemaking? 

9 MR. MODTLAND: Yes. 

10 MR. BERRINGER: We expect that we will 

11 have some delays. Right now, we will probably push 

12 the NOPR out. Again, we're looking at some unknowns 

13 with the test procedure. So I can't give a 

14 definitive. We're trying, again, the commitment is to 

15 work as quickly as possible. I anticipate that the 

16 NOPR publication, which is now in December, may slip. 

17 But our goal was still to make up some time and go for 

18 a final rule at the July 2000 timeframe. So we are 

19 still pushing for that. 

20 MR. BROOKMAN: Additional questions, 

21 comments before we proceed? Okay. 

22 MR. BERRINGER: Test procedure. I know a 

23 lot of you, this is something that's really come up 

24 recently. It's basically talking about it affects 

25 it is the major factor as far as the modified energy 

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1 factor. It takes into account the dry energy which 

2 would reflect in the remaining moisture content. 

3 Basically we released in the last TSD, 

4 some testing that we had done by an independent 

5 laboratory. Those results were sort of questioned. 

6 We went back to the indi victual manufacturers and asked 

7 them if these results looked correct. Basically they 

8 said there were discrepancies, mainly in the remaining 

9 moisture content. We sort of focused on that. In May 

10 of this year, we actually met with ITS and had some 

11 follow-up testing. That is where we really found that 

12 there was discrepancies in the test cloth. 

13 But the key factor is that we feel now is 

14 the test cloth that we're focusing on. There may be 

15 some other issues. We hope to capture those also. 

16 Basically the overall effect is if the 

17 data that was submitted for the engineering analysis 

18 by the manufacturer, that those MEFs or those values 

19 for the baseline are off, then our whole results would 

20 have to be redone and reanalyzed. So our first step 

21 is to find a cloth that is appropriate, and make sure 

22 we get in the future, have repeatable results as far 

23 as a cloth that meets a certain tolerance or 

24 specification . 

25 So that was something that we recently 

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1 discovered. I guess actually at the end of May is 

2 when we really definitively found out that there was 

3 a discrepancy in the cloth. 

4 We have basically - - we formed a team. We 

5 have been working on it pretty diligently since May. 

6 As a matter of fact, we had a number of conference 

7 calls before our meeting at ITS. We have had a 

8 number, three or four conference calls after. 

9 Everybody has been working together. We have had 

10 NIST, AHAM, LBNL, A.D. Little. ITS has been very 

11 helpful as far as doing the test. Also, I would like 

12 to -- Textile Innovators, Luther Myers, has been very 

13 involved and very cooperative from the textile 

14 industries. We're trying to work we also have the 

15 Department, and Dick Topping will talk about this 

16 more, what the plan of action is. We also have the 

17 Department of Agriculture doing some various 

18 characteristic testing for us. I will let him further 

19 go into that. 

20 Initial steps, is we examined the 

21 potential causes of the RMC variations. We reviewed 

22 those test methods at ITS. We basically found that we 

23 had two different cloths. They were actually from two 

24 

25 

different suppliers in this case. But we found a 

variation that showed an MEF, if we're looking at an 

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1 improvement, it showed a machine that may have been 30 

2 percent. It could also be 20 percent. So there was 

3 almost a 10 percent variation in those MEF numbers. 

4 If there's that much variation, it's hard 

5 to set a standards level at any level, especially when 

6 you see the step increases at five percent, where the 

7 significant changes are. So if you are talking about 

8 a 10 percent difference, that is very significant in 

9 this rulemaking. 

10 I kind of touched on that, the two 

11 different results of the test cloth, resulted in 

12 different RMCs. Again, we had the RMC is a factor in 

13 the denominator. It is used in the calculation of the 

14 MEF. So it's a very critical factor. 

15 Again, we have been looking at the 

16 trying to further investigate the characteristics of 

1 7 these two cloths that we found discrepancies in. 

18 Obviously there's going to be some other ones. We 

19 have got cloth being analyzed by Textile Innovators 

20 and also another supplier, Cotton Goods, it will be 

21 looked at. So that we can make sure, inspect the 

22 cloth out as the first step. We just feel that we're 

23 going to continue and try and set up a more detailed 

24 plan of action to make sure we can nail down this 

25 issue quickly. 

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1 So that's sort of the next slide, is the 

2 next step, is to actually try to resolve this quickly, 

3 spec out a cloth. Come up with something we can 

4 certify this cloth, that when we do it in the future, 

5 if we buy it five years down the road, that it's going 

6 to have the same characteristics and give us the same 

7 sort of results within a tolerance and acceptable 

8 tolerance. 

9 So a task force has been created, as we 

10 discussed, with various manufacturers, laboratories, 

11 textile manufacturers. We are going to try and 

12 further coordinate -- A.D. Little is going to. Dick 

13 Topping is heading up the group as far as coordinating 

14 the planning action. 

15 So if there is no detailed question, we do 

16 have Dick ~opping that's going to go further into it. 

17 If you have any general comments for me, by all means, 

18 at this time. 

19 MR. BROOKMAN: Chuck Samuels? 

20 MR. SAMUELS: I just wanted to give an 

21 overall industry perspective on this test procedure 

22 issue. Just as everyone knows, there's pretty wide 

23 diversity among the manufacturers in terms of their 

24 position on the standards and the level, the effective 

25 date. There is not a consensus on what the level of 

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1 significance is on this test procedure issue, what 

2 needs to be done about it, and what impact it 

3 ultimately will have on the rulemaking. 

4 But there are three points that all the 

5 manufacturers do agree on. I think that's important. 

6 The first thing is that this is a matter that must be 

7 dealt with before the proposed rule is issued. It 

8 would not make sense, either from an analytical point 

9 of view or legal or policy point of view to proceed 

10 until we understand the significance of this, what the 

11 fix is, what implications it has for the data that's 

12 in the system, and then we do something about it. 

13 We don't think that people would be able 

14 to make very meaningful comments on virtually any part 

15 of this rulemaking that's of any importance until this 

16 is dealt with. 

17 The second thing is, we don't see this as 

18 a government problem alone. We were an integral part 

19 of the development of the test procedure. We have a 

20 responsibility to be an integral part of trying to 

21 resolve this as quickly, but effectively as possible. 

22 So we stand ready to cooperate in any reasonable way. 

23 I appreciate Bryan's comments about our cooperation so 

24 far. I think you are going to see it continue . 

25 

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1 who is interested in this rulemaking should want to 

2 see this fixed, and fixed effectively. It's not just 

3 the manufacturers that have an arcane interest in 

4 uniform or repeatable results. The government has a 

5 huge interest in it, and anyone who doesn't want to 

6 see us moving forward not only with a shaky 

7 rulemaking, but even beyond that with a standards or 

8 test procedures that might have potential loopholes .in 

9 it, ought to want to see this get fixed and get fixed 

10 now. 

11 So we appreciate the way that DOE has 

12 organized itself and through ADL to deal with this. 

13 We will be there to work with you to resolve it as 

14 soon as we can. 

15 MR. BERRINGER: Thank you. Are there any 

16 other questions as far as the test procedure? 

17 I will turn it over to A.D. Little to go 

18 into a little bit more detail as far as the plan of 

19 action. 

20 MR. TOPPING: Good morning. For those of 

21 you that asked, yes, I am glad to be back. It is, 

22 it's actually good to be here, see some familiar 

23 faces, touch base with some friends. 

24 Bryan introduced the issue. I use that 

25 word deliberately. I think this is an issue. I don't 

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1 think it' s a problem yet . We'll see if it's a 

2 problem. But I guess the best way to describe it is 

3 to show you the data. 

4 About a month or a little bit longer than 

5 a month ago, some test data was developed that showed 

6 a fairly significant difference in remaining moisture 

7 content testing, when identical tests were done using 

8 two washing machines and two different test loads of 

9 test cloths. As you can see there, there was about a 

10 10 point difference in average RMC, both using two 

11 different washers, identical RMC tests, but two 

12 different test loads of clothing. One which resided 

13 at the test lab, and one which was supplied by the 

14 Amana or Alliance Laundry group. 

15 So also interestingly enough, those two 

16 test loads had been procured from two different 

17 companies. If you're not aware, these two companies, 

18 Cotton Goods and Textile Innovators, actually take 

19 cloth from mills, and it can come from different 

20 mills. Then they process the cloth, cut it, and hem 

21 it, and then provide it as test cloth to people doing 

22 testing. 

23 So, so what? I mean in terms of that 10 

24 points of difference. Well, you do a couple of back25 of-the-envelope calculations. This is part of the so 

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1 what. You take a high efficiency horizontal axis 

• 2 

3 

machine, and basically assume that the RMC would 

increase 10 points. Then plug those numbers into the 

4 modified energy factor equation. You get a 

5 significant difference. The MEF drops by 13 percent. 

6 Now if you take a machine that's a little 

7 less efficient, a vertical axis washer, where more of 

8 the energy consumed is to heat water and to actually 

9 run the washer so that the RMC component is not as 

10 large, and you add again hypothetically, a 10-point 

11 increase to RMC, you get about a six percent decrease 

12 in MEF. So that kind of bounds the range of 

13 differences in MEF that that sort of change in RMC can 

• 14 get you. 

15 So that is significant. It obviously 

16 impacts very much the test procedure and the results. 

17 Another implication, and I think Chuck 

18 mentioned this, is that the manufacturers have 

19 developed cost efficiency data for washers and design 

•• _ ...... '·,!'" ... ~::: ••••• 20 options in terms of how much it would cost to get to 

21 high levels of efficiency. 

22 Now hypothetically, if those manufacturers 

23 used different test cloths and the results varied, 

24 such as we see here, then the results that were 

• 25 provided to DOE to do its analysis could be 

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1 inaccurate, or certainly there could be a band of 

2 uncertainty around them. 

3 But a caveat is, and we have done some 

4 discussion with the manufacturers, that this has never 

5 been identified as a problem before. People have been 

6 doing RMC testing for years and years and years. 

7 Though maybe it hasn't been looked at in the depth 

8 that we have been looking at it over the past few 

9 weeks, it just has never been an issue. It has never 

10 been identified as boy, there's a big difference based 

11 on what cloth you use, what results you get. 

12 So that is why we need to really start to 

13 look in a detailed way at the two specific test cloth 

14 loads that were at issue here, but also more 

15 generally, to the test cloth that's specified in the 

16 procedure, see what's going on here. I added here on 

17 the slide what exactly the test procedure calls for in 

18 terms of a specification. 

19 One of the problems with that spec., if 

20 you just think about it for a minute, there's no 

21 tolerances on it. So, for example, it says 50-50 

22 cotton polyester. Does that mean 49-51 is okay, 45-

23 55? So threads per inches, 65? What if it ' s 6 3 ? 

24 What's the tolerance around the weight? 

25 

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1 done at any rate, I think, is to put some tolerances 

2 around the specification so when people procure test 

3 cloth, you know that it fits into a certain range. 

4 Based on what we find out, which I am going to go into 

5 in a minute, there may need to be some additional 

6 specifications to this test cloth to relate to its 

7 ability to be used for RMC testing. 

8 So there has been a test plan developed. 

9 It's just underway, so I really have no results to 

10 report, unfortunately. But we do have a test plan 

11 that we have worked with with several members of the 

12 task force and DOE. It seems to make some sense. 

13 This is the first public rollout, so we'll be looking 

14 for comments. 

15 But it's a three-part action plan. The 

16 first one, as you might expect, is just a 

17 comprehensive testing program to try to understand 

18 what's going on with these various loads of test 

19 cloth. There's a number of tests that are underway 

20 and about to begin. 

21 One is just how well that cloth meets the 

22 specification that I just showed you, in terms of 

23 cotton/polyester ratio, threads per inch, weight, that 

24 

25 

sort of thing. We are going to do much more 

comprehensive testing as well, using the Department of 

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1 Agriculture, to look actually at the composition of 

2 some of these test cloth loads, and to do some fairly 

3 sophisticated testing of the fabrics and of the fibers 

4 to see if there's a difference. 

5 we are also going to be doing more RMC 

6 testing. We will be doing more conventional RMC 

7 testing, using ITS. And then also, at Arthur D. 

8 Little, we plan to do some more comprehensive -- more 

9 in a research mode, some looking at RMC. 

10 This is a very busy slide, and probably 

11 the best approach here is to review it and get back to 

12 us if you have comments. But just to give you an idea 

13 that we're taking this seriously and doing an awful 

14 lot of testing, this is the test matrix that has been 

15 developed. We'll be using four laboratories. We'll 

16 be using four test cloth loads. The two loads that 

17 were the basis for the issue identification, but also 

18 two new loads of kind of virgin material coming from 

19 the two suppliers. 

20 we will be looking at the sort of data 

21 that's outlined in the spec, as well as some much more 

22 detailed information that is done by the Department of 

23 Agriculture down in their research center in New 

24 Orleans . 

25 

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As I said, ITS will also be doing some RMC 

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1 measurements, somewhat equivalent to what they did in 

2 May, but with different loads of material. What 

3 Arthur D. Little is planning on doing is simulating or 

4 doing some of the work that's similar to what we did 

5 years ago. This is some data from a project we did 

6 for EPRI a few years ago, where we actually used nine 

7 different washing machines, as well as an extractor. 

8 That is an interesting curve because it shows how RMC 

9 can vary the G load or spin speed for different 

10 machines. We expect to develop some families of 

11 curves similar to that for different materials and 

12 different test loads. 

13 The idea would be to determine whether 

14 there needs to be some sort of an RMC spec to be added 

15 to the test cloth to ensure repeatability and 

16 consistency in the future. 

17 So given that data and digesting all that 

18 data, part two of the action plan would be to 

19 determine what changes might be necessary to the 

20 current test spec. I'm not exactly sure what that 

21 entailed right now. As I mentioned before, we 

22 certainly need to put some tolerances in there to make 

23 it a more viable spec. We also may have to add some 

24 data to ensure that test cloth complies with kind of 

25 standard expectations for RMC measurements. 

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1 Depending on what happens there, there may 

2 need to be some level of amendment to the test 

3 procedure, Appendix J -1. I just don't know how 

4 stringent that is going to be. But that would be the 

5 logical conclusion to all the test work that's going 

6 to be underway over the next couple of months. 

7 Then the third part is once there are 

8 consistent test samples and the issue is resolved, as 

9 Chuck mentioned, there is then issue of how does that 

10 change what has already been developed. The point 

11 here then would be once we have a consistent - - a 

12 spec. and a consistent type of test clock, to 

13 basically have the manufacturers go back and analyze 

14 the differences that might exist or how the data that 

15 was supplied to AHAM may have to be modified based on 

16 a consistent set of test conditions. 

17 The schedule, we' re hoping to complete 

18 parts one and two by the end of September, about two 

19 months away. The time required for that last part is 

20 basically up to AHAM and DOE to determine in terms of 

21 going back and seeing what sort of impact and what 

22 sort of changes might need to be made to the data 

23 that's been developed. Then based on again the extent 

24 of the changes of that data, that will impact the 

25 analyses that have been done. I guess ultimately that 

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1 will tell you where you are in your overall schedule. 

2 So that's the plan. As I say, we have had 

3 a lot of input from experts in the field, so we feel 

4 pretty good about it. But this is obviously a time to 

5 ask questions or make suggestions as well. 

6 Yes, sir? 

7 MR. STEPHENS: Charlie Stephens, Oregon 

8 Energy Office. Do you know the test procedure well 

9 enough to tell me whether the temperature of the rinse 

10 water that's being spun out of these clothes is held 

11 tightly, as to the tolerance? 

12 MR. TOPPING: Is someone from ITS here? 

13 MR. BROOKMAN: Please come to the 

14 microphone. Did you hear the question back there? 

15 MR. MORGAN: Yes. I did. 

16 MR. BROOKMAN: Thank you. Please identify 

17 yourself for the record. 

18 MR. MORGAN: Ken Morgan, from ITS. 

19 The water temperature is held within 

20 we're trying to hold within plus or minus one degrees, 

21 but in general, it's two degrees. So if we're trying 

22 to do 100 degrees, then 98 to 102 is acceptable. 

23 

24 

25 

MR. STEPHENS: For rinse water? 

MR. MORGAN: For the water temperature, 

supply water temperature, the supply itself .. 

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1 MR. STEPHENS: Okay. I am trying to get 

2 at the temperature that the clothing or the water in 

3 the cloths will be at when you are spinning them dry 

4 for remaining moisture measurements. 

5 MR. MORGAN: Right. We have no data to 

6 show what the temperature is at that time. Depending 

7 on what the cycle duration is and --

8 MR. STEPHENS: So you just fill the rinse 

9 cycle with whatever cold water comes in, and there's 

10 no tolerance on the cold water temperature as it comes 

11 into the rinse cycle? 

12 MR. MORGAN: Yes. 

13 MR. STEPHENS: It's just cold? 

14 MR. MORGAN: Oh yes, there is a spec. of 

15 plus or minus two degrees. But if it's rinsing for 

16 if it's spinning and agitating for a period of five 

1 7 minutes or ten minutes, obviously the temperature will 

18 go up if the room temperature was higher than the 60 

19 degrees or go down if it's 

20 MR. STEPHENS: Yes. I ask because the 

21 most knowledgeable people I have come across lately 

22 about this issue are in Denver testing some different 

23 kinds of machines. My conversations with them led me 

24 to believe that they believe that temperature is a 

25 very big variable in remaining moisture performance. 

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1 If the temperature varies significantly at all, so 

2 will the remaining moisture. I don't --

3 MR. TOPPING: We'll look into that. 

4 Ken, correct me if I'm wrong, but the RMC 

5 test is at the end of a washing test. Is that 

6 correct? 

7 MR. MORGAN: That's right. The end of the 

8 whole cycle. 

9 MR. TOPPING: You basically run the whole 

10 cycle. The inlet water temperatures are controlled. 

11 What you are saying is you don't know how the 

12 temperature might vary over time through the spin 

13 cycle. But the inlet temperature to the rinse cycle 

14 is controlled. 

15 MR. STEPHENS: Yes. Well these folks at 

16 Levandry in Denver found that there was a huge 

1 7 variation in remaining moisture depending on the 

18 temperature of the water and the cloths in the water 

19 in the cloths as they were spinning them. The hotter 

20 it was, the lower the remaining moisture they got. 

21 MR. BROOKMAN: I see Larry wishes to 

22 comment. Can we let Bryan respond first? 

23 

24 

25 

MR. BERRINGER: Bryan Berringer, DOE. 

Larry is probably going to say the same thing. We 

have done testing with both J and J-1 at different 

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1 temperatures. We are aware that there is a 

2 difference, the RMC will vary at different 

3 temperatures. That is correct. The problem is is 

4 that we're doing the same machine, the same cloth, I 

5 mean the cloth with the same parameters. We are still 

6 getting a variation. We're not changing the 

7 temperature or the machine or anything. 

8 MR. TOPPING: Same day. 

9 MR. BERRINGER: So I don't think that's a 

10 -- yes, same time period. 

11 MR. BROOKMAN: Same day, so same water 

12 temperature presumed for the rinse cycle. That's your 

13 point . 

14 Larry? 

15 MR. HAWKINS: Yes. I just wanted to add 

16 that the test procedure does specifically tie down the 

17 water temperature. Actually, it ties down the source 

18 of water temperatures 140 or 135, depending on whether 

19 you are looking at the current test procedure or the 

20 J, J-1 test procedure. For code 60, it's plus or 

21 minus five degrees temperature control. 

22 To run the RMC test, if it's a cold rinse, 

23 you run a cold wash so that you are conditioning the 

24 washer with the wash water, the same temperature as 

25 the rinse water. For warm rinse, you would run a warm 

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1 wash. That is one area that could change depending on 

2 the manufacturer's design, because the warm 

3 temperatures do vary by design. But on a cold level, 

4 it should be close as is maintainable within the 

5 limits, and it is specified in the test procedure very 

6 accurately. 

7 MR. STEPHENS: Did you say that it was 

8 plus or minus five? 

9 MR. HAWKINS: Yes. 

10 MR. STEPHENS: By percent or degree? 

11 MR. HAWKINS: Degrees F. That's on source 

12 water. 

13 MR. STEPHENS: Yes, that's enough to make 

14 a difference. 

15 MR. HAWKINS: In practice, it could be 

16 tighter than that, but in the procedures it is allowed 

17 to be plus or minus five. 

18 MR. STEPHENS: Okay. Thank you. 

19 MR. TOPPING: Perhaps if you have data or 

20 access to additional data, you can let the Department 

21 know. 

22 MR. STEPHENS: I'll refer you to the guy 

23 you can talk to if you want to have a conversation 

24 with him. 

25 

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MR. NADEL: But Dick, you may want to look 

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1 into whether it makes -- there's a reason to try and 

2 tighten the tolerance on the order of plus or minus 

3 two degrees from five. 

4 MR. BROOKMAN: That was Steve Nadel. 

5 Additional questions or comments on this 

6 subject? Steve? Excuse me. Dick Best. 

7 MR. BEST: Dick Best, Whirlpool. Dick, I 

8 have a comment here regarding the numbers shown on one 

9 of your slides where you show like percent decease and 

10 MEF. Just for clarification, maybe for many people 

11 here, we're basing the rule on percent improvements 

12 not percent change in MEF. For consistency, maybe if 

13 we could correlate somehow in the future those 

14 numbers, with what it really means in the efficiency 

15 level changes, because they are not necessarily linear 

16 tracking. 

17 MR. TOPPING: That was not an attempt to 

18 say anything about the rulemaking. It was just take 

19 the equations and the test procedure and get an idea 

20 of what sort of a change in RMC leads to what sort of 

21 a change in MEF, just so you can bound the problem. 

22 Those are just illustrative. 

23 

24 

25 

MR. BEST: I understand that. 

