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 U.S. DEPARTMENT OF ENERGY 

+ + + + + 

PUBLIC MEETING ON STANDARDS FOR 

 COMMERCIAL UNITARY AIR CONDITIONERS AND HEAT PUMPS 

+ + + + + 

THURSDAY, 

SEPTEMBER 30, 2004 

+ + + + + 

 The meeting was held at 9:00 a.m. in Room 

1E-245 of the Forrestal Building, 1000 Independence 

Avenue, S.W., Washington, D.C., James Raba of DOE's 

Building Technologies Program, presiding. 

PRESENT: 

ASHLEY ABBOTT, Navigant Consulting, Inc. 

KARIM AMRANE, Air-Conditioning and Refrigeration 

 Institute 

DOUG BROOKMAN, Public Solutions 

DON BRUNDAGE, Southern Company 

KATIE COUGHLIN, Lawrence Berkeley National 

 Laboratory 

JIM CRAWFORD, Trane/American Standard 

LARRY DALE, Lawrence Berkeley National Laboratory 

ANDREW deLASKI, Appliance Standards Awareness 

 Project 

THOMAS ECKMAN, Northwest Power and Conservation 

 Council 

FEDERICO GARCIA-LOPEZ, Navigant Consulting, Inc. 

BARCLAY GIBBS, Navigant Consulting, Inc. 

BILL GOETZLER, Navigant Consulting, Inc. 

AARON HERZON, Nordyne, Inc. 

JILL HOOTMAN, The Trane Company 

ERIN JOHNSTON, Navigant Consulting, Inc. 

PATTY KAPPAZ, SENTECH, Inc. 

RICHARD LORD, Carrier Corporation 

JAMES LYONS, Energetics, Inc. 

ARIS MARANTAN, Navigant Consulting, Inc. 

MICHAEL MARTIN, California Energy Commission 

JAMES McMAHON, Lawrence Berkeley National Laboratory 

PRESENT: (cont'd) 

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KAREN MEYERS, Rheem Manufacturing Company 

DEBORAH MILLER, Air-Conditioning and Refrigeration 

 Institute 

HARRY MISURIELLO, Alliance to Save Energy 

JAMES MULLEN, Lennox International, Inc. 

STEVEN NADEL, American Council for an Energy 

 Efficient Economy 

HUNG PHAM, Copeland Corporation 

MICHAEL RIVEST, Navigant Consulting, Inc. 

GREG ROSENQUIST, Lawrence Berkeley National 

 Laboratory 

STEVEN ROSENSTOCK, Edison Electric Institute 

KURT ROTH, TIAX LLC 

SRIRAM SOMASUNDARAM, Pacific Northwest National 

 Laboratory 

CHARLES STEPHENS, Oregon Department of Energy 

GRAHAM STEVENS, Navigant Consulting, Inc. 

PETER TURNBULL, Pacific Gas and Electric Co. 

ROBERT VAN BUSKIRK, Lawrence Berkeley National 

 Laboratory 

LAURA VAN WIE, Lawrence Berkeley National Laboratory 

RICHARD WHITE, Lawrence Berkeley National Laboratory 

DAVID WINIARSKI, Pacific Northwest National 

 Laboratory 

STEPHEN YUREK, Air-Conditioning and Refrigeration 

 Institute 

DOE REPRESENTATIVES PRESENT: 

JAMES RABA 

SANDY BEALL 

BRYAN BERRINGER 

THOMAS DePRIEST 

MARK FRIEDRICHS 

SAM JOHNSON 

QONNIE LAUGHLIN 

RONALD LEWIS 

MICHAEL McCABE 

MAUREEN MURPHY 

CYRUS NASSERI 

FRANCINE PINTO 

BARBARA TWIGG 

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 A-G-E-N-D-A 

PAGE

Welcome............................................4 

Introduction and Agenda Review.....................6 

Rulemaking Overview...............................13 

Comments from Participants........................16 

Engineering Analysis..............................46 

Life-Cycle Cost Analysis..........................97 

National Impact Analysis.........................220 

Discussion of Other Issues.......................253 

NOPR Analyses and Next Steps.....................256 

Final Discussions................................282 

Adjourn..........................................284 

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

(9:10 a.m.) 

 FACILITATOR BROOKMAN: Okay. Good 

morning, everybody. My name is Doug Brookman. I'm a 

consultant from a small company in Baltimore called 

Public Solutions, and I'll be helping to facilitate 

this meeting today. 

 This is the ANOPR meeting on standards for 

commercial unitary air conditioners and heat pumps. 

We typically start off the morning with introductions. 

 Jim Raba, would you like to make brief 

welcoming remarks before we do introductions? 

 MR. RABA: I would like that very much. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. RABA: Good morning. Welcome to the 

public meeting on commercial unitary air conditioners 

and heat pumps. The Department of Energy will present 

its methodology for the Advanced Notice of Proposed 

Rulemaking analysis and explain its plans for the 

analysis to support the Notice of Proposed Rulemaking. 

 I'm Jim Raba, Project Manager for this 

rulemaking. Today's presenters will be Dave Winiarski 

from Pacific Northwest National Laboratory, Aris 

Marantan and Mike Rivest from Navigant Consulting, and 

Greg Rosenquist and Jim McMahon from Lawrence Berkeley 

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National Laboratory. 

 Representing the Department are -- I see 

at the table here at this time -- Ron Lewis, Building 

Technologies Program; Tom DePriest, Francine Pinto, 

General Counsel; and I believe we will be joined 

shortly by Michael McCabe, Program Manager, and Mark 

Friedrichs, Policy and International Affairs. 

 Today's facilitator is the ever-popular 

ever-professional Doug Brookman. 

 (Laughter.) 

 On behalf of the Department, the Program 

Office, and the members of the rulemaking team, thank 

you for participating in this important meeting. 

Today's public meeting, as with all of the public 

meetings on rulemaking -- this is important because 

they need us to work together as allies to listen and 

discuss and understand each other's views in real time 

and prepare for the energy conservation win-win -- win 

for the stakeholders, win for America. 

 So the Department earnestly seeks input 

from stakeholders on its planned methodologies, 

assumptions, and data sources, which will assist in 

developing a Notice of Proposed Rulemaking for 

commercial unitary air conditioners and heat pumps, 

the next phase in the rulemaking process. 