MR. TOPPING: They weren' t made to be 

anything else. 

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1 MR. BEST: But they are different numbers. 

2 Sometimes they get confusing. 

3 MR. BROOKMAN: Bryan Berringer? 

4 MR. BERRINGER: Bryan Berringer. I just 

5 wanted to respond to that. I kind of mentioned 

6 earlier in the presentation that we solved for a 

7 vertical axis machine as much as a ten percent 

8 difference in improvement. So a machine that was 

9 showing in our TSD at 30 percent improvement, dropped 

10 down to a 20 percent improvement. So that's the 

11 variation there. 

12 I have seen with the horizontal, I think 

13 an eight percent difference in MEF, and a six percent . 

14 So it did vary between machines from the limited data 

15 we know. Between three machines, I saw a ten percent 

16 difference, and eight percent difference, and six 

17 percent difference in the MEF values. In percentage 

18 improvement. 

19 MR. BEST: Just asking that to keep the 

2 o numbers straight so we know which ones you are 

21 referring to. 

22 MR. BROOKMAN: Additional questions or 

23 comments on test procedures, and particularly, Dick 

24 ended talking about the plan of action. I know that's 

25 of interest to several of you. 

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1 Steve Rosenstock? 

2 MR. ROSENSTOCK: Steve Rosenstock, Edison 

3 Electric Institute. If the NOPR was scheduled to be 

4 sent out in December of 1999 on the current schedule, 

5 October, November, it seems like with the timetable, 

6 October, November, that's going to be two months. Is 

7 it going to be enough for part III? 

8 ASSISTANT SECRETARY REI CHER: That 

9 depends. I mean it really depends on what the first 

10 two steps of the action plan determine. That's really 

11 what we'll know somewhat more in a few weeks when we 

12 get some data back. Then we'll know obviously in a 

13 very clear fashion when we get through those steps . 

14 MR. BROOKMAN: That was Dan Reicher. 

15 Additional questions, comments? Yes, 

16 Alan. 

17 MR. KESSLER: Alan Kessler from Amana. 

18 Dick, I know you've got USDA getting into 

19 it. I am sure that they will have comments on the 

20 cotton specifications, long staple, diameter, 

21 similarly on the polyester, the diameter. There's a 

22 whole lot of opportunity to work this. We haven't 

23 talked about it. 

24 

25 

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MR. BROOKMAN: Steve Nadel? 

MR. NADEL: Just to try to get a handle on 

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1 this issue, my understanding is that some 

2 manufacturers are tending to use one hepa cloth and 

3 get a certain set of results, some manufacturers are 

4 using another cloth and getting other results. I was 

5 curious, without mentioning companies' names, is it 

6 basically four manufacturers versus one, or three and 

7 two? How big -- how uneven a split is there between 

8 the different cloths among the manufacturer tests? 

9 MR. TOPPING: I wouldn't even go as far as 

10 what your first statement. What we do know is that in 

11 one particular set of tests, there were significant 

12 differences. How wide ranging that is, and in fact, 

13 whether that can be traced to different samples of 

14 different suppliers in the long-term, we'll know a lot 

15 better in a few weeks . 

16 MR. BROOKMAN: Additional questions, 

17 comments? Other questions? Assistant Secretary 

18 Reicher? 

19 ASSISTANT SECRETARY REICHER: I just 

20 wanted to be sure -- we're at sort of a critical point 

21 with this action plan being outlined. I think it is 

22 important that if there are other issues or problems 

23 people have with it, this is really an important time 

24 because we really want to agree that this is the right 

25 way to be proceeding. I was very impressed with what 

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1 Dick laid out, but if there are other wrinkles in 

2 this, no pun intended. I'll reserve my other pun for 

3 later. 

4 MR. BROOKMAN: We really need to know what 

5 those are now or in the next few days, as people 

6 submit their comments. Because what I would really 

7 very much like to avoid is a month or six weeks from 

8 now, people taking issue with the action plan that 

9 we've laid out, because there's some great detail to 

10 it, and a lot of players. I think we have been very 

11 open about how we're going forward. Let's hear those 

12 now or very quickly. 

13 ASSISTANT SECRETARY REI CHER: I would 

14 ref er everybody to the last two slides that Dick put 

15 up there on pages seven and eight in your handout, 

16 where they lay out the action plan elements and also 

17 the schedule. 

18 MR. STEPHENS: Charlie Stephens. It looks 

19 like a comprehensive plan. I think you are going to 

20 find out more than most of us want to know about. 

21 MR. TOPPING: True. Already we know more 

22 than we thought there was to be known. 

23 MR. STEPHENS: I don't see any inherent 

24 flaws in it from the outset. So it's comprehensive . 

25 

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MR. BROOKMAN: What about the schedule 

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1 itself? Let's ask that question broadly and directly. 

2 MR. STEPHENS: It's pretty fast from what 

3 I can see. I don't know that you can do it any 

4 faster, quite frankly, from my perspective, knowing 

5 about this process. 

6 MR. BROOKMAN: Comments from the 

7 manufacturers about the schedule? Dick Stilwell? 

8 MR. STILWELL: Dick Stilwell, Maytag. I 

9 think the schedule is pretty aggressive, but I think 

10 it needs to be aggressive. I think we really need to 

11 get after this. 

12 I would like to comment that now that this 

13 question of confidence about the test cloth has been 

14 raised, I think ultimately we are going to need some 

15 kind of a certification of the test cloth as to its 

16 RMC range. I mean we are going to need to put some 

17 kind of a specification on the RMC of the test cloth. 

18 I think that's something that ultimately we are going 

19 to have to have. We may as well get started on that 

20 part of it as soon as possible. 

21 MR. BROOKMAN: Let me ask, Dick, do you 

22 see it going in that direction or is that anticipated 

23 as part of the action plan? 

24 

25 

MR. TOPPING: Yes. There needs to be I 

think two things. One is the current specification 

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1 needs to be cleaned up because it's just too loose 

2 now. Then the second is given that this happened even 

3 once, there's something that can go wrong. So you are 

4 absolutely right. That needs to be somehow recognized 

5 through some sort of test. 

6 Obviously what we don't want to do is come 

7 up with million dollar test cloth requirements. So 

8 really, I mean the idea is to try to keep the spec. as 

9 loose as reasonable. At the same time, making sure we 

10 cover all these issues and eventualities. So that's 

11 kind of the balancing act. 

12 I'll just say in closing, this is a great 

13 opportunity for stakeholder participation and 

14 cooperation. Great opportunity for people to work 

15 together because we are looking for data, we' re 

16 looking for help in all sorts of different ways. So 

1 7 hopefully we can work together on this and get it done 

18 really quickly. 

19 MR. BROOKMAN: Gene Foley? Please use the 

20 mike, Gene. That was a shoot, for the record. 

21 MR. FOLEY: Gene Foley, AHAM. Are you 

22 comfortable that the variability at this point is 

23 strictly a test cloth problem? 

24 

25 

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MR. TOPPING: It appears to be. 

MR. BROOKMAN: So final questions, 

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1 comments, before we move on? 

2 MR. KESSLER: Dick, I have a question 

3 here. If we assume we've got a test cloth variability 

4 problem and we utilize a current test cloth as 

5 currently manufactured, how long do you think it's 

6 going to take, and I guess Luther is the guy to ask to 

7 get more test cloths made that are consistent so that · 

8 we can assure reproducability. I mean is this a quick 

9 turnaround kind of a deal? 

10 MR. TOPPING: We are going to start with 

11 what we have. You know, virgin material, unused from 

12 both suppliers, and see where we are. 

13 MR. BROOKMAN: Did that answer your 

14 question? 

15 MR. KESSLER: Not really. We don't know 

16 what the answer is. 

17 MR. TOPPING: Yes. Absolutely. 

18 MR. KESSLER: Okay. 

19 MR. BROOKMAN: Final questions or comments 

20 before we move on? Let me reaffirm what I heard the 

21 Assistant Secretary say, which is that the Department 

22 is seeking not only your participation, but your 

23 ongoing thoughts about this quickly. That is, upon 

24 reflection, if there are other things that occur to 

25 you, other snags, other concerns, other missed 

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1 opportunities in the analysis or the plan as 

2 presented, I hear the Department seeking that you 

3 quickly get back to them and help them and all the 

4 other players in this to confirm the analysis and move 

5 forward. 

6 Dick, they know how to find you, yes? 

7 MR. TOPPING: I think so. I can give them 

8 a phone number if you're interested. Do you have a 

9 roster? Is it in the roster? 

10 MR. BROOKMAN: Yes, the participant list 

11 from this meeting will include Dick's name, telephone 

12 number, and other contact information. 

13 So then let's move onto the next segment 

14 of the agenda, which is consumer analysis. Steve 

15 Grover from Quantum. 

16 After this segment, for those of you that 

17 are interested, we will be taking a break. So hang in 

18 there. 

19 MR. GROVER: Can people hear me in back? 

20 Again, I am Steve Grover from Quantum Consulting. We 

21 were hired by the Department and working with NREL to 

22 do the consumer analysis for this overall clothes 

23 

24 

25 

washer rulemaking process. 

What I intend to do is talk a little bit, 

review the objectives, walk through the methodology 

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1 that we used. Those of you that have seen the report, 

2 know that it's fairly detailed. I am going to talk a 

3 little bit about some very general results. 

4 So first of all, the objectives that we 

5 had for the consumer analysis were two-fold. One was 

6 to determine which features on a clothes washer were 

7 most important to consumers, and to set up a 

8 systematic process to determine that. Once we figured 

9 out which features were most important, we wanted to 

10 use those in a separate part of the analysis to see 

11 that if these features were changed due to a proposed 

12 efficiency standard, how was this going to affect 

13 consumer utility, and ultimately how is this going to 

14 affect the decision to purchase a clothes washer. 

15 So to address these issues, we had a two16 phased research approach. We utilized both focus 

17 groups and conjoint analysis. The focus groups were 

18 used to determine the list of the most important 

19 features. Once we determined an overall list of what 

20 was important to consumers, we took the top few. We 

21 took six. We used that in the second phase, in the 

22 conjoint analysis. 

23 The conjoint analysis was a tradeoff 

24 analysis tool that we used. Ultimately this was used 

25 to determine the utility of these features. We went 

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1 through some purchase scenarios and estimated 

2 elasticity to go through some market simulations to 

3 see how utility would change. 

4 MR. BROOKMAN: Steve, I would like you to 

5 say a little more about what conjoint analysis is for 

6 most of us who don't know what that means. 

7 MR. GROVER: I'm sorry. Yes. I was going 

8 to lead into this. I am going to discuss next both 

9 focus groups and conjoint. 

10 MR. BROOKMAN: Okay. Thank you. 

11 MR. GROVER: And now the results. Okay. 

12 Let me first talk about the focus groups. We designed 

13 the focus groups to let consumers tell us what was 

14 important to them. What we did was we had focus 

15 groups, we had a national sample. We had two focus 

16 groups in five different cities for a total of ten 

17 sessions all together. We did them in the D.C. area, 

18 Madison, Wisconsin, Dallas, Miami, and San Francisco 

19 Bay area. We had 8 to 12 participants for each 

20 session, depending on the weather. We ended up with 

21 90 participants total across these sessions. 

22 The way that we did these focus groups is 

23 we started off having the participants just volunteer 

24 the features that were important to them. We had the 

25 moderator be as non-intrusive as possible and just 

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1 have the ·discussion be free-form, have respondents 

2 suggest what features were most important. 

3 Once that discussion kind of ran its 

4 course, the moderator had a master list of features 

5 that we wanted to discuss. This is the list that the 

6 manufacturers actually provided DOE some time ago. At 

7 this point, the moderator would suggest other features 

8 that hadn't been covered in the focus group to that 

9 point. So what this did was it allowed the groups to 

10 be structured so that the customers, the respondents 

11 were providing the· information, but by referring to 

12 this master list, it also ensured that each focus 

13 group covered the same list of characteristics across 

14 all 10 groups. 

15 At the end of these sessions, the 

16 participants were asked to list their top 10 features 

17 that were most important in making the decision. So 

18 from this list, the entire list was about 75 features. 

19 That's given in one of the appendices of the report. 

20 I have here a list of the top 12. 

21 So the first column is just the features, 

22 price, capacity, energy/water costs. The middle 

23 column is how many times out of 90 was this particular 

24 

25 

item mentioned. Then the far column is just the 

percentage out of the total possible, the percentage 

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1 out of 90. 

2 MR. BROOKMAN: Is 90 your total N? 

3 MR. GROVER: Ninety is the total N for the 

4 focus groups . 

5 MR. BROOKMAN: Thank you. 

6 MR. GROVER: So you can see here that 

7 price was the top feature, was mentioned 75 out of 90 

8 times, or 83 percent of the time. So the top 

9 features, price, capacity, energy and water costs, 

10 load size options, meaning can you adjust the water 

11 level up and down, durability, water temperature 

12 options, and door placement were the top seven. 

13 What we wanted to do was take the most 

14 important features to include in the next phase, the 

15 conjoint. We wanted to use six features. We felt 

16 that six features would allow for a manageable number 

17 of things to be evaluated in the conjoint. Any more 

18 than that, you start adding cards, it becomes much 

19 more complicated. 

20 So we used, we included door placement in 

21 place of durability for a couple of reasons. One, 

22 door placement is very important for proposed 

23 efficiency standard. This is something that is likely 

24 

25 

to be impacted. So we wanted to make sure it was 

included. 

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1 Durability, while important, is not so 

2 much a feature. We considered it more of like a 

3 performance benefit of an overall product design. It's 

4 less likely than door placement to be affected by an 

5 efficiency standard. So we opted to use door 

6 placement. So we have six of the top seven important 

7 features from the focus groups that are used in the 

8 conjoint. 

9 All right. So this is the first phase. 

10 Determining from the consumers what are the important 

11 features. The next phase was the conjoint analysis. 

12 What the conjoint did, a conjoint is a stated 

13 preference data collection technique. What we did in 

14 these conjoint sessions is that we had these six 

15 features printed on cards with different levels for 

16 each feature. Each respondent in the conjoint 

17 sessions then were given a set of 16 cards, where each 

18 card reflected a different clothes washer. Each card 

19 had those six features on the card with different 

20 levels. 

21 They were asked --

22 ASSISTANT SECRETARY REICHER: Excuse me. 

23 Levels of what? 

24 

25 

MR. GROVER: Levels of the -- maybe this 

will be a little easier to --·the next slide was the 

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1 levels of the six. So the six most important 

2 features. Let me talk about this first. That might 

3 clear things up. 

4 The features that we used, these are the 

5 same top important features that came from the focus 

6 group. We used price, retail price of the clothes 

7 washer. What we did also was we used different price 

8 points to roughly coincide with efficiency levels. We 

9 had a standard efficiency level, what we called a 

10 medium efficiency level, which corresponded to a 20 

11 percent improvement in efficiency, and we had a high 

12 efficiency level, which corresponded to a 40 percent 

13 increase in efficiency . 

14 So here, price was the retail price of the 

15 clothes washer. We used three price points, $400, 

16 $450, and $650, corresponding to a standard 

17 efficiency, medium efficiency, and a high efficiency. 

18 Savings, which was annual water and energy savings, 

19 again, we had three points, zero for current standard 

20 efficiency, $10 a year, $50 a year. 

21 Capacity, we had two choices, either 

22 standard capacity or extra large capacity. The 

23 standard capacity is the normal residential size home 

24 

25 

unit. Extra large capacity would be 2 0 percent 

greater than that. 

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1 Door placement, there was two choices, 

2 either front loading or top loading. I want to 

3 emphasize one thing about door placement, is that we 

4 made the point in both the focus groups and the 

5 conjoint to make sure that people understood that it 

6 is possible to have an H-axis machine that is a top 

7 loader. We wanted them to try and focus on the 

8 convenience of the door, and focus just on the door 

9 placement. 

10 MR. BROOKMAN: Please identify yourself. 

11 MR. ESSMA: Eric Essma, Clorox Company. 

12 Could I just ask how you qualified the participants 

13 for the focus groups? 

14 MR. GROVER: How we qualified? 

15 MR. ESSMA: Were they head of households, 

16 most likely to do laundry, or are they just people on 

17 the street? How did you 

18 MR. GROVER: They had to be the person 

19 that did the laundry in the household. That was the 

20 case with the conjoint as well. We wanted to make 

21 sure that the people were the people that actually 

22 were familiar with doing the laundry. So they could 

23 both contribute intelligently or informed for both 

24 stages . 

25 

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Watch temperature. Basically we had two 

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1 options. Either you had hot water available, so cold, 

2 warm, and hot, or else hot water is not available. 

3 Either cold or warm. 

4 Then finally, load sizes, either 

5 adjustable or non-adjustable. 

6 MR. BEST: Dick Best, Whirlpool. While 

7 we're on this conjoint analysis, the one issue I see 

8 here is on door placement. If you're not aware, the 

9 Energy Star program has both top and front-loader 

10 products listed as high efficiency program. In this 

11 study, you used door placement as mutually exclusive 

12 with energy savings. We think that's totally 

13 incorrect. In fact, it's not mutually exclusive. So 

14 that part of it I think needs further examination. 

15 MR. GROVER: The conjoint analysis is 

16 designed to present these six characteristics 

17 simultaneously to the customers. Each card, it has 

18 these six characteristics with some level. Everything 

19 is mutually exclusive from the other. What this does 

20 is it makes the respondent look at the card and decide 

21 what's important, and then rank the cards. 

22 MR. BEST: We understand. What we' re 

23 saying is choosing between energy efficiency and door 

24 placement is not a choice a consumer necessarily has 

25 to make. 

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1 the setting. 

2 MR. BROOKMAN: I saw Assistant Secretary 

3 Reicher. I also saw Bryan Berringer. 

4 ASSISTANT SECRETARY REICHER: This is Dan 

5 Reicher. I think you are saying something similar. 

6 You're saying that these are analyzed, you put them 

7 all together, and you give people the options to 

8 choose how they like them linked. 

9 MR. BROOKMAN: Bryan? 

10 MR. BERRINGER: Yes. Bryan Berringer. In 

11 the report, we have laid out in Appendix D, the 

12 various cards. There are 16 cards that they used. So 

13 what you' re saying, Dick, and these were also ordered . 

14 There were like four sets of cards, different color 

15 codes that put -- so you didn't put prices on the top 

16 all the time. But it was looking -- what Steve is 

17 trying to say is that these are not necessarily -- a 

18 $450 machine may have been a front loader. So the six 

19 variables are looked at independently when they do the 

20 conjoint. But there is a sample of the 16 cards that 

21 were used in there, so there was no weighted 

22 preference to any one. 

23 MR. BROOKMAN: Steve, are you in a 

24 position to answer Dick's? 

25 

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MR. GROVER: Yes. I just want to make one 

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1 additional point. Is that if we link say like high 

2 price to more efficient machine, greater savings, or 

3 if you link door placement to savings, during the 

4 process of ranking the cards, we can't tell then what 

5 the person was focusing on when we do the analysis. 

6 If front loaders were always associated with the $50 

7 savings, and someone ranked their cards based on that, 

8 when we go back we can't tell if they were looking at 

9 the door and were looking at convenience for some 

10 reason, or if they were looking at the savings. 

11 So that's why when you look at the cards, 

12 a $400 machine might be a front loader with $50 

13 savings, because we wanted to require the respondent 

14 in the process to look at these things and make a 

15 decision about what's important. I think that comes 

16 out later on. 

17 MR. BEST: I believe part of the issue 

18 here is earlier in this rulemaking, I thought we 

19 passed the point where the utility issues were pretty 

20 much understood between top and front loading, and the 

21 fact that it was not a utility lost to the consumer on 

22 energy efficiency because of door placement, because 

23 all options were available. 

24 In this case, we're going back and we're 

25 doing this study for this energy standard rule. But 

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1 door placement back into the equation is not a choice 

2 the consumer has to make in this energy or machine 

3 attributes. 

4 MR. BROOKMAN: Okay. Thanks for making 

5 that point again. Thank you. 

6 What I heard you say there, Steve, was 

7 that using these cards, the ones that Bryan referenced 

8 in the document Bryan, hold up that document, 

9 please. What's it called? 

10 MR. BERRINGER: It's the draft. "Draft 

11 Clothes Washer Consumer Analysis," April 1999. It's 

12 Appendix D. 

13 MR. BROOKMAN: So following on from the 

14 focus groups, where the focus groups specified what 

15 the six characteristics were that were most important 

16 to them. Then using these cards, they make choices 

17 which are kind of mutually exclusive. Right? 

18 MR. GROVER: They look at the cards and 

19 they rank the cards. 

20 MR. MCMAHON: Jim McMahon at ADL. I don't 

21 think the word "mutually exclusive" is right. They 

22 are independent. 

23 

24 

25 

MR. BROOKMAN: Okay. Thank you. 

MR. MCMAHON: So every possible 

combination is in there. In Appendix D, card 10, is 

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1 a $400 clothes washer, with $50 energy and water 

2 savings. So that is a high efficiency machine, and 

3 it's a top loader. So every possible combination is 

4 possible. 

5 MR. BROOKMAN: Thank you. That is a 

6 better way of saying it. Thanks for the correction. 

7 Additional? Yes, Earl Jones? 

8 MR. JONES: Earl Jones, GE. Just to 

9 comment further. I thought the purpose of the 

10 analysis which you were just reporting on was to get 

11 from consumers what their issues were, and to the 

12 extent that door placement surf aced in their 

13 preferences, then obviously it's legitimately in the 

14 study, not something which the Department or somebody 

15 else could sort of exclude because of their own 

16 interests. 

17 MR. BROOKMAN: Thank you. Alan? 

18 MR. KESSLER: Yes. I think what you are 

19 saying is these are imaginary machines that don't 

20 exist and in some cases couldn't exist. The objective 

21 is to find out if consumers would like to have that, 

22 and how important it is to them. 

23 

24 

25 

MR. GROVER: How they would fall in, and 

so yes . That's exactly right. In the ranking 

process, there are some that like the example that was 

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1 just given, you would not see in the marketplace. But 

2 it's useful to see where these things are placed. 

3 MR. BROOKMAN: And they are making a 

4 choice among all possible choices, and then those get 

5 ranked? 

6 MR. GROVER: Not all possible 

7 combinations, but each one of these price points and 

8 savings points shows up enough where the ranges the 

9 way they show up it's independent of the other 

10 variables. 

11 MR. BROOKMAN: I'm getting the point that 

12 we've even clarified this sufficiently for me. 

13 (Laughter.) 

14 Please say your name. 

15 MR. FLORA: My name is Brad Flora. I'm 

16 with Whirlpool. Just a quick question. I notice you 

17 left durability off of these factors and it's ranked 

18 equally high with some of these. 

19 MR. GROVER: Right. The reason we did 

20 that is we wanted to -- we knew that door placement 

21 would be an issue in the proposed efficiency rule. 

22 That is one way that people can have a frontloading H23 axis machine. We knew that was an issue. We wanted 

24 

25 

to include it in the conjoint. We decided that 

durability for the proposed rule would be less of an 

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1 issue because it's not really a feature per se. It is 

2 more of an overall benefit. It's also less likely 

3 than door placement to be an issue with the rule. So 

4 we made the decision to go with door placement and 

5 leave off durability. 

6 MR. BROOKMAN: Dick Best? 

7 MR. BEST: Just to follow up on your 

8 comments and Mr. Jones. I think, Earl, you put it 

9 adequately, that the consumer input was important 

10 here. Consumers ranked durability ahead of door 

11 placement. Why did you choose to override the 

12 consumer input? 

13 MR. GROVER: Again, we felt that door 

14 placement would be more of an issue. We wanted to 

15 make sure that that was included in the second phase, 

16 although we realized that we wanted to have the system 

1 7 set up so that the consumers gave us their most 

18 important ones. We still included six of the most 

19 seven important issues. 

20 MR. BABICH: I am Bill Babich with NREL, 

21 who was involved in this effort. The more important 

22 was the fact that durability, like cleanliness, are 

23 performance characteristics that you can't quantify 

24 like, for example, water level on machines. It's not 

25 a feature. 

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1 characteristic. 

2 This was an effort to determine what 

3 features were most valued by consumers. It's assumed 

4 that high durability is valued, but how do you 

5 quantify durability? How do you determine if it's on 

6 a machine or not? So this was an effort to quantify 

7 features. That was the most important reason that 

8 durability was not chosen to be included in the 

9 conjoint. It was also, like Steve noted, of high 

10 interest to look at door placement. So it worked out 

11 well that it was high enough up there to be included 

12 once durability was taken off. But it was the 

13 performance characteristic issue which was most 

14 important. 

15 MR. BEST: For the purpose of expediting 

16 this meeting, I'll pass on further comment. But I 

17 will say that we don't agree with the methodology of 

18 this. 

19 MR. BROOKMAN: I know the Department would 

20 welcome your comments expanded in writing. But I 

21 think it has been useful to raise questions about the 

22 methodology, which causes me to ask are there other 

23 questions about the methodology as explained? 

24 

25 

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Dave Modtland? 

MR. MODTLAND: Yes. Dave Modtland. I 

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1 have got a question in terms of one of the features 

2 from the focus group was water temperature options. 

3 When we got to the conjoint analysis, that became 

4 whether they wanted hot water or not. There are other 

5 temperature options other than just eliminating hot 

6 which affect the energy rating of the machine by the 

7 temperature utilization factors. I wondered how we 

8 made that transition or shift. 

9 MR. GROVER: That definition was 

10 consistent from the focus groups to the conjoint. 

11 When we talked about water temperature options, what 

12 came out in the focus groups was they wanted hot water 

13 available . 

14 MR. MODTLAND: Did we ask them about 

15 whether they wanted a warm rinse? 

16 MR. GROVER: That wasn't brought up by the 

17 respondents in the focus group. 

18 MR. BROOKMAN: Your methodology was driven 

19 by what they stated as preferences and it didn't come 

20 up, is what you are telling us? 

21 MR. GROVER: Yes. 

22 MR. BROOKMAN: Bryan Berringer? 

23 MR. BERRINGER: Just to answer. There was 

24 on the cards, it does state in Appendix D, we have 

25 wash/rinse temperature. So we had cold/warm. So we 

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1 did address. One of the options would be a cold wash 

2 rinse. So we were looking at rinse in there, in those 

3 options. Again, if you look at the cards, it's in 

4 Appendix D of the report. So that we did specify 

5 wash/rinse temperatures when they were sorting the 

6 cards. So if they want hot/warm or cold. But we 

7 didn't specifically ask them if they wanted -- they 

8 more or less wanted to have features to select that. 

9 I don't know that any - - again, what Steve had raised, 

10 I don't think anybody specified they had to have warm 

11 rinse. 

12 MR. MODTLAND: How much time did they have 

13 to make this determination or sorting the 16 cards? 

14 MR. GROVER: We allowed two hours. There 

15 was never a situation where people required 

16 actually no. It was more like an hour-and-a-half. 

17 But we let them stay as long as they needed. 

18 Generally there was never a problem of asking people 

19 to leave. So basically they had as long as they 

20 needed to do it. 

21 MR. BROOKMAN: Did you help them by piping 

22 in new age music or any enhancement? 

23 (Laughter.) 

24 

25 

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MR. GROVER: No. 

MR. MODTLAND: Was there any incentive to 

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1 get done early? 

2 MR. BROOKMAN: · Are there any additional 

3 questions that relate to the methodology? I think 

4 this has been useful. 

5 MR. GROVER: There were cookies there. So 

6 they had an incentive to stay longer. 

7 (Laughter.) 

8 MR. BROOKMAN: Bryan Berringer. 

9 MR. BERRINGER: I sat in on a number of 

10 them, some of the conjoints. But yes, the focus group 

11 just went, as Steve said, the focus groups went as 

12 long as they basically ran out of ideas. The first 

13 group went about three hours. They just kept on going 

14 and going. Some of the other ones we had, they went 

15 as far as they could. Then the master list was 

16 brought out, as Steve said. 

17 In the conjoint, yes, they were given, I 

18 remember it was in Washington, we had a little old 

19 lady that came in late. She was just given the time 

20 until she was done. When she was done, she was done. 

21 There was no pressure to --

22 MR. GROVER: Even if it goes into the next 

23 group, we let them stay and work it out. 

24 

25 

MR. MODTLAND: But they were given some 

financial or some gift? 

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1 MR. GROVER: Yes. Both focus groups and 

2 conjoint people were paid $50 to attend. 

3 MR. MODTLAND: So the quicker they did it, 

4 the better their rate. 

5 (Laughter.) 

6 MR. BROOKMAN: Okay. Additional comments 

7 or questions about the methodology? You are not quite 

8 through with your slides. So keep going. 

9 MR. GROVER: Are people clear with the 

10 rank? Let me just say a couple other things. They 

11 ranked the cards. Then once the cards are ranked, we 

12 ask them also which of these would they be willing to 

13 purchase. So not only do we get an idea of the 

14 ranking, but we also are going to get some information 

15 about how the six features that are laid out there 

16 will also drive the decision to purchase. This 

17 becomes important in some of the results I am going to 

18 show. 

19 A couple other things. We have a sample, 

20 again. We have a national sample split across four 

21 regions. We did conjoint sessions in four different 

22 cities, Washington, Madison, San Francisco Bay area, 

23 and Dallas, split almost evenly across the four. 

24 We also had a survey at the end, which 1s 

25 also included in the Appendix C, I believe, in the 

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1 report, that asks demographic information as well as 

2 going through some types of repair purchase scenarios, 

3 where people are asked questions like "If your clothes 

4 washer breaks and it's a choice between repairing it 

5 for $150 or purchasing a new one at $450, what would 

6 you do?" 

7 We also asked have they tried an H-axis 

8 machine, would they be willing to consider it. Have 

9 you purchased a clothes washer in the recent past? 

10 This survey was used to help break up the 

11 sample and the demographic groups. It also provided 

12 some consistency checks, to see that people when they 

13 state their preferences in the survey, do they rank 

14 the cards in a consistent manner. For the most part, 

15 the survey did support what we found in the conjoint. 

16 MR. BROOKMAN: Bill Prindle. 

17 MR. PRINDLE: Yes. Bill Prindle. In your 

18 geographic selection test site, did you take into 

19 account areas that have had promotion on incentive 

20 programs for high efficiency equipment? Did you 

21 specifically include or excluded areas? 

22 MR. GROVER: We were most concerned with 

23 making sure, and we know that California has had a 

24 program like that. I know that Florida has not. So 

25 we wanted to make sure at least there was a mix to 

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1 some degree, but we didn't find strong regional 

2 differences on things like price. 

3 MR. BROOKMAN: Did not or did? 

4 MR. GROVER: Did not. 

5 MR. PRINDLE: Were there any questions 

6 specifically that asked whether people had 

7 participated in or heard about promotional programs? 

8 MR. GROVER: There were not questions 

9 specific to that. 

10 MR. BROOKMAN: What I thought I heard you 

11 say there was that you didn't try to introduce any 

12 specific controls for that feature. 

13 MR. GROVER: That's correct. 

14 MR. BROOKMAN: Bryan Berringer. 

15 .MR. BERRINGER: Just to add, we did have 

16 a separate, after the .conjoint, we did come up with a 

17 and it's also in the report in Appendix C, a number 

18 of questions that maybe useful to you, Bill, that we 

19 sort of asked if they got a rebate and how they were 

20 financing, various questions that we thought were 

21 important that we also wanted to try to capture in the 

22 study that were followed after the conjoint. 

23 The other thing I would just like to offer 

24 to Dave Modtland, is we have a number of videotapes if 

25 he has a couple of days. They're riveting. 

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1 MR. BROOKMAN: Other questions or 

2 comments? Why don't you proceed with your slides. 

3 MR. GROVER: Okay. When you look at the 

4 report, you'll see that it is very detailed. I just 

5 want to touch on a couple of analyses that we did. 

6 The first was looking at how each of these six 

7 features influenced the rankings. We have a chart 

8 here. Each row reflects a different feature. Each 

9 column represents the sample group that was examined. 

10 In the body of the table, this shows the portion 

11 attributable to that feature that affects total 

12 utility. 

13 So for this first column here, for the 

14 full sample, each of these columns always sums up to 

15 100 percent. So what this is saying is in the ranking 

16 procedure, which of these features is contributing the 

17 most to this decision. 

18 So we can go back in. We ran a Logent 

19 model regressing the ranks against the features, the 

20 six features and the values of the features. So the 

21 higher the value in the table, the more influence that 

22 feature is having in the procedure. We have this 

23 broken out for different sample groups. 

24 

25 

I just wanted to point out a couple 

general things to look at. You can see in the first 

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1 row that price is consistently either the number one 

2 driver or close to it. That's consistent across the 

3 groups. For the full sample, it's 26 percent of total 

4 utility, is driven by price. Low income, you can see 

5 that it's higher, it's a greater consideration. 

6 Eighteen to 24 year olds, it's also high. 

7 One thing I want to make clear about these 

8 sub-sample categories, is that these are not mutually 

9 exclusive groups. There might be some low income 

10 people that are also in the 18 to 24 category. 

11 While price is important, it's not heads 

12 and shoulders more important than everything else in 

13 the ranking procedure. You can see the last row, load 

14 size. Being able to adjust the water level to match 

15 the load was also very important, almost as important 

16 as price, equally important with some, and actually 

1 7 more important than price slightly for those that 

18 would not consider an H-axis machine. 

19 So while price is important, at least in 

20 this instance, I mean while it's the most important, 

21 it's not the only important factor. You can see the 

22 savings is also important. 

23 Another important thing to look at is door 

24 placement does not come up as.important as these other 

25 features. 

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It's fifth out of sixth for most groups, 

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1 the exception being those that indicated they would 

2 not purchase an H-axis machine. This is where the 

3 survey again is consistent with the conjoint. The 

4 survey said they would not, that 30 percent of the 

5 people would not consider purchasing an H-axis 

6 machine. For them, door placement becomes much more 

7 of an issue. 

8 Okay. So this gives a general idea of --

9 you know, we know that all six of these features are 

10 important. The conjoint allows us to see when push 

11 comes to shove and people have to make tradeoffs, 

12 what's really important across these six 

13 characteristics. 

14 MR. FLORA: Question. Brad Flora from 

15 Whirlpool. In terms of load size, based on the focus 

16 groups, did you get any feel for what was the logic 

17 behind? I mean why load size was so important to 

18 these consumers? 

19 MR. GROVER: It was the idea of wasting 

20 water, the idea of having a full tub of water to wash 

21 a few things. 

22 

23 

24 

25 

MR. BROOKMAN: How did you reveal that? 

MR. GROVER: We just allowed them to --

MR. BROOKMAN: They offered that in their 

comments in the focus group itself? 

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1 MR. GROVER: Yes. When they brought that 

2 up, the moderator would probe a little bit about what 

3 the issue was. That was what came up consistently. 

4 MR. BROOKMAN: You were careful to say, as 

5 someone who has run focus groups, you were careful to 

6 say at the outset, however the moderator did not lead 

7 them. 

8 MR. GROVER: Yes. That's definitely true. 

9 MR. BROOKMAN: Bill Babuch? 

10 MR. BABUCH: Just to clarify a point 

11 further. After the list of attributes was provided by 

12 the respondents in the focus group, the moderator then 

13 asked, identified various people who provided those 

14 and said would you explain to us why you think that's 

15 important. So all they did was ask that. People then 

16 talked about it and a little dialogue would occur. 

1 7 It's amazing how much people are willing to talk about 

18 this stuff. 

19 (Laughter.) 

20 MR. GROVER: The moderators were always 

21 more to shut people up than to get people to talk. 

22 MR. FLORA: Just to make sure I 

23 understand. It was the water savings, but it didn't 

24 have anything to do with performance or .somehow how 

25 the clothes were being washed? 

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1 MR. GROVER: No, not from the focus 

2 groups . 

3 MR. BROOKMAN: Bryan Berringer. 

4 MR. BERRINGER: Just to add, there were 

5 some respondents who looked at capacity as they could 

6 put more in essentially. It's the younger 

7 demographics that you could put more in and wash more, 

8 so you spent less time washing. So they like that. 

9 Then they also at that, they thought the levels were 

10 important because they didn't want to waste water. So 

11 if they just had a medium or small load, they wanted 

12 that option to be able to adjust. 

13 MR. FLORA: There is some connection 

14 between the capacity and the load size. 

15 MR. BERRINGER: Yes. They felt that it 

16 was important that capacity, larger capacity meant 

17 less time washing clothes. 

18 MR. BROOKMAN: Dave Modtland? 

19 MR. MODTLAND: I guess I have a question. 

20 Are you fairly confident they are not confusing load 

21 size and capacity? 

22 MR. GROVER: Yes. We spent a lot of time 

23 talking about -- because when that came up, I mean 

24 

25 

it's like well how many clothes can we do. They 

phrased it a lot of different ways. 

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1 moderator's job to have the person elaborate to 

2 clarify what they' re talking about. So I do feel 

3 confident. 

4 MR. MODTLAND: You feel very confident 

5 that load size is relating to the ability to adjust 

6 water level to the amount of clothes being 

7 MR. GROVER: Yes. Because we talked 

8 whenever the issue of the amount of clothes you could 

9 wash, the moderator made the decision to ref er to that 

10 as capacity. So that was the term that was used in 

11 the rest of the focus group. 

12 MR. MODTLAND: How was capacity defined? 

13 In terms of clothes you could wash or in terms of tub 

14 volume? 

15 MR. GROVER: Tub volume, especially in the 

16 conjoint. We actually had the cubic feet size. 

17 MR. MODTLAND: They are not necessarily 

18 the same. 

19 MR. GROVER: Right. 

20 MR. MODTLAND: Not necessarily a direct 

21 relationship, dependent upon washing technology. 

22 MR. GROVER: Yes. 

23 MR. MODTLAND: The people in the survey 

24 understand that? 

25 

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MR. GROVER: Yes. 

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1 MR. ECKMAN: Tom Eckman, Northwest Power 

2 Planning Council. In reviewing this and the full 

3 report, maybe this is going to sound a little bit 

4 parochial, but the Northwest has had some experience 

5 with real consumers buying these machines. We have 

6 also had some experience both doing the survey work 

7 with consumers before and after they have had 

8 experience with machines. I don't see anything in 

9 this or in the report that describes whether or not 

10 experience with the machines changes the way people 

11 rank and feel about certain features, and that ought 

12 to be added. 

13 MR. GROVER: We do have some purchase 

14 scenarios. We have a separate sub-group of people 

15 that have at least -- well, we have recent purchasers, 

16 and we have people that have tried H-axis. There are 

17 slight variations for those people. 

18 For instance, for the people that have 

19 tried horizontal axis and would consider purchasing an 

20 H-axis, which is not the same as people who purchase 

21 them, but at least they have tried them, door 

22 placement is even less of an issue for them, which is 

23 consistent with other findings, where people as they 

24 have used H-axis, I think, become more accustomed to 

25 them. 

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1 MR. BROOKMAN: I would like you to proceed 

2 with the slides and keep going. 

3 MR. GROVER: Okay. Let me just talk 

4 briefly about purchase scenarios, why I think I can 

5 breeze through this one without questions, I'm not 

6 sure, but nevertheless. 

7 The purchase scenarios, we asked people 

8 once they ranked the cards, which of these options 

9 would you purchase. This was done so we could get a 

10 measure of how these six features influence the 

11 decision to buy a clothes washer. 

12 What we have done then is use a separate 

13 Logent model to estimate the likelihood of making a 

14 purchase. What that allows us to do is simulate 

15 different market conditions, change each of these six 

16 features, and see how is this probability going to 

17 change. 

18 So we start off, again, we had the 

19 different sample subgroups in the rows. We have the 

20 different market scenarios in columns. We can look at 

21 the standard efficiency case as really just a starting 

22 point. We want to see how does this probability 

23 change from the starting point. 

24 When we move -- so if we just take the 

25 full sample case, it's at .59 is the starting point. 

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1 Standard efficiency involved plugging in values. For 

2 price, it was $400. Savings was zero. It was a top3 loading, standard capacity machine, with hot water, 

4 load size adjustable. 

5 Medium-efficiency, the only two things 

6 that changed, we moved price from $400 to $450. 

7 Annual savings goes from zero to $10. You can see 

8 with that move, there's relatively or virtually no 

9 change in the probability. A very slight decrease, 

10 but not anything really that could be considered 

11 significant. 

12 We went to the high efficiency case, and 

13 we looked at two cases where you could get to high 

14 efficiency, either with having a front-loading machine 

15 or having a top loading machine that removes hot 

16 water. So in these simulations, price went from $400 

17 to $650. Savings, annual savings went from zero to 

18 $50. In the first column, you can see front-loading -

19 - the machine became a front loader. 

20 The net affect of these three changes is 

21 pretty substantial. That here this is going to have 

22 a significant impact in the decision to purchase a 

23 machine. If you get to high efficiency by removing 

24 hot water, the effect is more dramatic . 

25 

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What we did in this case though, this is 

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1 reflecting the change, the net change of changing 

2 three things, price, savings, and let' s say door 

3 placement. 

4 The last column looks at holding price 

5 constant. We knew going into this, we suspected price 

6 would be influential. We knew that from the 

7 importance statistics. What we did was to hold price 

8 constant to see what the effect of the other features 

9 . is. You can see that if we keep price at $400 and 

10 just change savings and location of the door, that the 

11 likelihood of purchase is going to actually increase. 

12 What this is saying is that if price is 

13 removed from this scenario, that the increase in 

14 savings is off setting the disutility for most people 

15 of having a front-loading machine. The exception to 

16 this, again, is those people that stated in the survey 

17 independently that they would not consider purchasing 

18 an H-axis machine. 

19 So what this does, going through these 

20 probability scenarios, again, is we know that features 

21 are important. But here we can do market simulations 

22 and change different things, and look at what's really 

23 going to drive this purchase decision. From this, we 

24 can draw some general conclusions here . 

25 

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1 can say is that there are four features in particular: 

2 hot water, being able to adjust the load size, the 

3 price, and savings, are all important. This came out 

4 in the focus groups. These were in the top five 

5 things that were considered. In the conjoint, these 

6 were also driving both the purchase decision and the 

7 importance in the utility analysis. These four things 

8 comprised over 80 percent of the utility for each of 

9 the sample groups. 

10 So of these, price was the most important 

11 consideration. Again, this is the number one feature 

12 that came out of the focus groups and had the highest 

13 importance. When we looked at importance statistics 

14 at the conjoint and in the purchase scenarios, it 

15 appeared to be that was what was driving more than the 

16 other features, the purchase decision. 

17 Similarly, door placement was not as 

18 important as these other features. Now again, all six 

19 of these features are important, and the conjoint 

20 allows us to look and forces the respondent to rank 

21 them. Door placement made the cut, but when it came 

22 time in the conjoint analysis, when people had to 

23 evaluate door placement along with price and savings, 

24 the focus was more on price and savings and 

25 temperature options. 

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1 Then finally, this is something that is 

2 included more in the report and came out in the survey 

3 and some of the analysis that we did with the 

4 conjoint, is that we looked at looking at elasticities 

5 for clothes washer purchasers. Those people that 

6 currently own clothes washers had more of an inelastic 

7 demand. This came out of primarily the survey, but 

8 also analysis of the conjoint data. That people, when 

9 we went through scenarios where they were given a 

10 choice between repairing or purchasing, these people 

11 were much more likely to purchase and repair as 

12 opposed to do without a clothes washer entirely. 