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 As the presiding official, I will set the 

guidelines for conducting the meeting and provide 

other pertinent information as needed. In order to 

obtain as much relevant information as reasonable, and 

to enable you to express your views, we'll follow the 

agenda right there, beginning with an overview of the 

DOE analyses and issues identified in the ANOPR, and 

then invite brief summary statements where you will 

have an opportunity to identify your key issues. 

 Following that there will be a summary 

presentation of each analysis and a discussion of 

issues regarding the approaches used, pertinent 

factors that were considered, and a characterization 

of the results of the analysis. Later there will be 

open forum to discuss any remaining questions or 

issues that you have identified. 

 Finally, there will be a summary 

presentation, a discussion, of planned revisions to 

the ANOPR analysis, including approaches and factors 

that will be considered as we begin the next stage of 

the process, the NOPR stage. 

 In approximately two weeks a written 

transcript of the meeting will be available for 

inspection at the Department of Energy, Forrestal 

Building, Room 1J-018, the resource room of the 

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Building Technologies Program in the West Building. 

 Anyone wishing to purchase a copy of the 

transcript can make arrangements with the Court 

Reporter. 

 The Department will accept comments, data, 

and information regarding the ANOPR during and after 

today's public meeting, but no later than November 12, 

2004. See Section IV.D, Submission of Comments, in 

the ANOPR for details, including the procedures for 

submission of information that you believe to be 

confidential and exempt by law from public disclosure. 

 All written comments will otherwise be 

available for public inspection in the resource room 

of the Building Technologies Program. Please call Ms. 

Brenda Edwards-Jones at (202) 586-9127 for additional 

information about visiting the resource room. 

 On behalf of the Department of Energy, 

Building Technologies Program, and the rulemaking 

team, I appreciate the time and effort you have taken 

to attend this public meeting, and encourage you to 

participate as much as possible, so the Department may 

see a full spectrum of views on the issues and to 

gather input on the methodologies, assumptions, and 

data that are pertinent. 

 Are there any questions regarding this 

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introductory information or today's agenda? We'll 

begin with the next agenda item. 

 FACILITATOR BROOKMAN: Thank you. Thank 

you, Jim. 

 It's customary to have everybody introduce 

him or herself, and say your name and organizational 

affiliation. If we could do that now. And this will 

not all be on the record, but it's simply a matter of 

courtesy. 

 May I start with you, Richard? 

 MR. LORD: Yes. 

 THE COURT REPORTER: For those of you who 

have a mike, please use it. 

 FACILITATOR BROOKMAN: And for these 

microphones you need to stick your face right in it. 

 MR. LORD: My name is Richard Lord with 

Carrier Corporation. I'm also a member of the ASHRAE 

90.1 Committee. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. MULLEN: Jim Mullen, Lennox. 

 MR. AMRANE: Karim Amrane, Air 

Conditioning and Refrigeration Institute. 

 MS. MILLER: Deborah Miller, Air 

Conditioning and Refrigeration Institute. 

 MR. YUREK: Steve Yurek with the Air 

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Conditioning and Refrigeration Institute. 

 MR. CRAWFORD: Jim Crawford, American 

Standard. 

 MS. MEYERS: Karen Meyers, Rheem. 

 MR. PHAM: Hung Pham, Copeland 

Corporation. 

 MR. deLASKI: Andrew deLaski, Appliance 

Standards Awareness Project. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. 

 MR. ECKMAN: Tom Eckman, Northwest Power 

and Conservation Council. 

 MR. STEPHENS: Charlie Stephens, Oregon 

Department of Energy. 

 MR. MISURIELLO: Harry Misuriello, 

Alliance to Save Energy. 

 MR. MARTIN: Michael Martin, California 

Energy Commission. 

 MR. HERZON: Aaron Herzon, Nordyne. 

 MS. HOOTMAN: Jill Hootman, Trane Company. 

 MR. NADEL: Steve Nadel, American Council 

for an Energy Efficient Economy. 

 MR. LEWIS: Ron Lewis, DOE. 

 MR. RABA: Jim Raba, Department of Energy. 

 MR. MARANTAN: Aris Marantan, Navigant 

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Consulting. 

 MR. GOETZLER: Bill Goetzler, Navigant 

Consulting. 

 MR. ROTH: Kurt Roth, TIAX LLC. 

 MR. McMAHON: Jim McMahon, Lawrence 

Berkeley National Lab. 

 MR. TURNBULL: Peter Turnbull with the 

Pacific Gas & Electric Company. 

 MR. WINIARSKI: Dave Winiarski, Pacific 

Northwest National Lab. 

 MR. LYONS: Jamie Lyons, Energetics. 

 MR. ROSENQUIST: Greg Rosenquist, Lawrence 

Berkeley National Laboratory. 

 MS. COUGHLIN: Katie Coughlin, Lawrence 

Berkeley National Laboratory. 

 MR. SOMASUNDARAM: Sriram Somasundaram, 

Pacific Northwest National Laboratory. 

 MR. RIVEST: Mike Rivest, Navigant 

Consulting. 

 MR. STEVENS: Graham Stevens, Navigant 

Consulting. 

 MR. BERRINGER: Bryan Berringer, 

Department of Energy. 

 MS. LAUGHLIN: Qonnie Laughlin, Department 

of Energy. 

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 MS. MURPHY: Maureen Murphy, Department of 

Energy. 

 MS. BEALL: Sandy Beall, Department of 

Energy. 

 MR. RANNELS: Jim Rannels, Department of 

Energy. 

 MR. JOHNSON: Sam Johnson, Department of 

Energy. 

 MS. ABBOTT: Ashley Abbott, Navigant 

Consulting. 

 MS. JOHNSTON: Erin Johnston, Navigant 

Consulting. 

 MS. TWIGG: Barbara Twigg, Department of 

Energy. 

 MS. KAPPAZ: Patty Kappaz with SENTECH. 

 MS. VAN WIE: Laura Van Wie, Lawrence 

Berkeley National Lab. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. 

 FACILITATOR BROOKMAN: Thank you. Did we 

get -- everybody get a chance to introduce him or 

herself? Okay. Good. 

 Jim did a very brief review of the agenda. 

I think if you did not succeed in checking in and 

registering at the registration table, you need to do 

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that. And the registration list -- that is, the 

attendee list -- from this meeting will be sent out 

via e-mail in a few days, perhaps a week, in that 

range. So that's the way that we assure that you get 

the attendee list. 

 Over the span of these years that we've 

conducted these public meetings, norms have emerged, 

and I'd like to ask for your consideration to make 

them work. Please speak one at a time. Please say 

your name for the record every time you speak. I'll 

be trying to recognize you by name and make it easy 

for you to remember. 