13 MR. BROOKMAN: Questions, comments? 

14 Charlie Stephens, Steve Rosenstock, and then Gene. 

15 MR. STEPHENS: Charlie Stephens. 

16 MR. BROOKMAN: Let's try and keep these 

17 brief. 

18 MR. STEPHENS : Remembering my written 

19 comments here, and I hope I get it right. But as I 

2 o recall, price was not the most important consideration 

21 in a couple of cities. In fact, it fell down the pack 

22 quite a ways. Were you ever able to explain why that 

23 was? 

24 MR. GROVER: Off the top of my head, no. 

25 The price was always included as one of the more 

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1 important ones. Are you referring to the focus groups 

2 or in the conjoint? 

3 MR. STEPHENS : The focus groups that 

4 ranked the various things. You had a ranking of what 

5 the important features were for each city, city by 

6 city in the report. Price in a couple of cities, I 

7 was surprised. I think Texas was one of the places, 

8 it fell down in the middle of the pack there. It was 

9 so far below where every other city seemed to place 

10 it, I wondered what the big difference was between 

11 that city and the others. I thought it was a fairly 

12 significant difference. 

13 MR. GROVER: Yes. I'm not sure what 

14 happened in Dallas in that particular -- I didn't run 

15 that particular focus group. One reason why we looked 

16 at the incidents of how many times these appeared in 

17 the top 10 rather than like an average ranking, is to 

18 address that issue. Where sometimes in the focus 

19 groups, someone will get off and get on a soapbox 

20 about this, that, the other thing. This is a way to 

21 kind of control for that. Get somebody to kind of 

22 brow beat everyone into not thinking about price. At 

23 least it's still considered here. 

24 

25 soapboxes? 

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1 (Laughter.) 

2 MR. GROVER: We covered everything. 

3 MR. BROOKMAN: Steve Rosenstock. 

4 MR. ROSENSTOCK: Steve Rosenstock, Edison 

5 Electric Institute. Just a couple quick comments. In 

6 the report on conjoint analysis surveys, one thing 

7 that surprised me was that at page 4-4, 57 percent of 

8 those surveyed had used horizontal axis clothes 

9 washers in the past. That just seems really high to 

10 me. 

11 MR. GROVER: No. It was primarily from 

12 laundromats. 

13 MR. ROSENSTOCK: Okay. 

14 MR. GROVER: Although it was surprising 

15 that --

16 MR. ROSENSTOCK: It still seemed high. 

17 Seventy two percent did their laundry at home. 

18 MR. GROVER: We took care, in each of the 

19 focus groups. 

20 MR. ROSENSTOCK: I'm just saying that 

21 seemed high to me. 

22 MR. BROOKMAN: Bill Babuch? 

23 MR. BABUCH: A lot of people go there, 

24 from the focus groups it became evident that a lot of 

25 people go to laundromats to wash sheets or bedspreads, 

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1 big things like that where they need a big capacity 

2 washer, bigger than for your home. That's the reason. 

3 MR. ROSENSTOCK: It was just very 

4 interesting to me. 

5 MR. BROOKMAN: Bill Prindle? 

6 MR. PRINDLE: Sort of an overall comment. 

7 I think this analysis has been very helpful, and looks 

8 like it's methodologically robust. However, I would 

9 hope the Department would not use it in a wholly 

10 predictive manner as far as market behavior is 

11 concerned. For example, in Appendix C, there is a 

12 table about willingness to pay by price category. It 

13 says no one will be willing to pay more than $1,000 

14 for a washer. Yet we know that all the major 

15 retailers have $1,100 machines on their floors and 

16 some of them are selling. 

1 7 So I would encourage the Department to 

18 look at actual sales data for actual equipment today 

19 based on actual market behavior, and not rely entirely 

20 on a piece of consumer research which admittedly has 

21 some predictive inaccuracy built into it, with the 

22 best of methods. 

23 

24 

25 

MR. BROOKMAN: Earl Jones 

MR. JONES: I for one, want to commend the 

Department for the first time actually talking to and 

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1 listening to real consumers as opposed to taking 

2 people who may think they represent consumer interests 

3 at their word when they make claims about what it is 

4 people want or don't want. 

5 Then I wanted to just make one final 

6 comment on your conclusions. There seems to be a 

7 fistful which is missing, which has to do with people 

8 who are not currently washer owners, people who might 

9 be future purchasers. As I recall, there was some 

10 report, some part of the report which said that as to 

11 that group, it was indeed quite elastic. 

12 MR. GROVER: Yes. I mean as you know, 

13 there's a lot more in the report. I was just trying 

14 to highlight them. But that's true. We did a similar 

15 elasticity calculations for people who did not 

16 currently own a machine. Their elasticity did seem to 

17 be much more sensitive. 

18 MR. BROOKMAN: Steve. Gene, go to the 

19 microphone. You are next after Steve. Steve 

20 Rosenstock. 

21 MR. ROSENSTOCK: Just two quick ones. 

22 Again, in terms of elasticity, how would you suggest 

23 the results in terms of elasticity be used in the 

24 overall either energy savings or life cycle cost 

25 analysis? 

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1 MR. GROVER: One thing, and this will come 

2 out more at the LBL, but one thing that came out of 

3 this that I was going to make the point earlier with 

4 the purchase scenarios,· is that these calculations are 

5 all done based on the six attributes that were 

6 included in the conjoint. So for looking at how 

7 important those six attributes are, the conjoint is 

8 extremely useful. 

9 When we tried to do the elasticity, 

10 obviously the other demographic factors come into 

11 play. So we can get a measure comparing different 

12 subgroups, which is more elastic or more inelastic. 

13 But again, there are demographic issues that aren't 

14 taken into account in those calculations. 

15 MR. ROSENSTOCK: I found, just two quick 

16 ones. I found the questions on repair or replace very 

17 interesting in Appendix C, about various price levels 

18 versus the repair, an $150 repair versus incremental 

19 increases in the cost. Very interesting results. 

20 The last thing was the survey question 

21 showed about how did people finance it. Over 62 

22 percent of people in the survey, credit cards, store 

23 financing, credit card financing, or bank loan for a 

24 new clothes washer. So that might have an impact on 

25 both the life cycle cost and possibly the discount 

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1 rates. 

2 MR. BROOKMAN: Thank you, Steve. Gene 

3 Foley. 

4 MR. FOLEY: This is Gene Foley, AHAM. 

5 Following up on Steve's comment on elasticities. In 

6 the draft exhibit 4.7, and in the subsequent ones on 

7 elasticities, I'm trying to remember my old economics. 

8 It looks as though that graph would say it was 

9 actually quite elastic as opposed to inelastic, 

10 especially based on repair costs. Can you sort of 

11 explain how you chose to focus on the inelasticity 

12 aspects of this? 

13 MR. GROVER: 4.7 means that the survey 

14 results where people --

15 MR. FOLEY: Choice sensitivity to price 

16 change of respondents, which means the definition of 

17 elasticity. 

18 MR. GROVER: Right. The actual elasticity 

19 calculations were done using the conjoint rather than 

20 the survey. 

21 

22 

23 

24 

25 

MR. FOLEY: Rather than these analyses? 

MR. GROVER: Right. 

MR. FOLEY: So there is somewhat of a 

disparity between the two as opposed to one saying 

it's elastic and the other one saying it's inelastic. 

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1 MR. GROVER: Right. The reason why they 

2 are not directly comparable is the survey results have 

3 a repair as an option, where the conjoint, we weren't 

4 able to look at that. So the survey results, I think, 

5 are a little bit more anecdotal as far as elasticity 

6 is concerned. 

7 MR. FOLEY: At the very least, we ought to 

8 point out that there is some discrepancy between that 

9 bullet and the survey results. 

10 MR. BROOKMAN: I think in defense of 

11 Steve, or I guess maybe it's not defense, I think it's 

12 the obvious. He has gleaned several important 

13 conclusions and other conclusions are not fully listed 

14 here for the purposes of brief presentation. 

15 Charlie Stephens. 

16 MR. STEPHENS: Yes, I had a little concern 

17 about the repair issues these folks were presenting. 

18 How did you come upon a 10-year mark and $150 as the 

19 only repair option these folks were facing in their 

20 purchase choices? 

21 MR. GROVER: We wanted to look at how 

22 changes in price affected this decision. If we also 

23 started varying repair time, we wanted to hold that 

24 constant and look at how changes in price affect that 

25 decision. 

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So we decided we wanted to give them a 

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1 timeframe, make them make the judgement of a 10-year 

2 machine, how long that would last. This is the 

3 repair. Otherwise, we have got two different 

4 variables. We have got price of the machine and the 

5 price of repair, and if you want to change the age of 

6 the machine, we would have to end up asking 15 

7 questions to kind of cover, run the gamut. 

8 MR. STEPHENS: That is though how you get 

9 at cross elasticities, isn't it? 

10 MR. GROVER: It is a way, yes. What we 

11 wanted to do was to support some of the stuff in the 

12 conjoint. 

13 MR. BROOKMAN: I thought Charlie's 

14 question was going at how you arrived at those levels. 

15 MR. STEPHENS: Yes. I mean it actually is 

16 a very long string. I'm not going to go into the 

1 7 whole thing right now, but you know, you are not 

18 talking to people as though they -- I mean you are 

19 talking to one subgroup that later came out in the 

2 o analysis. You are talking about people who are making 

21 a decision to early replace their machine. I mean if 

22 you are asking about a probability of buying or price 

23 elasticity or a new machine and somebody has got a 10-

24 year old machine, that is a very small subgroup. 

25 

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What about the people that have a 15 or a 

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1 14-year old machine, who are facing a $250 repair 

2 bill? I mean I guess I am trying to, unless you have 

3 answered some of those questions, I am not sure you 

4 can really do very much with what you did ask. 

5 MR. BROOKMAN: Bryan Berringer first. 

6 MR. BERRINGER: Yes. Just to respond to 

7 you, Charlie. We tried to limit it. So obviously we 

8 tried to pick· a realistic one. Obviously we were 

9 looking at a life of a clothes washer being 14 years. 

10 We wanted to take something that was, you know, three11 quarters of the way of their life, and make sort of 

12 the best type of repair, to look at the repairs. So 

13 we didn't look at a whole range, except we tried to 

14 take the best sort of realistic question we thought 

15 would be 

16 MR. BROOKMAN: Does some of this get taken 

17 up in shipments analysis? 

18 MR. STEPHENS: Yes. We will carry on the 

19 rest of that conversation. 

20 MR. BROOKMAN: I am wanting for us to keep 

21 moving on so we can conclude this session, this 

22 segment, and then take a break. 

23 Dick Stilwell? 

24 MR. STILWELL: Dick Stilwell, Maytag. I 

25 just wanted to make a quick comment. 

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1 study is about as good as you can do without having 

2 actual machines therefor people to look at and feel, 

3 but when you do have actual machines there, either 

4 prototypes or mock-ups, you sometimes get dramatically 

5 different results. That has been our experience. 

6 MR. BROOKMAN: Interesting. That's a 

7 useful bit of information. I'm sure the Department 

8 welcomes that. 

9 Final questions, comments? I am very 

10 eager for us to go to break. Bryan? 

11 MR. BERRINGER: I just wanted to add one 

12 more, to respond to Bill Prindle's question as far as 

13 do we look at the market numbers or the sales numbers . 

14 That is something that we do look at, to the available 

15 data that we have. So we are looking at that. 

16 MR. BROOKMAN: Thanks, Steve, for that 

17 good presentation. Thanks to the others that have 

18 presented already this morning, Dick and others. 

19 It is now 11:25. Let's take a break. We 

20 will start. Did you hear the word, start, 11:40. 

21 

22 

23 

24 

25 

(Whereupon, the foregoing matter went off 

the record at 11:30 a.m. and went back on 

the record at 11:45 a.m.) 

MR. BROOKMAN: Those of you that walked 

into this building with computers, with laptops, if 

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1 you intend to walk out without having the security 

2 folks try and take it away from you, you need to get 

3 a property pass. Did everybody hear me? They will 

4 try to take it away from you unless you have a 

5 property pass. Sandy and Brenda have property passes. 

6 You need to fill that out and show it as you are 

7 trying to walk out of this secured building. 

8 Okay. So, Michael McCabe. Let's start 

9 then. The next item on the agenda, and we're running 

10 a little behind schedule, but I think we'll make it up 

11 as we go here. Is shipments analysis. Jim McMahon 

12 from LBNL will be our presenter. 

13 MR. MCMAHON: Good morning. I am going to 

14 speak about the shipments analysis. I think the 

15 ·questions leading into this have been a very good 

16 segway. I hope that I will be able to answer all 

17 those questions. 

18 This is not in your package, but I put 

19 this together at the last minute just to summarize the 

20 big changes that have gone on. The most important I 

21 think is the clothes washer consumer analysis that has 

22 just been described to you. As Earl Jones just 

23 commented, this is the first time the Department has 

24 attempted to quantify the impact of features of an 

25 appliance on the decision probabilities. In the past, 

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1 we have looked at price and operating cost, but now we 

2 also have the features that consumers have told the 

3 Department are important. 

4 The most important ones for this 

5 rulemaking are top or front loading, the door 

6 placement, and the hot water feature. 

7 Other changes that have gone on are we 

8 have updated the economic factors, the washer prices, 

9 and the energy and water costs. There is now a more 

10 detailed treatment of market segments. I'll step 

11 through the specifics of that in a moment. Finally, 

12 there was a comment I think Bill Prindle made about 

13 relying upon the stated preferences of consumers and 

14 that perhaps the Department ought to consider what the 

15 historical behavior has been, and we have done that. 

16 I will describe to you how we have done that. 

17 This maybe a little difficult to read from 

18 the back of the room, but it's in the handout. The 

19 process for developing the model started with the 

20 conjoint analysis. So inputs from real consumers. 

21 That led to the development of a probability of 

22 purchase model using standard economics. When we 

23 initially assessed the model just using the data from 

24 the consumers, we found that it did not match what has 

25 happened historically. I will illustrate that for you 

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1 momentarily. 

2 So there was additional work done to look 

3 at the tradeof f s that people are currently making and 

4 have made in recent years between purchase price and 

5 operating costs. Specifically, the consumers in the 

6 conjoint study overstated how sensitive they are, both 

7 to price and to operating costs. If you took them at 

8 their word, then you would expect that many more high 

9 efficiency models would be sold these days than are 

10 actually being sold. So you have to correct for that. 

11 Finally, there's a model calibration using 

12 historical shipments data from the industry to make 

13 sure that our model is based on reality. 

14 The principal economic factors that 

15 consumers face are the purchase expenses for baseline 

16 unit, including tax, $420 per washer. The operating 

17 expenses on average, $122 per year, of which $76 are 

18 energy costs. That includes heating the water and 

19 drying the clothes. The water expenses average about 

20 $46 per year, combining water and waste water rates. 

21 Moving into the different types of 

22 purchasers, we have four major segments that we are 

23 concerned about. The largest segment is washer owners 

24 and existing housing. There's also a fair number of 

25 sales of washers of people moving into new housing 

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1 each year. There are non-owners, who may decide to 

2 buy a washer and get out of the laundromat. A new 

3 feature is we have allowed for consumers to have the 

4 option of repairing washers and extending their life 

5 rather than buying new ones. 

6 The specific consumer decisions that they 

7 make are whether to replace a working washer. It may 

8 surprise you to know that 26 or 27 percent of working 

9 washers are replaced early, while they are still 

10 working. Most often this is when people do remodeling 

11 and they upgrade their product. This is information -

12 - I guess I want to at this point thank AHAM. AHAM 

13 did a couple of surveys with NFO. This is the 1996 

14 survey. There's also a 1990 survey. We got a lot of 

15 our input data from those surveys. They were useful. 

16 MR. NADEL: One question. Is there any 

17 information in those surveys or from other sources on 

18 what happens to those 27 percent of functioning 

19 washers? 

20 MR. MCMAHON: We presume that they go into 

21 the used washer market, and that they are still 

22 operating. But they have moved from one place to 

23 another. That is accounted for in our model. 

24 

25 

MR. FOLEY: While I don't have the 

statistics at my fingertips, that may not be an 

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1 accurate assumption, given that 80 percent of washers 

2 that are removed from people's homes are actually 

3 recycled. So I would be careful making that 

4 assumption. 

5 MR. MCMAHON: There is a specific question 

6 on this topic in AHAM's survey about how products are 

7 disposed of. Let's see, reasons for disposition. You 

8 have to separate these things out. For clothes 

9 washers, this is AHAM' s final report, "Home Appliance 

10 Saturation and Length of First Ownership Study", May 

11 of 1996, page 32. 

12 Among owners who obtain an appliance new, 

13 those who get rid of them, 53 percent are because the 

14 washer died or had costly repairs. Keep in mind, this 

15 is across all of them. So we're not saying anything 

16 about the age yet. Thirty one percent, because they 

17 moved. Fifteen percent, new or updated model. One 

18 percent, remodeled. One percent, remodeled. Three 

19 percent, other. Okay? So people who moved, 

20 presumably the washer is still in use and so on. So 

21 we segment these and deal with them in the specifics 

22 of the model. 

23 Okay. The second decision is if something 

24 happens to the washer, it's not functioning properly, 

25 you either replace it or repair it. The third is if 

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1 you move into a new home, you may decide to buy a new 

2 washer. I guess I want to say one thing here that I 

3 am not sure is clear in the report. The effect is the 

4 same whether the person moving into the new home buys 

5 a new washer or if they move their washer with them, 

6 but the house that they left behind, the new resident 

7 buys a new washer. As far as we are concerned, the 

8 new house creates a purchase. Okay? 

9 Becoming a washer owner, so someone who 

10 was not an owner before buys a washer. In each of 

11 these decisions, consumers have the choice of 

12 purchasing a new or a used washer. That was not 

13 modeled previously . 

14 In the handout, this may be easier to 

15 read. I this text is probably small for the back of 

16 the room. This is half of a two-page flow chart that 

17 shows how the model works. 

18 We start with a start of a year. We go to 

19 the end of a year. The model does this each year for 

20 the 3 0-year forecast. Starting with houses that 

21 already own washers, the first question is, are they 

22 having a problem with the washer or not. If not, they 

23 can decide to replace it early anyway, for the reasons 

24 that I have just stated, or not. If they do nothing, 

then they just stay in the population of houses with 

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1 washers. 

2 If. they are having a problem with the 

3 washer -- I'm sorry, I skipped a step. If they decide 

4 to early replace, then they buy a new washer. That's 

5 one contribution to purchase. 

6 If they are having problems, they decide 

7 whether to repair it or replace it. If they replace 

8 it, they choose new or used, so you get a stream of 

9 new purchases here or purchases of used. If they 

10 decide to repair it, we have a choice here of a 

11 regular repair which is normally going on now, or an 

12 extra repair, which it's put in here specifically for 

13 the standards analysis . 

14 If there is a situation where the standard 

15 changes the dynamics of the market and the new washers 

16 are more expensive, it may shift people into repairing 

17 longer. This has been raised in comments for a long 

18 time. We're now addressing it quantitatively. 

19 So if they do a regular repair, they 

2 O remain a house with a washer that' s been repaired. If 

21 they do an extra repair, we put them in a new category 

22 with a house with an extended lifetime washer. So we 

23 actually adjust the lifetime to allow these things to 

24 go on a bit longer. You can't do that forever.. The 

25 washers do eventually die. 

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1 The rest of the market is composed of 

2 houses that already had extended lifetime washers. 

3 When those break, there comes a point where you can no 

4 longer keep them going. So if it breaks down -- if it 

5 doesn't break down, you're fine. If it does break 

6 down, you have to replace it or buy a used one. So 

7 the life extension is only for some period of time. 

8 For new houses, decision to purchase a new 

9 washer, yes or no. If you do not purchase a new 

10 washer, you are a house without a washer. That's this 

11 group down here. Those folks who don't own a washer 

12 at the beginning of the year and decide to purchase a 

13 purchase, they can buy new or used. So this is just 

14 all the accounting that goes on. 

15 Let me turn to the inputs. I wanted to 

16 first thank AHAM for their data. Just a couple of 

17 numbers that we have used from this report. Eighty 

18 two percent of washer purchases in a given year are 

19 obtained new. Eighteen percent are used. This is the 

20 first time we have characterized the used market at 

21 all. As I said before, 2 6 percent of washers are 

22 replaced before they break down. 

23 We also got annual shipments data from 

24 them. I will come back to that . 

25 

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1 information about repair rates in their surveys that 

2 they do of consumers. They ask them how many people 

3 have had repairs in the first five years of life of 

4 the washers. It averages out to about five percent 

5 per year. So we're using that as the source of 

6 information about how often repairs occur. 

7 We are also using the consumer analysis in 

8 terms of the relative importance of features to the 

9 economic factors, the price and the operating cost. 

10 MR. BROOKMAN: Steve Nadel? 

11 MR. NADEL: I am just trying to 

12 understand, going back one. There's 26 percent of 

13 washers are replaced before breakdown. Does that 

14 include any overlap with this new home sales or is 

15 that in addition to? 

16 MR. MCMAHON: No. That is in addition to 

17 new homes. Let me clarify that. I will show you a 

18 graph in a moment. This is a cumulative number. It 

19 is a small number each year. It is a couple of 

20 percent, but accumulated over the 14-year life of an 

21 appliance. About 26 percent of them are replaced 

22 before they break down. 