 Please listen as an ally. Keep the focus 

here. I'm going to ask especially that you be 

concise, share the airtime. These agendas are packed, 

each one every day. There's a lot to cover. There's 

a lot of presentation, and a lot of people wish to 

comment, so please try and keep it very brief and 

focused. 

 I'm going to be queuing people to speak. 

I also wish to entertain and encourage follow-on 

comments. That's a fairly complicated sequencing 

sometimes. Please make it possible for it to work, 

especially keep your follow-on comments as brief as 

possible. And don't let me drop you out of the queue. 

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 Okay? 

 So questions and comments before we 

actually commence? 

 Okay. So Jim Raba is going to provide a 

brief overview on the rulemaking. 

 MR. RABA: This is the public meeting for 

the commercial air conditioners and heat pumps 

rulemaking. First, a brief overview of that 

rulemaking. 

 The purpose of today's public meeting is 

to present, describe, characterize, and clarify the 

Department's analyses in a technical support document 

and the Advanced Notice of Proposed Rulemaking. There 

are 20 issues that the Department is aware of related 

to the Department's analyses. 

 They are presented in Section IV.E of the 

ANOPR and are listed on the wall chart. There will be 

an opportunity to discuss each of them. If you know 

of additional issues that need to be addressed, today 

is a good time to raise them. 

 The Department wants to hear your views on 

the methodologies, assumptions, and data sources used 

for the ANOPR and invites comments and hard data that 

could be used to revise and improve the analyses 

during the NOPR stage. Later in the day we will 

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describe the analyses that will be conducted at the 

NOPR stage and the next steps in the rulemaking 

process. 

 The Energy Policy and Conservation Act 

directs the Department to consider these seven factors 

when setting energy conservation standards. For each 

factor there's a corresponding analysis. Some are 

appropriate for the ANOPR, some later. 

 Here's a simplified flowchart of the 

rulemaking process, beginning with the framework 

document and ending with the final rule, and then the 

date when the final rule will go into effect. For the 

ANOPR, the Department conducted three core analyses -- 

engineering, life-cycle cost and payback, and national 

impact, which include foundational supporting 

analyses. 

 The market and technology assessment and 

screening analysis feed into the engineering analysis 

that, in turn, feed into the markups for price 

determination analysis that, along with the energy use 

and end-use load characterization, feed into the life 

cycle cost and payback period analysis that, along 

with the shipments analysis, feed into the national 

impact analysis. 

 As the Department enters the NOPR stage, 

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we will consider comments on the ANOPR, make any 

appropriate revisions to the ANOPR analyses, identify 

trial standard levels, and conduct additional 

analyses, including manufacturer impact, utility 

impact, employment impact, environmental assessment, 

and regulatory impact. 

 Here's a summary list of the issues 

addressed in the ANOPR. The Department seeks your 

comments on each of them and other issues that you 

find important and identify, along with your views, 

comments, and data. Each of these issues will be 

raised and comments invited at the appropriate time 

during the presentations. 

 The next item on today's agenda opens the 

floor to those who wish to provide summary comments or 

make a brief statement for the record. Following that 

there will be presentations of the analyses and 

discussions regarding the approaches used, pertinent 

factors that were considered, and characterization of 

the results of that analysis. The time to submit 

written comments will remain open through November 12, 

2004. 

 Any questions? If none, the floor will be 

open to brief summary statements. 

 Doug? 

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 FACILITATOR BROOKMAN: Okay. So I have 

three persons that have indicated their desire to 

speak in this brief summary format. And I want to see 

if there's anybody else that wanted to speak this 

morning. Harry Misuriello, Steve Nadel, and Deborah 

Miller are the people that I have listed as being -- 

as wanting to speak. Anybody else that would like to 

provide a summary comment? 

 So can I start with you, Harry? Would 

you -- 

 MR. MISURIELLO: Yes. Harry Misuriello 

from the Alliance to Save Energy. Other than noting 

the excellent technical job that DOE has done with the 

ANOPR and the technical support document, and noting 

that all of the candidates' standard levels seem to 

provide positive economic benefits, I'd like to yield 

my time to Steve and Deborah this morning. 

 FACILITATOR BROOKMAN: Thank you. 

 And, Steve and Deborah, which one of you 

would like to go first? Did you see that? That was a 

nice gesture. Both of them said, "You start." 

 (Laughter.) 

 MS. MILLER: We both wanted to start. 

 (Laughter.) 

 FACILITATOR BROOKMAN: Exactly. It was -- 

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 MS. MILLER: It was in the spirit of 

compromise. 

 FACILITATOR BROOKMAN: It was a nice 

gesture. 

 MS. MILLER: Good morning. I would like 

to make a brief statement on behalf of the Air 

Conditioning and Refrigeration Institute, a trade 

association representing manufacturers of over 90 

percent of North American HVAC and R equipment. 

 For the record, my name is Deborah E. 

Miller, and I am Vice President for Government and 

International Affairs at ARI. 

 As many of you know, our industry has for 

many years supported energy efficiency, producing a 

wide variety of energy-efficient heating, air 

conditioning, and refrigeration equipment for 

consumers to purchase. 

 Although it has not been without political 

interference, we have, for the most part, supported 

the Department of Energy's program to promulgate 

balanced and fair minimum energy efficiency 

regulations, because we believe that one federal 

standard, rather than a patchwork of state standards, 

saves more energy, is better for the environment, and 

benefits both consumers and manufacturers alike. 

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 We welcome the Department's publication of 

this long-awaited Advance Notice of Proposed 

Rulemaking. As someone who has worked directly in the 

Office of Energy Efficiency and Renewable Energy and 

on this program, I am aware of the huge task that the 

Department and this staff face in promulgating minimum 

standards for many products beyond our own. 

 That is why I am pleased to announce today 

that ARI and its members have been negotiating with 

the coalition of energy efficiency groups and states 

to develop a consensus agreement setting the next 

round of energy efficiency standards for air 

conditioning products from 65,000 to 240,000 BTU per 

hour, or from 5 to 20 tons. 

 While it is not part of this rulemaking, 

this agreement also will cover equipment from 20 to 63 

tons. Although ARI believes that the Department 

already has the authority to regulate very large 

commercial air conditioning equipment -- 20 to 63 tons 

-- the joint stakeholders will shortly be going to 

Congress to ask that language be inserted into 

legislation giving the Department the clear statutory 

authority that it believes it needs to regulate this 

product as well. 