23 The conjoint analysis provided a great 

24 

25 

deal of information. One of the things that was 

interesting was how many people were willing to 

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1 abandon the washer if it broke down, and go to the 

2 laundromat. The answer was small. We used to think 

3 nobody would do it, but two percent of people are 

4 willing to say the heck with it, I'll just go to the 

5 laundromat. So that's fine. 

6 We also found, I guess I should say that 

7 Steve Grover and the folks at Quantum found that 

8 different income groups have similar purchase 

9 preferences. That is, the relative ranking of the 

10 features and the price and operating costs were very 

11 similar from one income group to another. There are 

12 small differences that he indicated, but by and large, 

13 price is important to everybody, and you go on down 

14 the list. That simplifies our modeling because we 

15 don't have to deal with a lot of different income 

16 segments to complicate the model. 

17 The functional form of the model is the 

18 likelihood of purchased model. I'm sure you don't 

19 want an economics lecture, so we'll just say that. 

20 There is a preference for top-loading washers by the 

21 majority of consumers in this study. We are going to 

22 account for that. 

23 So if we were to summarize everything into 

24 one picture, this is our attempt to do that. I want 

25 to thank Robert Van Buskirk on our staff for coming up 

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1 with this. 

2 This is washer age over time. This is a 

3 probability, zero to 100 percent. What do people do. 

4 So when you first buy a washer, you keep it, is what 

5 the blue area is. As it ages, there is a certain 

6 likelihood that it will require repair. That 

7 likelihood increases over time. 

8 Once it reaches a certain age, out here in 

9 10 or 11 years, it becomes very likely that you are 

10 going to start seeing people replacing them. 

11 Eventually at 17 years, they all get replaced. 

12 The other small line in here is the 

13 replaced early. Even though this is a small fraction 

14 of people every year, if you accumulate this over the 

15 entire population, you get the 26 percent number that 

16 I used on a previous slide. 

17 MR. BROOKMAN: That's a great graphic. 

18 MR. MCMAHON: Thank you. So this is one 

19 way to look at what the dynamics are. You start with 

20 purchasers in a given year, in the year 2003. You say 

21 what's going to happen over time. Most of them are 

22 going to keep them. Some fraction will early replace. 

23 There will be repairs. Eventually there will be 

24 replacements . 

25 

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1 repair cycle which buys people a little bit more time, 

2 for a price, before they replace them. 

3 Okay. If we now go to the output of the 

4 model, and the spreadsheet model is on the DOE web 

5 page, as is a detailed documentation of the model. 

6 The output of the model looks like this. This is 

7 annual shipments in millions. We're starting in 1980 

8 because I like to have a track record to see how we 

9 compare to what actually happened in the real world. 

10 So it's a back-cast, if you will. The forecast 

11 actually starts in about 1997 or 1998. 

12 Breaking down into the four categories 

13 that we talked about, new housing account for the 

14 shaded blue area in the bottom, roughly a million 

15 uni ts a year. Early replacements, another million and 

16 increasing. Regular retirements, so as the products· 

17 age, they get replaced, is the bulk. There is a small 

18 number, since 80 percent of households already own 

19 washers, of the 20 percent who don't, some small 

20 number of those buy washers each year. So non-owner 

21 conversions are the top. Our forecast on the future 

22 in the base case with no new standard, looks like 

23 this. 

24 Now let me come back to the issue of 

25 calibrating the model to the start is there a 

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1 question? 

2 MS. CASENTINI: Yes. Lauren Casentini, 

3 Pacific Gas and Electric Company. Does the model 

4 include common area washers? 

5 MR. MCMAHON: Common area washers? It 

6 does not. 

7 MS. CASENTINI: It does not. Okay, great. 

8 MR. MCMAHON: There are several things on 

9 this slide, so let me explain it. We have again, 

10 annual shipments in millions from 1980 to the year 

11 2000. So it's the historical record with just a 

12 couple of future years. 

13 The first one I want to call your 

14 attention to is this blue line, called stated 

15 preference coefficients. If we were to take what the 

16 conjoint analysis told us, and apply it to the 

17 historical record of what has happened to price and 

18 efficiency and futures of washers, then we can do a 

19 forecast and say people said this is how they valued 

20 these things, so they must have bought the appropriate 

21 number of machines. You get this blue line. 

22 What I would like to call your attention 

23 to is the spike which happened in 1994. What happened 

24 in 1994? The previous clothes washer standard. Okay . 

25 There was a significant change in efficiency. Not 

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1 much change in price, but the product became cheaper 

2 to operate. If we took the consumers at their word, 

3 that would say that they would have bought roughly 15 

4 million washers that year because the operating cost 

5 savings are so attractive. It didn't happen. The red 

6 squares are what actually happened in the market. So 

7 this is why we don't use the conjoint directly. 

8 It's not to be critical of the conjoint. 

9 It is just to say that people's statements need to be 

10 calibrated to how they actually behave. The conjoint 

11 was absolutely critical for us being able to weigh 

12 these factors relative to each other and relative 

13 features. 

14 So the next part is we revised the 

15 probability of purchase model to the green line here, 

16 to kind of damp down what people said to closer to 

17 what we believed the tradeoff is. Let me say that one 

18 more way. We have had many discussions about payback 

19 periods and discount rates and how people weigh the 

20 first price versus the operating cost. The results 

21 from the conjoint said that the relative value of a 

22 dollar of operating cost savings was about $5 compared 

23 to $1 of increased price of the washer. 

24 

25 time? 

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1 MR. MCMAHON: Yes. The relative value of 

2 a dollar of operating cost savings is about a factor 

3 of five larger than the value of a dollar of price 

4 savings. Okay? That is not consistent with 

5 experience that says people accept five-year paybacks. 

6 They don't. Most of the evidence says consumers go to 

7 one or two-year paybacks, and we have direct studies 

8 of that in some areas of the country. 

9 So we have to damp down what was said in 

10 the conjoint. We still take the relative value. The 

11 price is still really important. Operating cost is 

12 below that. But we adjust them for that factor. 

13 So that gets us to the green line. That 

14 is a partial adjustment. Then we calibrate all the 

15 coefficients of the model to the 1980 to 1996 

16 shipments. You get this black line, which runs 

17 through here. 

18 So you see the model is within about 

19 200,000 typically, of the correct value in any year, 

20 where the correct values are between 4 million and 

21 over 6 million shipments a year. So it's a reasonable 

22 

23 MR. STEPHENS: Charlie Stephens. Can I 

24 ask you a fundamental question? 

25 

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MR. MCMAHON: Yes. 

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1 MR. STEPHENS: What led you to believe 

2 that historical shipments of clothes washers were 

3 affected at all by price and efficiency? That they 

4 were even factors that had any influence at all on 

5 shipment? 

6 MR. MCMAHON: The consumers say that price 

7 and operating cost are very important to them. 

8 MR. STEPHENS: Yes, and then you created 

9 the curve based on what they said. I am losing you in 

10 the leap to okay, here's what we predict based on what 

11 the consumers said. I am not sure I am following how 

12 you can just assume. 

13 I mean my assumption from that would be 

14 that what they said really isn't relevant to 

15 historical shipments. You may find some other 

16 variables that have a bigger impact on shipments, like 

17 income, disposable income, economic, you know, the 

18 economic status in the country, housing starts, 

19 relative housing starts of multi-family versus single 

20 family. It seems to me there is an awful lot of 

21 variables that are an awful lot more important in 

22 predicting, if you want to, or backcasting shipments 

23 than price and efficiency. 

24 

25 

MR. MCMAHON: Let me refresh your memory 

of a previous workshop about shipments models. We 

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1 found that you could account for most -- you could 

2 explain most of the shipments by housing starts and 

3 replacement, without any consideration of economics 

4 whatsoever. Okay? So I agree with that. We have 

5 accounted for that here. 

6 However, on top of that, these variations 

7 from year to year, you want to be able to account for 

8 price and operating cost. First of all, because when 

9 there's a new standard, presumably price and operating 

10 cost will change. You want to be able to see how much 

11 of a kick that is going to give to the sales. That is 

12 a motivation for doing it. 

13 Now the question is, how well do we do in 

14 matching things up to the past. What is correct is 

15 there may be other factors that caused people to buy 

16 more or less washers that we have not accounted for. 

1 7 You mentioned income. A limitation of the conjoint is 

18 it's a slice in time. We don't have these going back 

19 20 years, to say how much income influenced the 

20 purchases. So I just don't have an answer to that. 

21 It could be that that is a factor. 

22 MR. STEPHENS: Well, I have watched this 

23 before. We went through an exercise like this 

24 watching somebody trying to backcast historical energy 

25 use in some buildings by developing similar equations. 

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1 When they were finished, what they didn't pay any 

2 attention to was the fact that we had actually 

3 measured what they were trying to estimate. They 

4 ended up with garbage because they just ignored what 

5 the real factors were. 

6 They assumed that what was in this total, 

7 which is shipments in this case, was affected by 

8 certain things, and therefore, that they knew. So they 

9 took what they knew. What they ignored was what they 

10 didn't know. They left it out of the model 

11 completely. Well, as it turns out, those factors 

12 actually had a big influence on what that total was. 

13 They were a big piece of the total, but they weren't 

14 even in the model. 

15 What they ended up doing was misestimating 

16 what they did have in the model, because part of what 

17 was in there was actually very much attributable to 

18 something else. 

19 I am afraid what you may be doing here is 

20 in our desire to try to find the impact of price and 

21 efficiency on shipments, you are backcasting into a 

22 realm where it didn't have any impact of note on 

23 shipments. If you go back far enough into 1980, how 

24 many models of efficient clothes washers were there, 

25 that were more efficient in any significant way than 

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1 other clothes washers or more expensive than other 

2 clothes washers in any significant way? 

3 MR. MCMAHON: Let me ask you what factors 

4 you think we have left out. I can tell you whether we 

5 have left them out or not. 

6 MR. STEPHENS: I mentioned them earlier. 

7 I think that the bigger factors have much more to do 

8 with economic factors going on in the economy than 

9 they do about the relative price and efficiency of 

10 clothes washers. You are backcasting and calibrating 

11 your prediction model against a scenario that had none 

12 of the elements in it that we are trying to 

13 MR. BROOKMAN: Like disposable income, is 

14 one you raised? 

15 MR. STEPHENS: Yes. Disposable income. 

16 But I mean we didn't have $1,000 clothes washers on 

17 the market in 1984. 

18 MR. MCMAHON: I agree with that. 

19 Disposable income is not in the model. However, the 

20 other factors you mentioned are. So housing is in 

21 there. 

22 MR. STEPHENS: I know you have looked at 

23 housing starts and you have explained most of that 

24 

25 

stuff. But what I am saying is it is a big leap to 

assume that price and efficiency, relative price and 

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1 efficiency are now the ones that are missing. I don't 

2 know that they are the ones that are missing. So far, 

3 I haven't seen a c~se that they are. 

4 MR. MCMAHON: Okay. Let me address that 

5 specifically. Actually with your indulgence, I will 

6 go to a different slide. I want to show you the 

7 historical data. This is the relative change based 

8 upon 1995 as the base for three things. Shipments are 

9 in red. So this is how shipments have changed. This 

10 is a percent axis. So this is shipments were 30 

11 percent lower in 1980 than they were in 1985. They 

12 were 30 percent higher in 1995 than they were in 1985. 

13 That is the red line . 

14 The triangles are the average washer 

15 price. They were 15 percent higher -- they have been 

16 going down over time -- in 1978, than they were in 

17 1985. They have continued to go down. They are now 

18 25 percent lower than they were in 1985. 

19 The last one is operating cost. Operating 

20 costs increased about 10 percent. So this accounts 

21 for efficiency and energy prices and water prices. 

22 Okay? There have been significant changes in those 

23 factors. Operating costs have come down over time. 

24 You see this big step-down is the 1994 standard on 

25 clothes washers. It made a big difference. I read 

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1 that as about a 15 percent decrease in operating cost. 

2 So we rolled these in because we think 

3 these changes from 1985, on the order of 25 percent in 

4 purchase price and more than 40 percent in operating 

5 cost, are big enough that they ought to be worried 

6 about. 

7 MR. STEPHENS: Yes, but I mean the notion 

8 that those things are correlated doesn't mean that 

9 they actually impact one another. I mean I see the 

10 correlation you point to, but I don't necessarily draw 

11 the conclusion that because they correlated an 

12 intuitively logical way, that one of them has an 

13 impact on the other . 

14 MR. MCMAHON: It is difficult for me to 

15 say anything other than without other data that shows 

16 that there is a correlation between income or some 

1 7 other variable, you know, I can't disprove that 

18 without some evidence. 

19 MR. BROOKMAN: Charlie, would you offer 

20 any additional data or any additional variable for 

21 consideration by LBNL? 

22 MR. STEPHENS: Well, I think we're trying 

2 3 to do some things here based on an awful lot of 

24 assumptions. What concerns me is the process called 

25 abstraction from reality. You start out, I think we 

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1 have all agreed, that what consumers say is kind of 

2 abstracted from the reality of what they do. 

3 The further you play with your 

4 coefficients to try to make your curve match history, 

5 that really isn't very much like the future at all, 

6 based on the standard, I mean if the manufacturers' 

7 comments are to be believed, that we are going to have 

8 a whole different marketplace here after the new 

9 standard. 

10 MR. MCMAHON: It is even worse than 

11 calibrating the history because we are now speculating 

12 about the future. 

13 MR. STEPHENS: Yes. Well, I mean that's 

14 the next step. But what concerns me is that the 

15 farther you get removed from what you know, the more 

16 abstracted from reality you are. I am not sure you've 

17 got variables that even are related to each other 

18 here. I haven't seen anything that you said, you know 

19 anything here, that says we should -- it's a huge 

20 assumption I think to assume that price and operating 

21 cost affect total shipments, historically. 

22 MR. MCMAHON: So you are alleging that 

23 price and operating costs should not be drivers of 

24 shipments? 

25 shipments. 

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Should not be considered as affecting 

So whatever the price or operating cost 

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1 is, it's not going to change the shipments. 

2 MR. STEPHENS: Not by themselves. I mean 

3 if the price crept up over time, you would expect 

4 shipments to creep down? 

5 MR. MCMAHON: Yes. 

6 MR. STEPHENS: And if price crept 

7 downward, then shipments should creep upward. What 

8 about price relative to income? What if disposable 

9 income is creeping down at the same rate price is, or 

10 creeping up at the same rate price is? What is they 

11 are disparate? One is creeping down and the other one 

12 is going up? What kind of a relative impact are you 

13 likely to see there? How do you explain the dip after 

14 you get that operating cost decline in 1994. I see 

15 that. Then I see a decline in shipments subsequent. 

16 MR. MCMAHON: So if we accept your model, 

17 that the shipments are unaffected except for income. 

18 We have accounted for the other things. 

19 MR. STEPHENS: No. My problem is not like 

20 yours. You are trying to find what is impacting a 

21 model. You are trying to make a model. 

22 MR. MCMAHON: Yes. 

23 MR. STEPHENS: And you are trying to pull 

24 in the right variables to use in the model . 

25 

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MR. MCMAHON: And to explain the 

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1 coefficients. 

2 MR. STEPHENS: To explain reality. I mean 

3 backcasting anyway. I don't think you can use the 

4 variables you have chosen. I don't know that you have 

5 made a case that I can believe that the variables you 

6 picked are the ones that you need to calibrate to go 

7 to backcasting. 

8 MR. BROOKMAN: Steve Nadel is next, and 

9 then Earl Jones. 

10 This is getting pretty esoteric, folks. 

11 I think it is fairly fundamental, but I would like to 

12 keep this as concrete as possible. So to the extent 

13 possible, if you can suggest what the variables, the 

14 pertinent points of analysis, how it benefits this 

15 analysis and how it works in the context of 

16 rulemaking, I think it would be very useful. 

17 Steve Nadel. 

18 MR. NADEL: Okay. I have a couple of 

19 comments and questions that to some extent relate to 

20 what Charlie said, and in some sense go beyond them. 

21 It strikes me in looking at the information you have 

22 there, that maybe before we get into a detailed 

23 conjoint analysis, we should do some much more basic 

24 regressions to look at a whole range of possible 

25 factors. Operating costs, price being one, disposable 

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1 income. Another one that I'm not sure is or is not in 

2 your model is number of households. There has been, 

3 over the same period, there has been significant 

4 growt~ in the number --

5 MR. MCMAHON: That is accounted for. 

6 MR. NADEL: So that one is in. But to 

7 look at a variety of factors. I agree with Charlie 

8 that disposable income I would expect would be a much 

9 bigger variable than those two. 

10 To figure out how much, how important 

11 those two factors are versus some other things. If 

12 our hypothesis that disposable income is very 

13 important, than all of these other things need to be 

14 put down to allow for the fact. Disposable income has 

15 been up at the same time that price is down. 

16 MR. MCMAHON: I understand. 

17 MR. BROOKMAN: Will you say it again? Say 

18 why you are making this attempt at backcasting? 

19 MR. MCMAHON: Sure we are trying to 

20 explain what has happened historically for the purpose 

21 of developing a model we can use for the future to see 

22 what the impact of new standards will be. 

23 I guess I would be uncomfortable making 

24 the assumption that purchase price will have no 

25 impact, whatever the purchase price is will not impact 

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1 shipments. It may be true that the historical record 

2 with this set of prices was not the only thing 

3 responsible for the increase in shipments. We know 

4 that I think about 60 percent of this increase is the 

5 change in the housing stock. Okay? But there remains 

6 the other 4 o percent to explain why more people bought 

7 washers. It may be that the features changed. It may 

8 be that consumer thinking changed. That is the 

9 challenge, is to come up with that model. 

10 MR. BROOKMAN: Okay. Earl Jones. 

11 MR. JONES: I just wanted to bring up a 

12 couple of things. One, I suppose what the question 

13 that's being raised fundamentally goes to is the 

14 ability to regulate this industry at all, to the 

15 extent that on the ability to discern from what's 

16 happening in the real world, then go and predict what 

17 is going to happen in the future. So we may be 

18 actually in agreement on that point, Charlie. 

19 (Laughter.) 

20 MR. BROOKMAN: Let me note for the record 

21 that we have an agreement here, folks. 

22 MR. JONES: We'll pass over that one very 

23 quickly since I don't' think we can get very far with 

24 this. Because there is additional data which I think 

25 we have seen today. That is, we .can just listen to 

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1 what real consumers tell us. We can go on the basis 

2 of that. 

3 I thought what the purpose here was, was 

4 to say, well let's just use all the data we can, 

5 whether it's historical, whether it is known factors 

6 versus what people tell us. But let's come up with 

7 something which at least gives us information from 

8 which we can hopefully make an intelligent choice. 

9 Now I have been very much objecting to the 

10 use of models by the Department over the years. I 

11 find that ironic that people who previously supported 

12 those, this modeling process, are now opposing it only 

13 when it seems to predict something which is different 

14 from what it used to predict, which didn't make sense 

15 then and was definitely wrong, but is at least now 

16 tested to be more accurate. 

17 So I mean let's just leave it at that, and 

18 agree to disagree. I suggest that we go on. 

19 MR. BROOKMAN: We have a suggestion on the 

20 table that we move on. 

21 I saw additional questions. I do want to 

22 make sure we finish with Jim's slides. Jim. 

23 

24 

25 

MR. ECKMAN: Tom Eckman, Northwest Power 

Planning Council. Two things. In the specification 

of the model, Charlie has pointed out and so has 

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1 Steve, that there may be missing variables, 

2 discretionary income, there may be others. 

3 In dialing in on the coefficients to get 

4 the backcast that you've got, are the regressions 

5 there to support the coefficients? Do you have T 

6 statistics and things like that on those coefficients 

7 to say that they are significant? 

8 MR. MCMAHON: We haven't done the T 

9 statistics, but we can. Yes. 

10 MR. ECKMAN: So for the variables that are 

11 in the model today, we can see the stats. to see 

12 whether they are significant? 

13 MR. MCMAHON: Sure. 

14 MR. ECKMAN: In terms of explanatory. And 

15 additional variables to be added, like income or other 

16 that ought to be tested. There should be a list that 

17 we can probably come up with. I think income is an 

18 important one. But there may be other things, 

19 relative price, to used market or something, needs to 

20 be in there. And maybe housing type splits so you get 

21 the common laundry versus the individual home laundry. 

22 

23 laundry. 

24 laundry . 

25 

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MR. MCMAHON: We have excluded common 

We are just looking at the individual 

MR. BROOKMAN: Steve Rosenstock was next, 

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1 and then Alan, I believe. Yes. Thank you. I wasn't 

2 sure you were in line or not. 

3 MS. CASENTINI: Thanks, Steve. Lauren 

4 Casentini, Pacific Gas and Electric Company. 

5 Just a question about the historical data. 

6 I wonder if you could help me understand this. 

7 Looking back at 1980, the ratio of annual 

8 shipments to population was 5. 8 percent. Then 1996 it 

9 shows it was 6.2 percent. And then based on the 35 

10 percent level, the forecast for 2003 is 5.17 percent. 

11 Yet, when you look back at 1980 the price 

12 of washers, it was $608 and annual operating costs 

13 were $129 higher than the 35 percent level. So it's 

14 sort of counterintuitive, one would think that the 

15 ratio of annual shipments would be more along the 

16 lines with what they were in 1980 at the 5.8 percent. 

17 I wonder if you could help me understand that. 

18 MR. McMAHON: I think one thing that has 

19 happened is you're reaching saturation. There were 

20 fewer people who owned washers, so there's a growth 

21 period, but once you reach that duration, then you're 

22 basically in a replacement cycle. So I don't think 

23 that the percent of population is a good metric --

24 

25 

MR. BROOKMAN: Which coincides with postwar growth, baby boomers, all of that. 

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1 Charlie Stephens? 

2 MS. CASTENINI: Thank you. 

3 MR. STEPHENS: For the record, I am not 

4 against modeling. 