 Both sides are putting the final touches 

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and getting final approvals for this broad-based 

agreement, so I am not at liberty to discuss the 

specifics. However, we are very optimistic that the 

consensus agreement will be signed shortly, and we 

will submit it to the Department in joint comments 

before the end of the ANOPR comment period. 

 The agreement has not been easy to 

negotiate, but it will give manufacturers the 

certainty needed to plan and make cost-effective 

investments in their manufacturing lines and products. 

We, therefore, urge the Department to undertake an 

expedited rulemaking, so that minimum efficiency 

standards for products from 65,000 to 240,000 BTU/H 

can be finalized by the end of the year or soon 

thereafter. 

 Thank you. 

 I also wanted to add one thing. I wanted 

to extend my personal thank-you to Steve Nadel, who 

has worked with our staff directly in representing the 

energy efficiency groups and the states. It has not 

been easy for either one of us, and he has really 

exerted some very lively and challenging leadership 

that we appreciate. 

 Thank you, Steve. 

 FACILITATOR BROOKMAN: Thank you. 

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 Steve Nadel, ACEEE. 

 MR. NADEL: Okay. Thank you very much. 

I'm here speaking on behalf of ACEEE, but also a 

consortium of other energy efficiency supporters, 

Appliance Standards Awareness Project, the Alliance to 

Save Energy, the California Energy Commission, the 

Natural Resources Defense Council, Northeast Energy 

Efficiency Partnerships, and the New York State Energy 

Research and Development Authority. 

 Several of those people are in the room, 

so they may want to add things to this. 

 As Deborah said, we've been working hard 

for multiple months to -- with Deborah, her staff, and 

we have appreciated their constructive attitude and 

problem-solving as we try to work through various 

issues, but we are very happy that we have been able 

to reach agreement. 

 We think this will result in very 

substantial energy savings for the country, 

substantial benefits for the country, as well as save 

an awful lot of contention here in the hearing room 

and in a rulemaking and allow DOE to get on with it in 

terms of setting these standards. The proposed 

standard will also make it easier for manufacturers, 

because it will align the effective date of the 

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standard with the phaseout of HCFCs. 

 We also wanted to thank DOE for their 

assistance, and particularly getting the analysis out 

I think helped everyone to focus. DOE did play a 

significant role, and we thank them for that. 

 As Deborah said, we plan to provide joint 

detailed comments specifying specific recommended 

efficiency levels for each of the pieces of equipment, 

as well as the rationales that we believe -- in terms 

of the seven criteria in the law, and why we believe 

that the levels we're going to jointly recommend are 

the logical level that DOE should select as it follows 

the law. 

 We will get these in by the 12th, and we 

urge DOE to look into expediting the processes to 

speedily adopt these -- you know, obviously getting 

appropriate comments from other people, but we believe 

this is a strong consensus and should be speedily 

adopted. 

 With that, I don't know if anybody else in 

our coalition wants to add something. 

 FACILITATOR BROOKMAN: Yes. Andrew 

deLaski. 

 MR. deLASKI: I'm Andrew deLaski, 

Appliance Standards Awareness Project. I just want to 

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also thank the industry for their focus on this over 

the past -- well, I guess it's been more than a year, 

it's been a couple of years. 

 (Laughter.) 

 And ongoing discussions to come up with a 

recommendation that we can submit jointly to the 

Department, and incorporate the other elements as well 

that Deborah described. 

 And also -- and note that it's been 

difficult also working among the energy efficiency 

supporters around the country to get consensus behind 

a proposal from the energy efficiency and state 

organizations' point of view as well, and that also 

hope the Department can move forward in an expeditious 

manner with those things that are recommendations in 

the Department, and that other stakeholders can 

support that recommendation -- those recommendations 

as well. 

 FACILITATOR BROOKMAN: Thank you, Andrew. 

 MS. MILLER: So can we go home now? 

 (Laughter.) 

 FACILITATOR BROOKMAN: I believe other 

people might wish to make comments at this time. 

 (Laughter.) 

 Harry. 

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 MR. MISURIELLO: Well, thank you. Harry 

Misuriello. Deborah, you'd better stick around for 

some more compliments this morning. On behalf of the 

Alliance to Save Energy, I'd like to also express our 

appreciation to ARI and the HVAC industry for coming 

up with an agreement that's going to improve electric 

reliability, save the nation lots of energy, improve 

our energy security, and all those good things that 

these standards are supposed to do. 

 So thank you very much, Deborah and Steve, 

for helping bring this to a successful agreement. 

 Thank you. 

 MS. MILLER: And the manufacturers, I have 

to say, this is -- 

 MR. MISURIELLO: And the industry. 

 MS. MILLER: The manufacturers are the 

ones that have -- 

 FACILITATOR BROOKMAN: Okay. 

 MS. MILLER: Thank you. 

 FACILITATOR BROOKMAN: And the 

manufacturers, as Deborah said, for reinforcing their 

key participation in this effort. 

 So any other comments at this point from 

other persons at the table? Summary comments before 

we proceed with the rest of the agenda? I think 

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perhaps we might talk a little bit how we reconsider 

the agenda in light of these events. 

 Michael Martin. 

 MR. MARTIN: Yes. On a personal note, I 

welcome this agreement that the California Energy 

Commission has had with ARI. We've had some pretty 

stormy relationships in the past, and I look at this 

as a big step towards better cooperation in the 

future. 

 FACILITATOR BROOKMAN: Thank you, Michael. 

 Okay. Other comments from anybody at this 

point about how to proceed with the rest of the day? 

 So we've already gone through the agenda, 

and, as you know, a huge amount of analysis and 

preparation for this meeting has taken place. And the 

Department is queued up to -- and all of you have in 

your packets the slides and the detailed content for 

the presentations today. 

 And so the Department is prepared, with 

all of its supporting cast of consultants and experts, 

to push on through this content. And we are wondering 

in light of the -- what has just been revealed, how 

you would like to proceed. 

 Steve Nadel, and also, then, Steve 

Rosenstock. 

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 MR. NADEL: Okay. What I thought might 

make sense -- but I'd like other opinions here in this 

room -- is that we stick to the current agenda in 

terms of the general topics. 