5 (Laughter) 

6 I think modeling can be done well and it 

7 actually can produce interesting and useful results. 

8 But people seem to think -- I don't think -- I want to 

9 offer you one variable that you don't have in your 

10 model that I think probably can explain an awful lot 

11 of what you see in shipments as they keep going up in 

12 spite of everything else going down and that is the 

13 availability of credit . 

14 I think if you go back and start looking 

15 at the historic availability of credit at every income 

16 level and you start figuring out how easy it has 

17 become to buy large things, I mean your data suggests 

18 that SUVs should not sell. I mean the prices of those 

19 things relative to every other car is going off the 

20 charts and yet, they're 49 percent of sales I think 

21 now, over 50 now. 

22 So you know, there are some other things 

23 associated with that and I think you' 11 find that 

24 availability of credit is a huge influence on why 

25 shipments might keep climbing as other things --

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1 MR. BROOKMAN: · I know for a fact that the 

2 Department welcomes your ideas about how to 

3 characterize additional variables, so thank you. 

4 Steve Rosenstock? 

5 MR. ROSENSTOCK: I want to get back to the 

6 future on this, this output of washer shipments and go 

7 back to this original slide presentation. 

8 Just as a quick comment, under the 

9 standards, that was the last slide you had, between 

10 2020 and 2030, it seems to flatten out. Is that 

11 because, as I've seen a number of reports, that's past 

12 the NEMS deadline you just other parts of the 

13 report, other reports, it seems like you've kind of 

14 said no real improvements between 2020 and 2030 on a 

15 variety of issues, so you kind of left it flat just as 

16 a placemark? 

17 MR. McMAHON: These, no. You can see the 

18 replacements continue to grow. I think that the 

19 projections for new construction are declining. 

20 MR. ROSENSTOCK: Okay. 

21 MR. McMAHON: And that's what's flattening 

22 things out. 

23 

24 overall cap . 

25 

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MR. ROSENSTOCK: I just thought it was an 

MR. BROOKMAN: Alan? 

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1 MR. KESSLER: Jim, I think it might be 

2 helpful to go through the list of the factors that you 

3 are including in the forecast because some of the 

4 things that Charlie comments on are inherently in some 

5 of those other numbers. 

6 MR. BROOKMAN: You might see them as 

7 embedded. 

8 MR. KESSLER: Embedded, yes. And what 

9 you've tried to do with these last, I believe, is add 

10 those things that are germane to this particular 

11 subject. 

12 MR. BROOKMAN: Did you also have a 

13 comment? Okay. I want to make sure you get through 

14 your slides, so I'd like you to proceed with what you 

15 haven't covered so far. 

16 Steve Nadel, go first. 

1 7 MR. NADEL: Actually, as a transition into 

18 this, can we go to the next slide because I had a 

19 question about that. 

20 MR. BROOKMAN: I like this progress. 

21 MR. McMAHON: This one? 

22 MR. NADEL: Yes. I was trying to 

23 understand the difference between the green line and 

24 the black line . 

25 

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MR. McMAHON: Yes. 

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1 MR. NADEL: What did you do to revise your 

2 model to go from one to the other? 

3 MR. McMAHON: We looked at the current 

4 distribution of sales by efficiency of washers and 

5 compared to the engineering data that we have from 

6 AHAM that indicates what the relationship is between 

7 price and operating costs and that gave us a better 

8 read on how people trade off, price versus operating 

9 costs because they' re buying close to the baseline 

10 model, not at the high efficiency end of that 

11 distribution. 

12 So current market behavior defined by what 

13 people are currently buying gave us a ratio between 

14 how valuable a dollar or savings is to a dollar of 

15 purchase price that is different than we got from the 

16 conjoint analysis. And that's what we did here. 

17 MR. NADEL: So if I understand the blue is 

18 the conjoint --

19 MR. McMAHON: Yes --

20 MR. NADEL: The green was your attempt to 

21 tamp down the conjoint? 

22 MR. McMAHON: Yes. 

23 MR. NADEL: And the black represents, 

24 based on your models, the correlation of market which 

25 effectively is a further significant tamping down on 

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1 the -- some of the factors in the contract. 

2 MR. McMAHON: That's correct. Thanks for 

3 that summary. 

4 (Laughter.) 

5 MR. BROOKMAN: Proceed with the rest of 

6 your slides. 

7 MR. McMAHON: Okay, so moving along into 

8 the future, speculation about how consumers might 

9 react to new standards, higher equipment prices, if 

10 all of this data is correct, will mean that there will 

11 be fewer earlier replacements, the people have less 

12 incentive to buy a new product early. There will be 

13 more repairs and fewer replacements in general and 

14 more purchases of used washers. 

15 Lower operating expenses that would go 

16 with new standards would mitigate these reactions, so 

17 they'd go in the opposite direction. At the higher 

18 standard levels if that implies an increase in the 

19 fraction of washers that are front loaders, people's 

20 preference for top loading will amplify the resistance 

21 to the new products and it would therefore be similar 

22 to what's happening with the higher prices. 

23 Now all of these things are accounted for 

24 in the models, but I just wanted to be explicit about 

25 what the factors are. 

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1 MR. BROOKMAN: Bill Prindle? 

2 MR. PRINDLE: Jim, could you explain a 

3 little bit how you derived assumptions about future 

4 prices, particularly in light of your earlier slide 

5 from your other presentation which showed essentially 

6 no price impact from the 1994 standard? How do you 

7 translate manufacturing costs and prices? 

8 MR. McMAHON: It's all in the spreadsheet. 

9 We used the manufacturing cost information from AHAM 

10 as a function of the efficiency levels. There are 

11 markups applied for the manufacturing markup, the 

12 retailer markup and a sales tax. So basically, the 

13 retail prices are proportional to the manufacturer 

14 costs. That's how the prices are derived. 

15 MR. PRINDLE: Did you do any sensitivity 

16 analysis on different assumptions about different kind 

17 of pricing behavior or just assume sort of a --

18 MR. McMAHON: We have not --

19 MR. PRINDLE: A pass through of costs? 

20 MR. McMAHON: Let me go ahead to here. 

21 Let's go into sensitiyity analysis which is the next 

22 slide. I've skipped over the results with different 

23 standard levels, but we can come back to that. 

24 

25 assumptions 

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Obviously, there are a 

in this that you can 

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1 particularly since we' re speculating about the future. 

2 So the next three pages list those things that we have 

3 thought about that could give you different answers 

4 and we haven't done -- we've done a few sensitivities 

5 so far, but not a lot and we would welcome suggestions 

6 about what sensitivities to do, especially 

7 . specifically quantitative suggestions about what to 

8 change here. 

9 If consumers in the future value energy 

10 and water savings more than they do now, then they 

11 will be less resistant to purchasing products that are 

12 more efficient. So when I say standards of level, 

13 that's the ef feet of the top of this, I mean the 

14 change in shipments will be less if consumers are 

15 happy with reducing their energy and water costs, more 

16 happy than they are now. 

1 7 If manufacturers act to mitigate the sales 

18 decrease somehow, so maybe they are able to adjust the 

19 pricing, I don't know, maybe there is a way to reduce 

20 costs beyond what their current estimates are. This 

21 is speculation. 

22 If there were some adjustment on the 

23 supply side of the washers, then that would also 

24 mitigate the change in sales . 

25 

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1 models, there's a distribution of prices here and 

2 we've just said that this distribution moves on out 

3 into the future and applies to the new standard. But 

4 if, in fact, consumers are -- get too high up on the 

5 price curve and they change their mix, I hope that the 

6 manufacturers will forgive me, but there might be some 

7 brand shifting that went on in that scenario. That 

8 might change the effects. 

9 If there were early replacement programs 

10 by governments or utilities and that those were 

11 effective, that could induce people to continue to buy 

12 more washers in spite of new standards going on. 

13 If high efficiency washers continue to 

14 capture market share more than we're projecting, we 

15 have an increase in our baseline, but if it's faster 

16 than that, then that would mitigate the ef feet of 

17 standards. 

18 An issue that I think it was Dick who 

19 raised it this morning about the washer-dryer 

20 combinations, we did not consider that factor when we 

21 did this forecast and in fact, it's going to damp down 

22 the effect of standards here. Let me explain. 

23 About half of washers are sold as a 

24 washer-dryer combination, not as just a washer alone . 

25 That means that if there's a standard on the washers 

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1 and it doesn't affect the price of dryers, that the 

2 relative change in price for the combo, for the 

3 washer-dryer combo is a smaller percentage than if it 

4 was just compared to the washer alone. We have an 

5 accounter for that. 

6 Our elasticities are based upon just a 

7 washer price alone. I know the manufacturer impact 

8 analysis did do an analysis that includes the 

9 combination washer-dryers. That was a new issue just 

10 came up, so that's going to be a small adjustment 

11 that's going to happen here. 

12 Another factor, we've assumed that enough 

13 used washers are going to be available. We haven't 

14 worried about supply of used washers and then maybe 

15 there's other factors as Charlie says that are 

16 responsible for why people decide to buy washers that 

17 we haven't accounted for. 

18 On the other side of the ledger, if in the 

19 future consumers value energy and water savings less 

20 than they do now for whatever reason, then the 

21 standard impacts will be greater than we've estimated. 

22 If consumers don't adjust to front loaders, if their 

23 resistance to front loaders increased for whatever 

24 reason, then standards would have a bigger impact. Or 

25 if high efficiency washers fall off and they don't 

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1 continue to capture the market shares that we' re 

2 project, then the standards will have more effect. 

3 So bottom line, backing up a couple of 

4 pages. This is the output from the current model. 

5 Historical data again is the red axis. Just for 

6 reference, the blue line is the baseline case, no new 

7 standard and the interesting period is from 2003, the 

8 start date of a new standard on into the future. 

9 I have not shown all of the efficiency 

10 levels because the lower efficiency levels show up 

11 very close to the baseline in the 5, 10, 15 percents, 

12 a very small change in shipment. At 20 percent, you 

13 begin to see a change, at least visually it's enough 

14 to see. At 25 percent, a bigger change; 35 percent 

15 and then 45 and 50 percent are out here and they're 

16 very close together. 

17 So we're seeing initial drop of about 1.5 

18 million in shipments in 2003. It's mitigated 

19 somewhat. Part of what's going on here is you have 

20 people who do an extra repair. They buy a little bit 

21 more life and they defer their decision, but then over 

22 some number of years that washer dies eventually and 

23 they have to buy a new one, so the gap closes 

24 somewhat, as you go out in time . 

25 

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Steve Nadel? 

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1 MR. NADEL: Could you back up one more 

2 because in response to a previous question on that one 

3 you jumped ahead. 

4 MR. McMAHON: Sure. 

5 MR. NADEL: A couple of questions. If you 

6 could tell me what are the sources of the data you 

7 used on the assumed impacts on fewer early 

8 replacements, more repairs, more purchasers needed 

9 washers. Also likewise, what specific data did you 

10 use for your last bullet? 

11 MR. McMAHON: Okay, I summarized the data 

12 sources earlier iri. inputs, but I' 11 go over them 

13 again. The faction of people who are likely to do 

14 early replacement is based upon the AHAM NFO survey of 

15 1996. 

16 I guess I want to restate your question. 

17 We didn't assume the answers. We assumed coefficients 

18 for the decision model that I showed you earlier. So 

19 what fraction of people faced with these earlier 

20 decisions here. 

21 MR. NADEL: Right. 

22 MR. McMAHON: What is the likelihood of 

23 problems? That's from Consumer Reports. It tells us 

24 the probability of repair. 

25 

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MR. NADEL: Right. 

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1 MR. McMAHON: And then we extrapolated 

2 that out. The probability of early replacement is 

3 from AHAM NFO survey 1996. 

4 MR. NADEL: Current price is what I'm --

5 on what basis or did you just assume that that same 

6 probability continues under all the scenarios or is 

7 there somehow is that affected by the price and that's 

8 what I wanted to know. 

9 MR. McMAHON: Yes. These are. 

10 MR. NADEL: How is that adjustment 

11 determined by? 

12 MR. McMAHON: These are all affected by 

13 the price and by the operating cost, by whether it's 

14 a front loader. 

15 MR. NADEL: Yes. 

16 MR. McMAHON: And those coefficients are 

17 primarily from the conjoint adjusted to agree with 

18 historical shipments. So it's a Logit equation with 

19 these multiple terms in it. 

20 MR. NADEL: Okay. 

21 MR. McMAHON: So it's a response to those 

22 quantitative things that are in there. And we' re 

23 calibrating it to 1996 data, in this case of early 

24 replacement where we know what the percentage was at 

25 that time. That helps us determine the coefficients 

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1 now and then as the drivers, the energy price and 

2 operating costs and number of households change over 

3 time, the model adjusts. 

4 MR. BROOKMAN: Question or comment? 

5 MR. BRUNDAGE: Question. Don Brundage, 

6 Southern Company Electric Utility. Could you put back 

7 up your washer shipment slide? 

8 MR. McMAHON: The historical shipments? 

9 MR. BRUNDAGE: No, the output with new 

10 standards. 

11 MR. McMAHON: Sure. That one? 

12 MR. BRUNDAGE: No. 

13 MR. McMAHON: Not the base case, the 

14 standards case? 

15 MR. BRUNDAGE: The standards case. 

16 MR. McMAHON: Yes. 

17 MR. BRUNDAGE: The question I have is when 

18 you have these high efficiency levels which you're 

19 assuming are going to result in additional repairs, 

20 one thought that had occurred to me also is that 

21 you're going to have a couple of year period before 

22 implementation of the new standard where knowledge 

23 that the standard is coming in, it's going to be 

24 

25 

public knowledge. Are you assuming any early 

replacements of washing machines to get the cheaper 

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1 models before the new standards? 

2 MR. McMAHON: No, we have not. 

3 MR. BRUNDAGE: Okay. 

4 MR. BROOKMAN: Dick Best, you've been 

5 patient. Thank you. 

6 MR. BEST: Thank you. Jim, would you 

7 repeat your comment on the washer-dryer combinations? 

8 I'm not sure I understood the point. 

9 MR. McMAHON: Okay, sure. The models are 

10 set up in terms of the change in price of the washers 

11 and right now if we have a $420 washer including tax, 

12 then there's a certain dollar increase in that, that's 

13 going to influence the percent of people who decide to 

14 purchase a new washer. 

15 However, if the correct base is not a $ 4 0 0 

16 washer, but a $400 washer and a couple hundred dollar 

17 dryer, then let's say a $50 increase in price is a 

18 smaller percentage change for the combination than it 

19 is just for the washer alone. 

20 So for half of the market that buy washer 

21 and dryer combinations, the expectation is they will 

22 be less sensitive the change in price than the folks 

23 who just have a washer alone. 

24 

25 

MR. BROOKMAN: Michael McCabe first. 

Pardon me, Dick wants to follow on. Dick, follow m. 

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1 MR. BEST: I think that needs some further 

2 evaluation because it's usually - - dryers are normally 

3 sold almost as an accessory to the washer as an 

4 additional sale, although they're sold together and 

5 the fact that the price of the washer goes up and they 

6 decide not to buy the washer, that's the first 

7 decision. The dryer sale goes right along with the 

8 washer. 

9 On the second portion of it, increasing 

10 the washer price, you built it in making an additional 

11 purchase of the dryer also declines the probability, 

12 so I think you have a different effect than the 

13 viewpoint that you presented . 

14 MR. BROOKMAN: Michael, are you okay? 

15 David Modtland, Bill Prindle and then Earl Jones. If 

16 we could be brief. I'd like to get him towards his 

17 conclusion. 

18 MR. McMAHON: If I may before I take one 

19 more question I want to respond to Dick. I think what 

20 I hear you're saying is you're supporting the current 

21 model which says everything is based upon the washer 

22 and I was proposing that we make an adjustment for the 

23 combination purchases and you're saying we should not 

24 make that adjustment . 

25 

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1 that you presented I don't believe is correct on the 

2 adjustment method. 

3 MR. McMAHON: Okay. 

4 MR. BROOKMAN: David. 

5 MR. MODTLAND: Could you explain the dip 

6 in the higher efficiency around the 2018-2019 time 

7 frame? 

8 MR. McMAHON: This is a function of, I 

9 think what's going on with - - I really need the 

10 breakout of that, but I think it's a combination of 

11 what's going on here. If you go out roughly 14 to 20 

12 years later, you should see a dip. There's less 

13 replacements because you had less sales here. That's 

14 what's going on. 

15 MR. MODTLAND: Don' t you have to make 

16 those up some time? 

17 MR. McMAHON: Not necessarily. These are 

18 people who have decided not to have washers. 

19 MR. MODTLAND: I think the effect 

20 stretches out the replacement. 

21 MR. STEPHENS: It does stretch the 

22 lifetime out abut a year. 

23 

24 

25 

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MR. McMAHON: Right. 

MR. BROOKMAN: Bill Prindle. 

MR. PRINDLE: I am trying to recall. I 

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1 think earlier, Jim, you referred to the 1994 standard 

2 in its energy savings impact. Did you look at all the 

3 historical data based on what happened in response to 

4 the 1994 standard or is the predictive part of that 

5 graph solely based on the adjusted conjoint? 

6 MR. McMAHON: The former. We used all of 

7 the shipments data from 1980 to 1996 in order to 

8 calibrate the coefficients of the model. It's not 

9 based just on the contract. 

10 MR. BROOKMAN: Earl? 

11 MR. JONES: Just again, Jim, I'm still not 

12 sure I follow your point on the impact on dryers. I 

13 want to make a point that decreases in washer sales 

14 would necessarily have a negative impact on the dryer 

15 sales and your model does or does not recognize that? 

16 MR. McMAHON: Our model has no connection 

17 between - - we didn't look at dryer sales at all. 

18 We're looking strictly at washers. 

19 MR. JONES: Okay, and so therefore 

20 anything like the employment analysis which follows as 

21 well which I gather you all did? 

22 MR. McMAHON: Yes. 

23 MR. JONES: Does not take that into 

24 account either? 

25 

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MR. McMAHON: That's correct. 

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1 MR. JONES: That may be something which I 

2 think would be appropriate if you're looking to make 

3 some adjustments to take into account the relationship 

4 between washer and dryer sales. As Dick says, to 

5 accept their accessories and the washer sale is in 

6 place because of the negative impact on dryers you 

7 need to acknowledge that in your analysis. 

8 MR. BROOKMAN: I would like -- I saw both 

9 Steve and Charlie. Will you let him do his conclusion 

10 so we can roll the conclusions into the following 

11 comments and then I know we'll all strive to be brief. 

12 Please, Jim, press on with your conclusions. 

13 MR. McMAHON: Conclusions. Subject to 

14 comment. The current clothes washer shipments model 

15 provide a very detailed picture of potential 

16 standards-induced impacts. Assuming no mitigating 

1 7 actions by government or industry, the impacts that we 

18 forecast are less than 10 percent change in shipments 

19 for standard levels of 25 percent or below and 20 to 

20 30 percent reductions in shipments in 2003 for the 

21 higher standard levels. 

22 Then these are the factors that you might 

23 want to consider to do sensitivity studies. If 

24 consumers become increasingly aware of savings and it 

25 becomes more important to them or they move to low end 

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1 models, if used washers are not available, if early 

2 replacement and marketing programs increase, that 

3 could mitigate the drop in shipments. 

4 On the other hand,· if consumers value 

5 energy and water savings less, or have an adverse 

6 reaction to front-loaders, that could aggravate the 

7 drop in shipments. 

8 That's my conclusion. 

9 MR. BROOKMAN: Excuse me, I'm sorry. I'm 

10 calibrating for the rest of the day. I saw Steve and 

11 Charlie both, briefly, if you can. 

12 MR. NADEL: Okay, I had some comments on 

13 a number of the slides . 

14 MR. BROOKMAN: It strikes me we' re getting 

15 towards the level of detail in this analysis that 

16 almost, you know, some of this information has been 

1 7 presented before and it has been recalibrated for this 

18 purpose and this kind of detailed analysis is very 

19 useful to the Department. I'm wondering how much of 

20 it can be put in writing and can also be included 

21 after the kind of exchange between individuals that 

22 illuminates. 

23 MR. NADEL: Some of it is I'm trying to 

24 understand his thing . 

25 

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1 MR. NADEL: So if we could go back to the 

2 graph showing shipments with standards. 

3 Now if I understood you correctly, you 

4 said that in the case with standards that the average 

5 life is basically increases about one year because of 

6 more repairs. 

7 I also heard you say that at most maybe 2 

8 percent of the people who now have washers go to the 

9 laundromat. But here, if you look at your 45 percent 

10 level, it's a 20 to 30 percent decline in sales. What 

11 happens to the rest? If 2 percent go to the 

12 laundromat and the average life increases one year, 

13 there's still a large quantity of people --

14 MR. McMAHON: This is sales of new 

15 washers. 

16 MR. NADEL: Right. 

17 MR. McMAHON: So there are a number of 

18 people who either repair the washer and extend the 

19 life or buy a used washer. 

20 MR. NADEL: Okay, but if you buy a used 

21 washer, that's another way of saying you've extended 

22 the average life. 

23 MR. McMAHON: Well, the biggest affect 

24 here, if you're doing it in percentage terms is that 

25 the used washer market takes off. There's a lot more 

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1 used washers bought. It's one of the reasons why in 

2 our caveats we said if there aren't enough used 

3 washers that could be a problem. 

4 MR. NADEL: Okay, and that would be my 

5 next question. Where would these used washers come 

6 from if - - I understood the previous discussion it was 

7 used washers come primarily from early replacement and 

8 if early replacement is down, that implies that the 

9 used washer market is smaller, so where do all these 

10 used washers come from? Mexico? I don't know. 

11 (Laughter.) 