 But instead of DOE making a detailed 

presentation at the beginning of each section, we give 

a couple of minutes for people to leaf through the 

presentations and then we take questions as in, "Gee, 

I don't understand this one," or "Can you present the 

following slides?" and comments. But maybe we can 

save a lot of time with the presentations, because I 

think a lot of people here are quite familiar with the 

material -- 

 FACILITATOR BROOKMAN: Okay. 

 MR. NADEL: -- and they don't need a 

presentation. That would be my thought, but, still, 

it would give everybody in the room an opportunity to 

ask questions and make comments. 

 FACILITATOR BROOKMAN: Let me just get a 

read. How many of you in the room would think of 

yourselves as being quite familiar with this material? 

 (Laughter.) 

 So all but about three, I would say. 

 (Laughter.) 

 Okay. So that's one data point. 

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 Thanks for getting the mike, Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. I still think I would prefer the 

regular format of having DOE staff going through the 

slides first as traditional, because, yes, we might be 

quite familiar, but especially for other stakeholders, 

to be fair, that if they didn't have as much time to 

review the information that -- again, it's another 

review for everybody. 

 I think it would be helpful, and it does 

-- and it would provide time to ask the questions that 

some of the newer -- other stakeholders would have a 

chance to get some more details and provide good 

discussion. 

 Thank you very much. 

 FACILITATOR BROOKMAN: I could get some 

other -- I could easily imagine a third way, which 

tries to strike the balance between both of those 

alternatives -- that we would try to -- we would have 

the resource person putting the slides up, describing 

them briefly, making certain there were no questions 

or comments, getting that bit of affirmation, and then 

moving on expeditiously from there. I could imagine 

us striking a balance between those two. 

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 MS. MILLER: Thirty seconds per slide. 

 (Laughter.) 

 Deborah Miller. Thirty seconds per slide. 

 We'll cut you off. 

 FACILITATOR BROOKMAN: Did you get that on 

the record? 

 (Laughter.) 

 Some people are so goal-oriented. 

 Don Brundage. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. I would agree with Steve. And an additional 

problem with this, for those of us who are having to 

deal with three rulemakings going on simultaneously, 

it becomes very difficult to take the time to go 

through in detail. 

 FACILITATOR BROOKMAN: Yes. 

 MR. BRUNDAGE: So I would appreciate -- 

don't do the Reader's Digest version of the -- 

explaining what you did. 

 FACILITATOR BROOKMAN: You would like a 

more full explanation of the material, Don. 

 MR. BRUNDAGE: Yes. 

 FACILITATOR BROOKMAN: Michael Martin. 

 MR. MARTIN: It's nice to know what we 

agreed to here, but DOE has the responsibility to show 

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that they meet these DOE criteria. 

 FACILITATOR BROOKMAN: Yes. 

 MR. MARTIN: And I think we ought to hear 

about it. 

 FACILITATOR BROOKMAN: Thank you. Thank 

you. And I'm certain the Department is amply aware of 

that. 

 Okay. So do you wish to chime in here? 

Okay. When you do, you let me know. 

 (Laughter.) 

 Michael McCabe. 

 MR. McCABE: Michael McCabe with the 

Department of Energy. I would like to congratulate 

all those who worked the last two years on the 

agreement. We're certainly excited about it. We're 

looking forward to it. While we have not seen it, I 

have gotten word about the discussions recently. Over 

the last couple of weeks it has gotten louder and 

louder and was informed that there would be a -- the 

consensus would be announced today. 

 We have alerted management on the first 

question, and the management asked us, "What does this 

mean?" 

 (Laughter.) 

 What does it mean to the schedule? And my 

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response back to them was, "It could mean a lot, but I 

can't answer the question until we see the 

recommendations." So we're looking forward to that, 

but in addition to the congratulations, I would like 

to ask a question. 

 Are there any topics that parties would 

like to add to the agenda that are not already on that 

we could have a -- what I would call an informal staff 

discussion as to some of the issues, some of the 

things that have made -- we may need to consider? 

 For example, in the -- in us going forward 

with this rulemaking, there are certain things that we 

have to do, that we have to consider, that it may be 

worthwhile to discuss. There was a request that the 

Department accelerate the rulemaking, and I think even 

a specific statement by going to a direct final rule. 

 While we've not had -- not sat down and 

discussed that with General Counsel, it would be 

useful to have some staff feedback on that, because if 

I were to ask General Counsel they would say that this 

rulemaking, as it's planned out with legislative 

authority, I would suspect that they'd say that we 

probably do not have the authority to go to a direct 

final rule, because under EPCA we are required either 

to adopt the standards that ASHRAE adopts or go to a 

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rulemaking in accordance with the Act, the 

Administrative Procedures Act, which would require a 

proposed rule and final rule. 

 But there may be some issues with respect 

to analysis that can be dealt with. There may be some 

things with respect to the comments that could help us 

that would be worthwhile to discuss. And there are 

probably other issues that you may want to get into, 

so I would ask if there are any topics that you'd want 

to go into at this point in time, recognizing, one, we 

haven't seen the proposals, so it's somewhat -- it's 

going to be -- you're going to be at a disadvantage 

offering comments. 

 And, two, some of the questions that folks 

may have would be: what is the policy of the 

Department? What position would the Department take? 

Or what is the Department's view of the law? And to 

get some of those, we'd have to go upstairs and talk 

to the politicals, and we're not -- they're not going 

to be available to us, so we can offer some answers to 

many of those questions, as far as a staff 

perspective, but there would not be the DOE position. 

 In fact, most of the answers hopefully 

will be very close, if not identical, to what the 

Department's position would be. So at this point in 

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time, if there's information that we could provide, or 

some discussion that would help in completing the 

process with the understanding that would be a staff 

dialogue, we'd entertain them. 

 FACILITATOR BROOKMAN: Steve. Oh, Deborah 

Miller is first, and then Steve Rosenstock. 

 MS. MILLER: Okay. This is Deborah Miller 

from ARI. This will not change what you said, 

although I would urge the lawyers to be creative and 

the politicals to be creative. But -- and I think 

Steve would be okay with me saying this, that we will 

be submitting this as well to ASHRAE. 

 And Karim informs me, though, that the 

meeting is in February, and the decision couldn't be 

made, obviously, until June, understand -- at the 

earliest, understanding that this industry on this -- 

on -- yes, on 90.1 is a huge part of that 90.1 

Commission. 

 So I don't think we would have that much 

difficulty. I never want to underestimate it, but if 

everyone agreed I don't think we would have that much 

difficulty pushing this through. That doesn't change 

what you just said, Michael, but I at least wanted you 

to know that as well. 

 FACILITATOR BROOKMAN: Thank you for those 

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additional details. 

 Steve Rosenstock. 

 MR. ROSENSTOCK: This is Steve Rosenstock, 

Edison Electric Institute. To follow-on to Mr. 

McCabe's comments, I just -- just from personal 

recollection for previous federal rules that were -- 

that we did have a negotiation process, I'm thinking 

in particular fluorescent lamp ballast and residential 

clothes washers, the results of the negotiations were 

announced, and there were publications and press 

releases. 

 But as I recall, there were notices of 

proposed rules published, so that other stakeholders 

would have a chance to comment on them, because as -- 

you know, as stated, not all stakeholders who have 

been involved with the process were part of the 

negotiation. 

 So -- and I believe that that process did 

work well, in the fact that, yes, there were 

negotiations, DOE did alter their analysis and alter 

-- might have changed the final -- it did have an 

impact on the Notice of Proposed Rule, but other 

stakeholders did get a chance to comment on it before 

it became a final rule. So I think that following the 

process would be better, both from a procedural basis 

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as well as a process basis. 

 Thank you. 

 FACILITATOR BROOKMAN: Thank you. Thank 

you very much. 

 Additional comments? Yes, Don Brundage. 

 MR. BRUNDAGE: When this rulemaking was 

opened a couple of years ago, the way I understood the 

process was going to work was that DOE would proceed 

through with the cost-benefit analyses, and that when 

that was available it would provide an opportunity for 

ASHRAE to look at changing its standard. 

 And I think since ASHRAE, under NAECA, is 

really the primary source rather than as with 

residential-size air conditioning, DOE is. I think 

it's appropriate to give ASHRAE a reasonable 

opportunity to modify its standard before taking 

direct DOE action. 

 The other thing that -- and I don't know 

whether this is in the analyses or not. One of the 

things you run into with -- and this is more on the 

engineering side. One of the things you run into with 

increasing efficiency of equipment is often an 

increase in size and weight. 

 And I would like to make sure that for 

things such as retrofit, replacement of units, that 

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there is not potential -- that adequate study has been 

made that the roofs of existing buildings can stick 

these things on there without potential problems. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

Thank you. 

 So let's take any additional comments at 

this time, and particularly additions to the agenda 

for today that Michael requested. And then, we'll 

proceed with the presentation -- presentations, 

plural. 

 Francine Pinto. 

 MS. PINTO: Francine Pinto, General 

Counsel's Office. A couple of people have mentioned 

direct final rules, and just to clarify what that 

process is -- when you do a direct final rule, you 

actually publish simultaneously a NOPR and a Notice of 

Final Rulemaking. And you only do that in 

circumstances where you anticipate there will not be 

significant adverse comment. 

 So what happens is you publish both 

simultaneously. There is still a comment period of 30 

days. And if we don't get significant adverse 

comments, then it becomes effective as a final rule 

automatically in 60 days. We don't do that unless we 

actually think that there won't be significant adverse 

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comments, but there is always a NOPR published. So 

that's -- that step is not skipped. 

 FACILITATOR BROOKMAN: Thank you. 

 MS. PINTO: It's just an abbreviated 

comment period. 

 FACILITATOR BROOKMAN: Michael McCabe. 

 MR. McCABE: Michael McCabe. A couple of 

questions for clarification, Francine. It is also my 

understanding that, one, that if -- that to go to a 

direct final rule, that there generally is a 

demonstrated need as to why a direct final rule is 

needed, typically schedule-drawn or schedule-driven. 

 MS. PINTO: No. No. The basis is that 

you believe you have a situation that is not 

contentious. Now, obviously, if something happens and 

you get comments that indicate that there is 

disagreement, then that proceeding stops and you sort 

of -- then you go back to the regular proceeding. 

 MR. McCABE: Second one. In the case of 

the EPACT language with respect to commercial 

products, the EPACT amendments that the commercial air 

conditioners fall under, there is the requirement in 

EPACT that we adopt the ASHRAE-specified standards 

unless we can determine more efficient standards that 

are technically feasible and economically justified. 

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 So in January of 2001, we went to -- 

directly to a final rule for a number of the ASHRAE 

products without having a Notice of Proposed 

Rulemaking to accompany it. So if ASHRAE were to 

adopt these standards, the remarks -- the comments 

that you made about the direct final rule with the 

NOPR wouldn't apply. 

 MS. MILLER: Excuse me. I have a 

question, though. 

 FACILITATOR BROOKMAN: Deborah Miller -- 

 MS. MILLER: This is Deborah Miller, 

sorry. 

 FACILITATOR BROOKMAN: -- with a question. 

 MS. MILLER: I have a question. I think 

what Francine said, though, is that there will be a 

comment period, number one. And, number two, most 

importantly, the Department has the authority to 

accept ASHRAE's standards, which was what in the past 

we had asked the Department to do, or to determine a 

higher standard. I will admit to you, and I think 

Steve will allow me to say this, it is a significantly 

higher standard. 

 So you will meet those requirements, at 

least as far as whether -- we don't believe ASHRAE 

needs to see this again before the Department makes 

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its final judgment on this. Obviously, they can 

comment. But as I suggested, we will be submitting 

this to ASHRAE as well. 

 But we don't believe that the fact that, 

you know, ASHRAE will be -- get this in the long run, 

the Department can still make a determination based 

upon the fact that we will provide justification as to 

why, according to the seven things that you need to 

meet, this meets those requirements and more. 

 FACILITATOR BROOKMAN: I want to give 

Steve a chance to follow-on. 

 MS. PINTO: Can I just say one thing in 

response? 

 FACILITATOR BROOKMAN: Will you let him 

follow-on first? 

 MS. PINTO: Sure. 

 FACILITATOR BROOKMAN: Just so we have 

both sides of this on before we return to you. 

 MR. NADEL: Actually, if she wants to 

respond directly, I was going to add something about 

some of these other comments. 

 FACILITATOR BROOKMAN: Then, please. 

Francine Pinto. 

 MS. PINTO: Well, without making any final 

commitments, because I am a lawyer, right? 

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 (Laughter.) 

 I just want to be really, really clear 

about that. 

 I didn't -- in my statement I didn't say 

anything about ASHRAE, but I believe you are correct 

that we would not need -- since we're already in a 

rulemaking process, and we are looking to going higher 

than what is already in ASHRAE, and we've got that 

already going, I don't believe we would need to wait 

for ASHRAE to do anything. 