12 MR. BROOKMAN: I would like to float a 

13 suggestion. In the service of sticking with the 

14 agenda, and in getting done nearly on time today, Jim, 

15 what time is your plane? 

16 Can you hang around for a little bit after 

17 this workshop today to go through these in sufficient 

18 detail to answer all these very detailed and I think 

19 very appropriate questions. 

20 MR. McMAHON: I'd be happy to. 

21 MR. BROOKMAN: So could we move off this 

22 level of depth and get to maybe comments on the 

23 conclusions and then move on with the other elements 

24 of the agenda. Would that work for you, Steve? 

25 

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MR. NADEL: I mean some of these things 

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1 you may consider in detail effectively drive the 

2 results and I wanted to get them --

3 MR. BROOKMAN: I don't wish to deny you 

4 the answer though. 

5 MR. NADEL: Other people can have their 

6 input too. Maybe I should just raise a few more of 

7 the issues and comment on some of them. 

8 MR. BROOKMAN: Briefly. 

9 MR. NADEL: Right, I was wondering to what 

10 extent does your analysis look at all at the fact that 

11 many of these higher efficiency washers have 

12 additional factors that affect consumer utility, such 

13 as better cleaning ability, larger ability to 

14 accommodate clothes. Are those factored into your 

15 analysis in any way? 

16 MR. McMAHON: Those were not considered 

1 7 and in fact, if those features are sufficient to 

18 offset the factors that we have considered, then that 

19 would change the forecast. 

20 

21 

22 

23 

24 

25 

MR. JONES: I just had to stop right there 

MR. BROOKMAN: Earl Jones. 

MR. JONES: You have to have the data to 

support the question or the conclusion which is 

implicit in the question which I don't think you've 

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1 got either. That is to say either that there's more 

2 capacity or that there's more cleanliness. 

3 MR. NADEL: I '.d be happy at some point to 

4 debate you on this. 

5 MR. JONES: Well, we can debate it, but if 

6 there's no data then that's all it is, a debate. 

7 MR. BROOKMAN: Do you have an additional 

8 question? 

9 MR. NADEL: Let Charlie go. I' 11 have one 

10 more. 

11 MR. BROOKMAN: Can either of you hang 

12 around and go through this in detail with Jim at the 

13 end of the workshop today? 

14 MR. STEPHENS: Yeah, there will be about 

15 15 pages of comments on it, too, later. 

16 MR. BROOKMAN: I think that's very useful 

17 and that provides also the level of detail in your 

18 comments that the Department really benefits from, I 

19 believe. 

20 MR. BROOKMAN: Other questions or 

21 comments? Dan Reicher. 

22 MR. REICHER: I just wanted to say this is 

23 a very, very important discussion because this is a 

24 very important piece of analysis, so we really do need 

25 people's fullest and best views of this so that we can 

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1 go back and really assess what we ended up because 

2 this is very much key to final decision making about 

3 what was established. 

4 MR. BROOKMAN: Steve Rosenstock and then 

5 Chuck Samuels. 

6 MR. ROSENSTOCK: Steve Rosenstock. Yes, 

7 just to follow up, it might be interesting as you're 

8 looking at it just to go back to other standards like 

9 ballast. I remember when the ballast standards were 

10 created in 1990 there were stories about how they were 

11 going into overtime making the last of the old 

12 magnetic ballasts just to rush the production and then 

13 also with the 40 watt, 4 foot fluorescent lamps. I'm 

14 just saying there might be a bump up. It might be 

15 interesting, that one or two year period beforehand. 

16 There might be a bump up. I might make it interesting 

17 on the forefront of the forecast. 

18 (Laughter.) 

19 MR. BROOKMAN: As if we need other 

20 exogenous variables here. Chuck? 

21 MR. SAMUELS: Yes, I just wanted to point 

22 out that it's important to reflect that if it hadn't 

23 been for some of the turmoil in the program that, of 

24 course, eventually moved over to the congressional 

25 front and then as a consequence we had the difficult 

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1 but extremely productive process improvement, we would 

2 not be giving Charlie and Steve the opportunity to ask 

3 these very cogent and insightful questions because we 

4 would have been where we were five or six years ago 

5 where we'd be looking at outputs for models and nobody 

6 would even know where to begin to ask the questions. 

7 Everyone is to be commended for the fact that we now 

8 have an approach that allows people to ask these good 

9 questions. 

1 O So even though there was a lot of pain and 

11 people were extremely unhappy with some of the things 

12 that were done outside of the program in terms of the 

13 appropriations moratorium, we should recognize that we 

14 wouldn't be here, able to have this rich of a 

15 discussion without it. 

16 MR. BROOKMAN: Thank you, thank you. 

17 Additional comments that relate, I would hope more 

18 particularly to the conclusions and not these 

19 methodologies, noting that we will provide time to 

20 those that with to delve into this in greater depth . 

21 Steve Nadel? 

22 MR. NADEL: i guess I have one other point 

23 that I wanted to put on the table and I'm not sure it 

24 

25 

relates to the conclusion or the methodology. It's 

kind of 

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1 MR. BROOKMAN: So that was a good cover. 

2 I appreciate that. He's a real politics guy. 

3 (Laughter.) 

4 MR. NADEL: Right, but Jim, as an 

5 economist, I was wondering if you could comment on how 

6 useful is it to have a model from a past period based 

7 on declining prices and apply to a future period based 

8 on rising prices. Is there -- is it a nice, smooth 

9 transition or is there enough of a mismatch that one 

10 needs to proceed with caution? 

11 MR. McMAHON: For the record, I am not an 

12 economist. 

13 (Laughter.) 

14 However, I will attempt to answer the 

15 question. It's a valid question. The historical 

16 record is a record of declining prices and you are 

1 7 observing correctly that we' re assuming that the 

18 response, the elasticity to increasing prices will be 

19 the same as it was to decreasing prices. And that's 

2 o an assumption because we do not have a historical 

21 record of increasing prices. 

22 The only other choice that I would have 

23 would be to make some assumption absent any data on 

24 what would happen in a period of increasing prices . 

25 We have chosen to use the historical record as a 

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1 guide. 

2 MR. BROOKMAN: Final questions. I see 

3 none. Thanks, Jim, thanks very much. 

4 Let me say as a recovering economist, that 

5 if you were an economist your job might be easier. 

6 (Laughter.) 

7 Who's next in the agenda? Mike Rivest. 

8 Mike Rivest is going to review the tools and 

9 particularly the GRIM spreadsheet. 

10 MR. RIVEST: I will not be reviewing the 

11 GRIM. What I will be doing is -- I have three things 

12 I'd like to cover. I'd like to give a status report 

13 on where we are in performing the manufacture impact 

14 analysis. I quickly would like to make you aware of 

15 some changes I've done on the clothes washer GRIM 

16 analysis. 

17 And thirdly, I'd like to make you aware of 

18 a new tool which is a GRIM analysis for the clothes 

19 washer business which really came out of our 

20 interviews as something important that we needed to 

21 consider. 

22 So my objective here is to make you aware 

23 there's no analysis per se. That will come at a later 

24 date when I have a little more certainty on the test 

25 procedure issue. 

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1 As I want to make you -- first of all, I 

2 have completed interviews with practically all 

3 manufacturers, I believe, and have gotten their 

4 feedback on the GRIM models and the shipment models 

5 and the various parts of the analysis that would 

6 directly impact their business . 

7 And I'm currently in the stage of sitting 

8 down with them, reviewing the results of the analysis 

9 and mostly trying to identify any aggregation and 

10 confidentiality issues that result from insufficient 

11 aggregation, if you will. So I'm very -- since I 

12 signed my life away on those confidentiality 

13 agreements, I want to make sure I don't get sued . 

14 (Laughter.) 

15 We have developed cash flows for the 

16 industry. We've developed employment impacts. As you 

17 can see from the spreadsheets, we are modeling the 

18 dryer business, also considering the dryer business 

19 and the employment impacts. 

20 We've also developed a small manufacture 

21 cash flow analysis, if you will, which is applying 

22 sensitivities to the main industry cash flow through 

23 the knowledge we gained of the differences between 

24 small and large manufacturers . 

25 

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1 as the magnitude of the test procedure issue becomes 

2 more clear, then I' 11 be able to come back to the 

3 manufacturers and get some feedback with them as to 

4 whether or not the conclusions we drew together are 

5 still valid. 

6 You may recall that with the ANOPR, we had 

7 a version of the GRIM that had been prepared and there 

8 were some parts missing to it. The main part that was 

9 missing is the shipments forecast and obviously the 

10 shipments forecast is a dryer of the manufacturer 

11 impact analysis, one we're anticipating drops of 25 

12 percent, the order of 25 percent in shipments to have 

13 serious consideration of the cash flows and on the 

14 competitiveness of the industry as they try to 

15 recuperate those volumes. 

16 So what we've done, we've made sure that 

17 we had a similar shipment forecast as is being used in 

18 the National Energy Savings spreadsheet which involved 

19 separating out the horizontal and the vertical or the 

20 high efficiency and baseline efficiency markets in the 

21 base case. 

22 We've also gotten additional information 

23 from manufacturers breaking out the fixed costs 

24 between actual tooling and equipment, costs that are 

25 not expensed in the current year, but are depreciated 

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1 over time, but have to be replenished and marketing 

2 and design costs which are expensed in current year 

3 and do not have to be at least in terms of meeting 

4 standards, do not have to -- are not reoccurring. 

5 Just for information, say those breakdowns 

6 have been incorporated in the GRIM spreadsheet and are 

7 now being considered in the cash flow. 

8 The shipments currently incorporated in 

9 the GRIM are the shipments, exactly the shipments that 

10 Jim modeled earlier. Now if these need to be revised, 

11 then they'll also have to be revised in the GRIM. If 

12 any sensitivity analyses need to be performed, they 

13 will also have to performed in the GRIM . 

14 MR. BROOKMAN: Leave it up there for a 

15 second. 

16 MR. RIVEST: Sure. 

17 MR. BROOKMAN: Say what you just said 

18 again. 

19 MR. RIVEST: I said that the shipments 

20 that were developed for the National Energy Savings 

21 spreadsheet are also being used in the GRIM to model 

22 the future cash flows for manufacturers. So any 

23 revisions to the shipment forecasts will also have to 

24 be incorporated in the GRIM spreadsheet . 

25 

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1 MR. RIVEST: We'll see a little later that 

2 this also drives the shipments forecast for dryers 

3 because of the 40 to 60 percent influence of clothes 

4 washers sales on dryers. 

5 MR. BROOKMAN: Thank you. Charlie 

6 Stephens? 

7 MR. STEPHENS: Does that not also drive 

8 the forecast for parts? 

9 MR. RIVEST: I haven't looked at that. 

10 MR. STEPHENS: Why? Why not? It seems 

11 like it's going to be a big issue if you start 

12 extending the life of a product based on repair. 

13 MR. RIVEST: I was going to take next week 

14 off, but now I think --

15 (Laughter.) 

16 Thank you. So Charlie, in your comments 

17 I think that would be useful to --

18 MR. STEPHENS: I can reiterate them. I 

19 also made that comment in December. 

20 MR. BROOKMAN: Okay, thank you. Dan 

21 Reicher? 

22 MR. REICHER: Dan Reicher. When you say 

23 parts, then do you also have to look at increased 

24 employment among the service businesses, the plumbers, 

25 the - - the repair guys, the guys that make $65 an 

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1 hour. Is that in the analysis? 

2 MR. RIVEST: It's not currently, no. 

3 MR. JONES: What assumptions - - Earl Jones 

4 in the GRIM for the production of the parts? 

5 MR. RIVEST: For the production of the 

6 parts? 

7 MR. JONES: The manufactured parts. 

8 MR. RIVEST: Actually, the employment 

9 impacts is that what you mean? The employment 

10 impacts are evaluated a number of ways. One of them 

11 is to look at incremental labor costs, for example, 

12 that were part of the date of submittal. Others is to 

13 look at the potential impacts of closing plants and 

14 moving them. So there's not a quote direct 

15 relationship between the spreadsheet and the 

16 employment impacts. The employment impacts are 

17 actually have --

18 MR. JONES: What about the impact on 

19 manufacturers? Was there any provision made for some 

20 increase in production of spare parts? 

21 MR. RIVEST: Well, I don't want to get 

22 into the analysis now, but there are -- it's not all 

23 rosy in the production of parts. The manufacturers 

24 who have to keep supplying replacement parts have to, 

25 in fact, maintain production facilities for those 

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1 parts and there's a presumption in your question that 

2 that will be a lucrative, profitable business which 

3 I've gotten comments that it might not be. So I 

4 didn't ignore the issue, but it's more complicated 

5 than I can get into today. 

6 MR. STEPHENS: I've done quite a bit of 

7 research on the retail end of it, so I know where some 

8 of the parts are produced. I know what the mark up is 

9 on a lot of the parts and it's not insubstantial. 

10 MR. BROOKMAN: You are suggesting an after 

11 market emerging here for those parts? 

12 MR. STEPHENS: Well, it is not just an 

13 after market. It's also there are major 

14 manufacturers selling the parts manufactured in Mexico 

15 with a markup and other manufacturers selling the same 

16 kind of part manufactured somewhere else at a 

17 different markup and the markups are quite different, 

18 actually, from one manufacturer to the next and the 

19 impacts will be quite different, I presume, on the 

20 bottom line from one manufacturer to the next based on 

21 what I've learned. 

22 MR. BROOKMAN: So Michael, in summary, 

23 you're saying that it's not presently in your 

24 analysis, although you might see it embedded in other 

25 features? 

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1 MR. RIVEST: There are elements of it. I 

2 do not specifically do an analysis of the 

3 profitability or the cash flow impacts of changes in 

4 the repair business. 

5 I'll speak to DOE and see if that's 

6 something they would like us to look at. 

7 MR. BROOKMAN: Additional questions on 

8 this point? 

9 MR. RIVEST: One very important thing that 

10 has to be kept in mind is that what Jim is forecasting 

11 in terms of shipments are -- he's primarily doing for 

12 the purpose of evaluating the energy savings in the 

13 U.S. But manufacturers, actually, produce for the 

14 U.S. , for other countries, and there are also imports. 

15 So in terms of what is being produced and the 

16 shipments that they have to retool for, it may be 

17 different and what I've done here is made the 

18 assumption that they will completely -- any -- if the 

19 standard requires an efficiency level, they would 

20 retool their whole production for that efficiency 

21 level and that has a significant impact in that 

22 there's about a 12 if you see the industry 

23 shipments for 1996, there's 7 million, but they also 

24 

25 

export .8 million. So I'm trying to incorporate in 

the industry cashf low their actual production volumes. 

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1 Out of a necessity to take into account 

2 the growing or the assumed growing market of h axis 

3 clothes washers, I've separated the business, if you 

4 will, in a v axis and an h axis business, where a 

5 baseline efficiency and a higher efficiency business 

6 and I've created separate cash flows for both those 

7 businesses. That would also, Charlie, allow me to 

8 model some of your recommended scenarios for the base 

9 case. And that's actually work under way. 

10 An important note, I had to make some 

11 assumptions about the relative profitability of the v 

12 axis business versus the h axis business in the 

13 baseline. I currently have a slightly more prof it able 

14 h axis business modeled, but obviously we'll need to 

15 do some sensitivity on that. 

16 MR. BROOKMAN: Steve Nadel? 

17 MR. NADEL: Mike, what are you doing in 

18 the analysis or what do you plan to do in the analysis 

19 regarding if there's a standard at the h axis level --

20 MR. RIVEST: At what? 

21 MR. NADEL: If there is a standard at the 

22 h axis level. 

23 

24 

25 

MR. RIVEST: Right. 

MR. NADEL: What type of markup 

assumptions are being made and on what basis? 

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1 MR. RIVEST: That's what I don't want to 

2 get into today because that will not happen in the 

3 next few minutes. That's actually what we've been 

4 working on with manufacturers looking at the 

5 distribution of costs, looking at the current products 

6 in the· market and their ability to increase price. 

7 MR. BROOKMAN: You are suggesting that's 

8 a work in progress? 

9 MR. RIVEST: That's the analysis. 

10 MR. BROOKMAN: You're not ready to talk 

11 about it? 

12 MR. RIVEST: Correct. 

13 MR. NADEL: When is that open to 

14 discussion? 

15 MR. RIVEST: That will be open to 

16 discussion once I have some certainty that the costs 

1 7 that have been provided are reliable and that the 

18 conclusions we drew from those costs are reliable. 

19 MR. REICHER: Dan Reicher. That, Steve, 

20 would clearly be an appropriate subject when we get to 

21 the next workshop. 

22 MR. RIVEST: Right. 

23 MR. REICHER: With the document going out 

24 presumably ahead of time . 

25 

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1 that, my hope would be to the extent we can get into 

2 those issues a lot sooner, because to the extent there 

3 is debate about those and a need for additional 

4 sensitivity, it would be nice to have those 

5 sensitivities at the workshop. 

6 I think that's going to be another hot 

7 issue. And you don't want to go to the workshop and 

8 say we need to do an analysis. We have a lot of time 

9 now because of the test procedure issue. How can we 

10 advance the manufacturing impact analysis so that we 

11 can address these uncertainties in parallel with the 

12 uncertainties on the other issues. 

13 MR. RIVEST: Right, I think we'll know 

14 within a few weeks how much progress we'll be able to 

15 make in terms of releasing the analysis. 

16 MR. REI CHER: This is Dan Reicher. Let me 

·17 say obviously the sooner we can release an analysis 

18 that we' re comfortable with, we will strive to do 

19 that. 

20 MR. RIVEST: I mean 2 5 or 3 O percent or 15 

21 or 20 percent makes the world of difference for some 

22 manufacturers. There are technology thresholds and - -

23 MR. NADEL: Right, if we could find some 

24 way to get that a lot sooner, that would be very 

25 helpful. 

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1 MR. BROOKMAN: Dave? 

2 MR. MODTLAND: Dave Modtland. We just 

3 have to be a little careful of how we use horizontal 

4 axis and v axis and high efficiency and then use h 

5 axis and high efficiency interchangeably and someone 

6 else's isn't tied that way and --

7 MR. RIVEST: I think the more generic way 

8 to think about it is stating the efficiency level. 

9 MR. MODTLAND: Efficiency level, yes. 

10 MR. BROOKMAN: Thanks for that caution. 

11 Other additional comments on this slide before Mike 

12 moves to the next one? 

13 MR. RIVEST: Based on the changed 

14 shipments forecast, based on some corrections, or some 

15 suggestions I had on the ANOPR analysis, the current 

16 spreadsheet that you have models a base case industry 

1 7 value which, as I mentioned here, there will be 

18 additional scenarios developed to look at what that 

19 base case industry value is and that is the value 

20 against which the standards case industry value will 

21 be compared and the change in industry value will be 

22 benchmarked. 

23 So you have the tool and the intent of 

24 making the tool available is to have you knowledgeable 

25 about what data exists, what are the distribution of 

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1 costs at the various levels, what assumptions you 

2 would make so that when we do have that conversation 

3 you would have had plenty of opportunity to look at 

4 the impacts of some of those suggestions that you're 

5 making. 

6 I wanted to make some progress in trying 

7 to get a handle on what might be the impact on the 

8 dryer business and because it' :3 not something that had 

9 come up earlier, I didn't have a lot of data. What I 

10 did is I created a spreadsheet GRIM, with very much 

11 the same top down approach of looking at industry 

12 costs, industry prices from census and from retail 

13 surveys, and create an industry -- base case industry 

14 cash flow for the dryer business. And then looked at 

15 what would be the implication of the drop in 

16 shipments. 

17 So what I have here, if you will, is a --

18 what I would consider a shell in which I would invite 

19 additional comment. I have there my simple 

20 assumption is that the only impact of the decline in 

21 dryer shipments is the loss margin. That's 6 or 7 

22 percent that we're no longer making. I'm not taking 

23 into account any pricing competition that may occur as 

24 a result of the drop in shipments or any investments 

25 that may be needed in the actual dryer business to be 

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1 able to match the cabinets of a more stringent, of a 

2 higher efficiency washer, for example. So as such, 

3 with these conservative assumptions, I still come up 

4 with considerably large impacts on the dryer business 

5 strictly looking at the lost profit. 

6 And there again, the point I want to make 

7 is we'll make every effort to incorporate the dryers' 

8 impact into the analysis and I understand they'll be 

9 -- we'll be having conversations as to what you're 

10 planning on doing and I invite data on conversion 

11 costs including R & D, design marketing at the various 

12 levels. 

13 MR. BROOKMAN: Bill Prindle and then Steve 

14 Rosenstock. 

15 MR. PRINDLE : On page 11, your third 

16 bullet, you have a "could" changes tb a "would". 

17 MR. RIVEST: . I'm sorry, where is that? 

18 MR. PRINDLE: Third bullet on page 11 you 

19 say that "changes in washer platforms could indicate 

20 a change to dryer platforms. And as a result, there 

21 would necessarily have to be some" is this just 

22 people's speculation or is this based on --

23 MR. RIVEST: Have you looked in a dryer 

24 cabinet on my Frigidaire -- I have a paired Frigidaire 

25 washer-dryer. I don't think that dryer was something 

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1 -- it seemed to me like an entirely new production 

2 line was put in place for that. I may be wrong. I 

3 would make that case for an efficiency improvement of 

4 10 percent for example. So the would or could has a 

5 lot to do with what efficiency improvement we' re 

6 looking at. 

7 I would change could to would at 40 

8 percent. 

9 MR. PRINDLE: Okay, it just seems a little 

10 vague as to whether --

11 MR. RIVEST: Maybe 

12 MR. PRINDLE: there' s some causal 

13 relationship here. It just sounds a little 

14 speculative. 