 So we could proceed however we're going to 

proceed. We look at your, obviously, recommendations 

and we see what other comments come in in the next 

month, and we'll go from there. And then we have to 

assess whether direct final rule is appropriate in 

this particular situation. 

 But the comment period is built into that 

process. That's the key thing. 

 MS. MILLER: Can I make a comment? 

 FACILITATOR BROOKMAN: Deborah Miller. 

 MS. MILLER: Deborah Miller. And I'm 

going to do this, and I hope Steve will understand why 

I'm doing this. Even if it is not a direct final 

rule, the Department in the past has rewritten a rule 

in five weeks and finalized a rule in five weeks -- 

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excuse me, Steve -- for having to say that. 

 So I know -- 

 (Laughter.) 

 -- that where there's a will there's a 

way. So whether it's a direct final rule or a NOPR, 

you know, if there's a will to get this thing out 

quickly, it can be done if management directs staff to 

do so. So, you know -- so, to me, that would be -- 

the direct final rule might be the easiest. But at 

the same time, DOE fully is capable, if there is 

management support, to get a rule out quickly and 

finalized. 

 MR. NADEL: Steve Nadel, thanks for your 

patience. 

 MR. NADEL: Sure. Building upon what 

Deborah said, I think by far the quickest route is 

going to be DOE either going to a NOPR or a direct 

final rule with comment. As a 10-year veteran of the 

ASHRAE 90.1 Committee, my understanding of their 

timelines, because even if the committee votes it out, 

then it goes to a whole public review and comment, I 

don't see any possible way ASHRAE would complete it in 

June of next year. 

 The earliest I could see, even if it's 

totally non-contentious, is it would get voted out in 

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late September/early October in what they call "Tech 

Weekend." But DOE, even under its normal process, 

should be able to come out with a NOPR next summer, 

which is quicker than that. And if we are talking in 

the accelerated process, the DOE either direct final 

rule or NOPR process should be quicker than ASHRAE. 

 We will pursue the ASHRAE process. We're 

not trying to go around ASHRAE. But I believe that 

there's a 90 percent chance that will be a slower 

process, not a quicker process. 

 FACILITATOR BROOKMAN: Michael Martin. 

 MR. MARTIN: As a fellow ASHRAE veteran, 

heading off tomorrow to the Tech Weekend in Atlanta, I 

would expand on what Steve has said, because in ASHRAE 

this has to go out for public comment. It has to be 

approved by the Project Committee first. 

 Then, the Standard Project Liaison 

Subcommittee has to agree and send it out. they don't 

-- can't agree to that until their editor has had a go 

at it. Then, it goes out for public comment. Then, 

the committee has to look at the comments, and then 

they have to take another vote and it has to go back 

to the Standard Subcommittee. 

 So if you get it done in a year, you'd be 

lucky. 

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 (Laughter.) 

 FACILITATOR BROOKMAN: So I think this 

process discussion has been useful, and I'm wondering 

if any additional issues -- if anybody would like to 

raise any additional issues at this time before we 

proceed to the content material. 

 Jim. Jim Mullen. 

 MR. MULLEN: At a little bit lower level, 

the question is: what becomes the disposition of the 

technical analysis that's in place? Does it just get 

thrown into a drawer and pulled out the next goaround? Does it get finished or corrected or updated 

and then thrown into a drawer for next time? Where 

does it end up? 

 FACILITATOR BROOKMAN: Ron Lewis. 

 MR. LEWIS: We certainly don't want to 

throw it away. There has been a lot of work in there 

and thought that was done with the intent of adding 

some positive -- if it's just stimulating 

conversation, and there are other -- it's drawing out 

other thought. 

 But in the NOPR stage of validating the 

assumptions, and all the rest, if there is a consensus 

decision in industry and advocate groups and states, 

if -- there are things that we need to do regardless 

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of whether this goes to a direct final rule or not, in 

the NOPR stage of considering the comments at the 

ANOPR stage that were submitted. 

 And to the degree that we're all anxious 

to expedite this, there's nobody in DOE that wants to 

hold this back any longer or keep this festering here 

with a whole lot of anxiousness. What we would like 

to do is we have criteria that we have to show that -- 

for whatever the final rule is and the standard is. 

 The more that we're in line with your 

giving us evidence and there being consensus to those 

things before they come to us, the more help it is to 

us, the less adjustment we have to make into the ANOPR 

analysis. 

 That's our baseline -- the ANOPR analysis 

that's been done and the comments that then -- 

reanalysis -- the degree of reanalysis we have to do 

is minimized to the point it was brought up yesterday, 

and I believe the day before, that there are 

interpretations that say that DOE needs to start at 

max tech, for instance, and then work down, looking at 

why it would not be economically justified and 

technologically feasible. 

 Looking at that kind of approach, to the 

degree that you'd give us -- in agreement that these 

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levels and the justification, starting there and 

saying why these higher levels, you know, are not 

appropriate. All those kinds of things are the 

analysis we have to do, and we have to search for. 

 So in trying to speed things up, the more 

input that -- the things that you give us to help us 

to see that clearly, the less divisiveness that we see 

out there, it helps us, because that -- that trying to 

consider all the comments, which many times are in 

different directions, is -- causes us to dig deeper 

and deeper to try to make sure that we're fully 

looking at the picture. 

 I don't know if that was helpful. 

 FACILITATOR BROOKMAN: Michael McCabe. 

 MR. McCABE: To add -- this is Michael 

McCabe. To add to what Ron has said, we have this 

rulemaking since -- under the provisions that we are 

pursuing, we have to make the determination that the 

standards are economically justified and the maximum 

improvement is technologically feasible. 

 We have the seven factors in the 

legislation that have to be considered, and we also 

have to get -- one of those factors, we have to get a 

reading from the Department of Justice with respect to 

the impact on competition. We have not done a 

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manufacturer impact analysis. 

 We have a process that was built on a 

recommendation that had been made by ARI, GAMA, and 

AHAM probably 10, 15 years ago, a government 

regulatory impact model which looks at developing 

industry net present value. 

 We don't have that information. In the 

discussion later today on manufacturer impact 

analysis, I think it would be very fruitful to focus 

on that, because if that's going to be done, is it 

going to be done at the extent presented, or are there 

ways that information that is necessary for us to 

reach a conclusion, for Justice to consider, 

information for them that we can just do that which is 

necessary. But we still have to meet the legislative 

requirement and make them stick. 