15 MR. RIVEST: It is speculative because 

16 that's something that --

17 MR. BROOKMAN: It seems as though he's 

18 trying to make the statement that encompasses that 

19 range, right? Charlie? 

20 MR. STEPHENS: Charles Stephens. 

21 MR. BROOKMAN: Steve, I'm sorry, you' 11 go 

22 next. 

23 MR. STEPHENS: Your 2 to 10 percent comes 

24 from the shipments forecast that you' re currently 

25 using and that's the direct impact of that. 

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1 MR. RIVEST: Right. 

2 MR. STEPHENS: The loss of the same dryer 

3 sales? 

4 MR. RIVEST: Correct. 

5 MR. BROOKMAN: Steve? 

6 MR. ROSENSTOCK: Steve Rosenstock. Yes, 

7 on the last page with the chart of results. Standard 

8 gauge versus change - - that's in million dollars, 

9 dollars per annum? 

10 MR. RIVEST: Yes. 

11 MR. ROSENSTOCK: Okay. 

12 MR. BROOKMAN: Additional questions on 

13 these sheets and particularly the final slides. Dick 

14 Stilwell. 

15 MR. STILWELL: Dick Stilwell, Maytag. I 

16 have a comment I'd like to make regarding the impact 

17 of washer design on the dryer design. Obviously, if 

18 you do anything other than square box for a washer 

19 design, then you've got to modify the dryer to match 

20 it. 

21 MR. BROOKMAN: You want them to appear as 

22 matched, as a matched pair? 

23 MR. STILWELL: Yes, absolutely. So more 

24 than likely, any new major redesigns of washers would 

25 also involve a redesign for dryers. 

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1 MR. BROOKMAN: Glenn Schleede. 

2 MR. SCHLEEDE: It just occurs to me as a 

3 result of this conversation about matched dryer and 

4 washer that there's an opportunity here to save 

5 consumers a lot of money on buying new dryers. DOE 

6 would just issue specifications for the appearance of 

7 the washer and dryer --

8 (Laughter.) 

9 MR. BROOKMAN: Thank you for that comment, 

10 Glenn. 

ll Dick Best. 

12 MR. BEST: Maybe I missed a point. You 

13 had in your package here the fact that you've included 

14 import/export impacts in the analysis. 

15 MR. RIVEST: Yes. 

16 MR. BEST: The only comment I have is if 

17 those were entered with the same degree of impact, 

18 that needs to be reevaluated. I think the point is 

19 that significant price increase on a U.S. produced 

20 washer, by the time it's exported and normally taxed 

21 at the value of the import at the receiving point, has 

2 2 a much larger impact than it . would be just on the 

23 price in just a year in the U.S. And also the growth 

24 of imports needs to be recognized as the -- not only 

25 the technology becomes close, but the price becomes 

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1 close between imports and both of these products' 

2 placement of U.S. products by imports. That number is 

3 going to change as well. So I think there's some 

4 further analysis on import-export that probably needs 

5 to be considered, both from the percentage of impact. 

6 MR. BROOKMAN: Thank you. Additional 

7 comments or questions? Yes, Dave Modtland. 

8 MR. MODTLAND: I just had a question about 

9 the import and export is relatively new into the 

10 analysis, right? 

11 MR. BROOKMAN: Could you say the page, 

12 Dave? 

13 MR. MODTLAND: I'm talking about the same 

14 page, page 7 and it's in the material that was on the 

15 

16 MR. BROOKMAN: Sorry. 

17 MR. MODTLAND: I was just wondering is the 

18 Department as interested in the energy saved in 

19 foreign countries or are they mainly concerned with 

20 what the savings is domestically? 

21 MR. RIVEST: There are a couple of people 

22 from Canada back there. 

23 

24 

25 

MR. MODTLAND: No response required. 

MR. REICHER: I think there's probably a 

definition based on the answer based on the 

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1 statute. I don't know what that answer is. I would 

2 presume the statute tells us to look at U.S. energy 

3 savings. It does not tell us to look at foreign 

4 energy savings. 

5 MR. BROOKMAN: Michael McCabe. 

6 MR. McCABE: Michael McCabe. This is the 

7 manufacturing impact analysis that's trying to capture 

8 what was happening as far as the manufacturers both 

9 with respect to the importing and exporting of 

10 products an dhow imports may affect domestic 

11 manufacturers, how the impact on regulation may be 

12 modified or minimized because of a growing export 

13 market . 

14 This is not feeding into the national 

15 energy savings analysis. That analysis was looking 

16 strictly at the use domestically of these products. 

17 MR. BROOKMAN: Steve Nadel? 

18 MR. NADEL: Yes. A question on the base 

19 case. In the base case, are there assumptions about 

20 the investments that manufacturers will need to make 

21 and new plants because I know a number of 

22 manufacturers have been holding off on investments 

23 until they know what the new standard is going to be. 

24 So I assume there's going to be some pretty hefty 

25 investments even if there was no new standard. Is 

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1 that factored into the analysis? 

2 MR. RIVEST: Yes, the investment levels 

3 for higher efficiency are the exact same numbers that 

4 are being used for the standards case. So as you have 

5 a more aggressive base case where there's more market6 driven changes towards h axis, the same types of 

7 investments are occurring, but they're occurring over 

8 time. And then the impact, the impact of standards is 

9 diminished when you have fewer lower efficiency models 

10 to convert in the standards case. So there is a --

11 MR. NADEL: Right, you are answering a 

12 question about key market driven improvements to high 

13 efficiency. I was saying to what extent does even in 

14 the base case, assuming no change in efficiency levels 

15 does that factor into some likely significant 

16 increases to modernize plants in years following 

17 effective date of the standard because a lot of 

18 manufacturers have been postponing some of those 

19 decisions because why retool now when you know you're 

20 going to have to quite possibly retool. 

21 MR. RIVEST: I'm not entirely sure I 

22 understand, but to the extent the market is demanding 

23 the products, the assumption is that manufacturers are 

24 

25 

satisfying that demand by investing in h axis 

technology? 

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1 MR. NADEL: No, forget h axis. 

2 MR. RIVEST: Okay. 

3 MR. NADEL: The question is in looking at 

4 investments in a base case, under no change in new 

5 standards, does that take account of the fact that 

6 these investments in a base case are likely to be 

7 significantly higher in the future than they have been 

8 in the recent past because people have been waiting 

9 for a decision on standards before making investments 

10 in modern production facilities? 

11 MR. RIVEST: I'm still not sure how I 

12 would answer that. 

13 MR. McCABE: Let me try to add a little 

14 bit to this. Mike McCabe. 

15 Is your assumption is that certain 

16 manufacturers meet or are planning to make an 

17 investment for reasons other than standards for 

18 modernization, to remove costs, improve productivity, 

19 whatever the issue is, that they are waiting to make 

20 that decision to making that investment and they're 

21 waiting for it because they don't want to make two 

22 investments. They know they're expecting to have to 

23 make one because of standards. They want to make them 

24 together at one time . 

25 

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1 MR. McCABE: So that there is some 

2 investment that you're arguing is going to be made 

3 whether or not standards happen or not and is that 

4 taken into account in the analysis. 

5 MR. NADEL: Right. 

6 MR. RIVEST: Definitely no. I mean no. 

7 There are things that even they won't tell and they 

8 won't tell me. 

9 (Laughter.) 

10 I saw a few press releases. 

11 MR. BROOKMAN: Additional questions or 

12 comments? 

13 Okay, thanks, Mike. I'm hoping that Bryan 

14 or Michael or somebody can describe the time line, 

15 looking ahead, in just a moment. But let me affirm a 

16 few things, notes that I've taken as we've gone 

17 through the workshop today. 

18 When did we say comments were due? August 

19 3rd. August 3rd for comments, specific comments 

20 related to these workshops. 

21 I've made some notes about specific action 

22 items that we detailed as we went along, particularly, 

23 the test procedures plan of action that Arthur B. 

24 

25 

Little is helping to coordinate. That's proceeding 

rapidly. 

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1 comments soon on that as they intend to get that 

2 shaped and moving ahead shortly. Right, Dick? In the 

3 span of the next couple of weeks at the outside. 

4 Also, I know that Jim McMahon from LDNL 

5 would appreciate your comments on other variables to 

6 consider that might fit into his modeling efforts. So 

7 for those of you that are inclined in that 

8 quantitative direction, please send those comments to 

9 him. 

10 MR. McMAHON: To the Department. 

11 MR. BROOKMAN: To the Department. Thank 

12 you. In care of Bryan. All of these comments get 

13 directed to Bryan. Bryan is the designated federal 

14 official on this one. That may not be correct. He is 

15 the head guy on this particular rule making. 

16 (Laughter.) 

17 And the GRIM spreadsheet values that Mike 

18 Rivest just talked about now, I know that there's 

19 going to be some additional work to confirm and 

20 scrutinize those and Steve Nadel made the question or 

21 request about when that -- releasing those as soon as 

22 possible so that any additional sensitivities work 

23 that needs to be done, surrounding those values that 

24 

25 

that get in motion. Kind of on a parallel track, 

while test procedures are proceeding. 

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1 So Bryan, can you or Michael talk 

2 generally about the time frame for this going ahead or 

3 perhaps the Assistant Secretary. 

4 MR. REICHER: I have to go and I'll let my 

5 colleagues talk about the time frame. Obviously, what 

6 we very much want to do is keep to the schedule, but 

7 do it in an appropriate fashion, making sure we have 

8 all the data we need to make a decision. 

9 I just want to thank everyone for what I 

10 think has been a very, very good session. As Chuck 

11 said, I think a level of discussion, the analysis we 

12 have to talk about, even, I think, the degree to which 

13 we are addressing the problem that we face with the 

14 test procedure is we're doing it at a very -- in a 

15 very helpful and constructive way and I appreciate 

16 everybody wanting to put their shoulders to the wheel 

17 here and move forward. I think when all is said and 

18 done, the better the data we have and the more we can 

19 address these problems, ultimately the better the 

20 decision will be and while it may not be a decision 

21 that everybody loves, I think it will be a well -- it 

22 will be a thoughtful decision, a well-informed 

23 decision and one that over time will show itself to be 

24 

25 

defensible, so I really appreciate people's 

cooperation, their willingness to talk, to listen to 

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1 each other, to provide data so that people can get 

2 back to us in quick time frames and to keep this very 

3 good discussion going so we can come to a conclusion 

4 that the largest number of people can support. So 

5 thank you very much. 

6 MR. BROOKMAN: Thank you. So then talking 

7 about the timetable, looking ahead. 

8 MR. BERRINGER: One of the suggestions, 

9 obviously, the test procedure, one of the steps is 

10 looking at the end of September. We also have, 

11 obviously, the manufacturing impact report will be 

12 released as soon as possible, as soon as we can get 

13 that certainty on that. So we could -- I would say 

14 probably the October, November time frame would be a 

15 possible likelihood for a second workshop. I'd just 

16 like to open up for discussion when people -- what 

1 7 their calendars look like, when would be the best time 

18 to, the most logical time to have the next workshop. 

19 MR. BROOKMAN: Deborah, do you wish to --

20 MS. MILLER: Yes, I just wanted to say 

21 that I agree with Bryan that it has to be at the end 

22 of September or October, although they all know that 

23 I am not happy about that. 

24 (Laughter.) 

25 Be that as it may, this test procedure 

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1 issue is critical. Having said that, I just wanted to 

2 stress and we will, obviously, take our lead from what 

3 Dick Topping tells us on the state of things, but I 

4 just wanted to stress again because Dan whispered in 

5 my ear and that is simply that we really would like to 

6 get the workshop done as soon as possible. So 

7 although November is an option, we all know it's 

8 Thanksgiving. We start going into Christmas, blah, 

9 blah, blah. Look at October more seriously and we may 

10 have to end up in November, but we would really like 

11 to look at October. 

12 MR. BROOKMAN: Okay, thank you. Steve 

13 Rosenstock and then Michael McCabe . 

14 MR. ROSENSTOCK: The only thing I would 

15 suggest is in terms of timing is that once the test 

16 procedure is resolved in September, as long as all the 

17 other analyses that have to be revised can be revised 

18 and in that time frame revised, posted on the 

19 website and then give us a little time to digest that 

20 and that would be the main thing that I know that I 

21 would ask for. 

22 MR. BROOKMAN: How much time would that be 

23 to digest? 

24 MR. ROSENSTOCK: At least a few weeks. I 

25 mean, you know --

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1 MR. BROOKMAN: So at a minimum, you're 

2 looking at a couple of weeks, after it gets up. 

3 Michael? 

4 MR. McCABE: Michael McCabe. After Dan 

5 whispered into Deborah's ear --

6 MS. MILLER: Did he tell you something 

7 different? 

8 MR. BROOKMAN: He's persistent. He's a 

9 persistent guy. 

10 MR. McCABE: He whispered in my ear what 

11 he would like to do, to see everybody would consent to 

12 two dates, one that would be an earlier date and 

13 things go well; another would be a little later date 

14 if it takes us a while longer and understanding that 

15 the decision is going to be dependent upon the work of 

16 Mr. Topping and others. The October time frame would 

17 be the earlier date. He's not looking for a six month 

18 window, but something a lot smaller than that. 

19 MR. BROOKMAN: Do you wish to try to 

20 establish a date right now? Those two dates right now 

21 so everybody can get it penciled in on their calendar? 

22 MS. MILLER: The second or third week of 

23 October. 

24 MR. BROOKMAN: So let's try to do that if 

25 you can get your calendars. 

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1 So the second or third week of October, 

2 the second week commences with the 11th which is 

3 Columbus Day. Is it good for most of you to continue 

4 to meet in the middle of the week like this? 

5 Brenda? 

6 MS. JONES: There are two tentative 

7 workshops in October. 

8 MR. BROOKMAN: I see. So I guess we're 

9 looking at the second and third week of October is 

10 what's been suggested. 

11 Bryan? 

12 MR. BERRINGER: Let me just throw 

13 something out to get us a good time frame from the 

14 manufacturing side. If we come up with something by 

15 the end of September from ADL, what time frame are we 

16 looking to run some tests? Is that two weeks, three 

17 weeks, four weeks? If we say we got the certified 

18 cloth out there, we said this is the standard cloth, 

19 this is the one we want to rerun some tests to make 

20 sure the analysis that was submitted was valid. What 

21 type of turn around are we talking about? 

22 MR. SAMUELS: Before we answer that, which 

23 these folks can answer individually, I just thought 

24 I'm glad you brought that up because it does sort of 

25 hamper reality checks, which is there's been a couple 

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1 of comments about when we get this resolved in 

2 September. Well, maybe we're not going to get it 

3 resolved in September. Maybe in September, Mr. 

4 Topping will have some suggestions that will then need 

5 to be the subject of some testing by the manufacturers 

6 and then maybe we'll have to analyze what the results 

7 of the manufacturers' testing is and then we'll have 

8 to figure out what to do with the existing data base. 

9 So you can set the dates that you want to 

10 set, it's fine with me and people can give you their 

11 comments on how long it's going to take them to do 

12 testing, the sooner they're going to understand what 

13 testing is that you're talking about, but let's 

14 recognize all the steps that we' re talking about. 

15 Then we get to Steve's comment, well, so then we have 

16 possibly some revised analysis, right? Which is then 

17 put up on the web and then we get to Steve's point of 

18 having some time to look at it before the workshop. 

19 So that's why -- I mean I don't want to --

20 when you said October, I was wondering what year you 

21 were in. 

22 (Laughter.) 

23 MS. MILLER: Excuse me, Chuck. This is 

24 Deborah Miller again. This is the problem and I think 

25 this would be helpful if Dick or Bryan lay out for the 

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1 decision makers, policy makers here what steps. 

2 Again, we're the uninformed. You know, what steps 

3 need to take place and what a reasonable schedule 

4 would be because when we just looked at this we say 

5 okay, we want this as soon as possible, but we don't 

6 know what the steps are. So Bryan and Dick, maybe 

7 that would be helpful for us and maybe we can set some 

8 dates and we' 11 be in constant contact with you, 

9 understanding that we need to get a better sense of 

10 what needs to happen and what those time frames are. 

11 MR. BERRINGER: Well, just looking at the 

12 time frames say 

13 MS. MILLER: I think what we need to know 

14 is are there any major conferences going on for anyone 

15 in October and November. I don't think it makes sense 

16 to worry about an actual date yet before we know what 

17 are those elements. 

18 MR. BROOKMAN: And Bryan, I thought the 

19 request was are there big chunks of this that need to 

20 get done that you want to identify now that would 

21 influence the date we schedule? 

22 MR. BERRINGER: The big chunks would be, 

23 if everything worked fine, at the end of September, 

24 this is talking about best case, we send the material 

25 out for the manufacturers to retest. 

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1 that, that's going to be October --

2 MR. BROOKMAN: And that takes a certain 

3 amount of time to do the retesting. 

4 MR. BERRINGER: Yeah, they' re going to 

5 have to have some time to do that. And if we're going 

6 to do reanalysis that adds another month to the time 

7 frame and that's assuming everything is going smoothly 

8 and when you figure you have to have that in advance 

9 of the workshop, typically, by a month, realistically 

10 we're pushing it into -- to me, into the December time 

11 frame. We can shoot for November, December --

12 MS. MILLER: No. Let me just state 

13 something again. I'm not looking for this detail 

14 right now. What I'm looking for is a time line laid 

15 out with these elements so that we can inform the key 

16 decision maker in this, i.e., Dan Reicher, what the 

17 reasonable dates are that we can consider. Because 

18 right now the orders that we have from him being 

19 uninformed about really what needs to happen is he 

20 wants something in October, at the latest, November. 

21 So frankly, Bryan, I think what we need to do 

22 internally is just lay out the elements, the time 

23 frames for those elements because you know that he's 

24 going to push the envelope of this stuff and we're 

25 going to ask the manufacturers to push the envelope on 

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1 this stuff as well. 

2 We all, as we've talked about earlier, the 

3 optimum situation is to get this done as soon as 

4 possible. We're all in this together. We're all 

5 putting additional resources on it. So if you could 

6 just -- we can do this and share this with people, you 

7 know. Bryan will share it, I'm sure, and ask whether 

8 this is correct. Lay out the different elements that 

9 need to happen, what the time frames are, we believe, 

10 and see how we can possibly compress, push, whatever, 

11 to shorten those elements. 

12 That's what I guess I'm driving at. And 

13 it may be November or December, but at this point our 

14 instructions are October and November, without this 

15 sort of information. 

16 MR. BROOKMAN: Earl Jones. 

17 MR. JONES: Earl Jones. The facts will 

18 speak for themselves, I assume and either there will 

19 or there won't be a problem. So rather than 

20 prejudging that why don't we just -- how about the 

21 week of the 18th of October and then the 15th of 

22 November? 

23 MR. BROOKMAN: Would you like to pencil in 

24 a specific date? 

25 

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MS. MILLER: No. 

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1 MR. BROOKMAN: No, you wouldn't. Well, I 

2 guess you're asking people to just kind of try and 

3 pencil in that whole week or -- try to --

4 MS. MILLER: If it' s Tuesday or Wednesday. 

5 We have to check the availabilities of rooms. 

6 MR. BROOKMAN: Right. 

7 MS. MILLER: We can have maximum 

8 flexibility. 

9 MR. BROOKMAN: So Earl, I thank you for 

10 suggesting that and you said October 18th and - -

11 MS. MILLER: Week of November 15th. 

12 MR. BROOKMAN: Thank you. 

13 MR. BERRINGER: Bryan Berringer. At this 

14 point, if there's any major conflicts that people know 

15 about that are going on, please let us know. 

16 MS. MILLER: Conferences. 

17 MR. NADEL: On that, early in the week of 

18 the 15th is not good. It would be better toward the 

19 end of the week. 

20 MS. MILLER: Okay. 

21 MR. BROOKMAN: And I know that the 

22 Department would like to hear from those of you that, 

23 as your conflicts start to occur on those dates, so 

24 they can really zero in . 

25 

(202) 234-4433 

I presume midweek works best for people 

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1 still, rather than a Monday, rather than a Friday. 

2 We're talking Tuesday, Wednesday, Thursday. I think 

3 that's as specific as we wish to get right now, right? 

4 Steve Nadel? 

5 .MR. NADEL: The one thing I would 

6 encourage the Department is to try to resolve this in 

7 the next couple of weeks. Those calendars are quickly 

8 going to fill. 

9 MR. BROOKMAN: Is there any other business 

10 that we need to cover at this point? I think we've 

11 covered the elements of the agenda so before I turn it 

12 back to the Department for their closing remarks, I 

13 thank all of you for the spirit of cooperation and 

14 good humor that came here today. We covered a lot of 

15 ground and we covered it rapidly and thanks for 

16 observing the norms that have emerged in these 

17 meetings and travel safely. 

18 MR. BERRINGER: I would like to thank 

19 everybody for coming today. It was very useful and 

20 important. I think we got a little bit further as far 

21 as the at least the methodologies used in the 

22 analysis, so I do appreciate that and the comments. 

23 That said, meeting adjourned. Thank you. 

24 

25 concluded.) 

(202) 234-4433 

(Whereupon, at 1:32 p.m., the meeting was 

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CERTIFICATE 

This is to certify that the foregoing transcript in the 

matter of: WORKSHOP ON CLOTHES WASHER STANDARDS 

Before: U.S. DEPARTMENT OF ENERGY 

Date: JULY 22, 1999 

Place: WASHINGTON, D.C . 

represents the full and complete proceedings of the 

aforementioned 

typewriting . 

(202) 234-4433 

matter, as reported 

NEAL R. GROSS 

COURT REPORTERS AND TRANSCRIBERS 

1323 RHODE ISLAND AVE., N.W. 

WASHINGTON, D.C. 20005-3701 

and reduced to 

www.nealrgross.com 
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