 FACILITATOR BROOKMAN: Okay. Steve Nadel, 

and then Dr. Ron Lewis. 

 MR. NADEL: Okay. I'm going to attempt to 

answer Jim's question a little bit differently from 

someone who is not speaking officially, but this is 

the fourth major agreement we've had and how it has 

worked in the past. I know there's a couple of 

questions about certain details of this analysis. 

 Typically, what we will do is in our joint 

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comments we will liberally refer to the current 

analysis, quote different figures that will build upon 

the DOE analysis. However, we will probably note a 

couple of places where we might have concerns with 

that joint analysis, so it is part of the public 

record. 

 Typically in the past, as I recall -- and, 

obviously, it will depend on comments from all sorts 

of other people, not just us -- DOE has usually not 

revised the analysis but has just noted in its rule 

that, yes, this analysis provides a firm foundation, 

but there were these concerns about this and this. 

And, therefore, we're not putting great weight on 

those findings. That's how it's typically done. 

Obviously, it all depends upon comments not just from 

the people in agreement but other people as well. 

 FACILITATOR BROOKMAN: Thank you. Thanks 

for the shorthand. 

 Ron Lewis. 

 MR. LEWIS: One of the other areas where 

we could potentially speed things up is as we look at 

scheduling whether it's the manufacturer impact 

analyses, how we do these things and set up the 

schedules and plan for them, the resources and the 

people, the more advanced notice, and the more stuff 

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that's foundational or that's been done in advance, it 

helps us, because we've got three ANOPRs and an SNOPR 

going, plus a lot of other lesser-level activities 

underway. 

 So in resource planning we certainly -- if 

you're helping us to speed this up, we would consider 

that in looking at our resources and what comes first 

and how we're doing things, and would want to fall in 

line and help to speed it up. So we'll do our part 

there of trying to influence it. 

 FACILITATOR BROOKMAN: So I'm eager to 

move on to the substantive presentation. And the 

final comments on -- summary comments are we've just 

had a significant discussion on different process 

avenues. So we'll proceed, then, right? 

 And I look to Don Brundage and to Steve 

Rosenstock to be particularly the keepers of -- to 

make certain we cover the content adequately. Okay? 

Because we will -- because there will be a tendency 

for us to try and go through it expeditiously. 

 Okay. Dave Winiarski, our first speaker 

on behalf of engineering analysis. 

 MR. WINIARSKI: Hi. My name is Dave 

Winiarski. I'm with Pacific Northwest National Lab. 

I'll be introducing the engineering analysis segment 

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of this discussion. I'll probably -- because of the 

recent news, I'll probably try to go through the 

presentation relatively quickly. If there's any 

questions, feel free to -- 

 FACILITATOR BROOKMAN: You've got to get 

close, Dave. And you can look at this screen here. 

 MR. WINIARSKI: Okay. In this segment of 

the discussion, we'll be talking about three separate 

analyses. These are the market and technology 

assessment, DOE screening analysis, both of which lead 

to the engineering analysis. I will be speaking to 

the first two of these. Aris Marantan of Navigant 

will be talking to the formal engineering analysis. 

 The purpose of each of these analyses is 

discussed on this slide. The purpose of the market 

and technology assessment is to characterize the 

market for the commercial unitary equipment that's 

covered under this rulemaking, and to examine the 

available equipment efficiencies on the market and the 

different shipments by product classes that are also 

considered covered products. 

 The screening analysis is used to identify 

design options that can be used to improve the 

efficiency level of the equipment, as well as to 

determine design options which should be screened out 

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as inappropriate for a -- the final efficiency levels 

in the final rule. 

 Finally, there is the engineering 

analysis, the purpose of which is to characterize the 

manufacturer -- manufacture, cost, and efficiency 

relationship for higher efficiency products and to 

evaluate choices between different design options that 

might be used to achieve higher efficiency levels. 

 There are four issues for public comment 

that really are going to be opened up in this segment. 

The first is DOE's approach to the current ANOPR 

analyses and future analyses for split systems and 

heat pumps and other products on the market, the 

treatment of this alternative refrigerant issue, which 

will be coming in 2010 as discussed, the use of the -- 

the use and presentation of the design option analysis 

for higher efficiency levels, and also what those 

maximum efficiency levels should be for this product. 

 Finally, we'd like to get feedback on 

technologies that affect the part-load performance of 

these air conditioning products, but whose benefits 

are not necessarily reflected in the current rating 

procedure. 

 Basically, the product classes that's 

covered and defined under EPCA for this product are 

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air-cooled unitary air conditioners and unitary heat 

pumps, air source products between 65,000 and 240,000 

BTUs per hour. This is basically considered singlepackage equipment with all the components in one 

package as well as split systems with an outdoor 

condenser unit and an inside evaporator section. 

 This is broken into essentially five 

primary product categories. They're shown here, as 

well as the ASHRAE 90.1 1999 minimum efficiency 

levels. Those efficiency levels set the statutory 

baseline that DOE -- minimum levels that DOE can adopt 

for each product category. 

 A brief overview of the market. There are 

approximately 300,000 units that are shipped -- that 

are in this covered product. That number is probably 

a little old. It's probably a little higher than that 

today. This is an expanding market. Of that market, 

the air conditioning units, both single package and 

split systems, account for about 90 percent of the 

market, heat pumps account for approximately 10 

percent of the market. 

 The chart shown at the bottom here 

discusses the air conditioning unit breakdown which 56 

percent are in single-package year-round products. 

These are units of the gas heating section. The 

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remainder of the market is equally split between 

single-package products that do not have a heating 

section or use an electric resistance heating section 

and split systems. 

 The markets currently held-- the majority 

of the market with four -- four large manufacturers 

and two smaller manufacturers have some fairly 

significant niches. There are also some other 

manufacturers who play in different portions of the 

market. They may provide products that are designed 

and suited, for instance, for an industrial setting. 

 As discussed, the year-round air 

conditioning product -- 56 percent of the air 

conditioning product, when you throw in the heat 

pumps, it's about 50 percent of all the covered 

products under this rulemaking, and so the ANOPR 

analysis really focused on an examination of that 

product. 

 Moving on quickly, DOE did a screening 

analysis for this product, as it's required to. In 

that screening analysis, we looked at a number of 

different tools or mechanisms that could be used to 

improve the efficiency of the air conditioning 

equipment. I'll show those here in a second -- the 

ones that DOE decided to. 

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 It used, as the basis for looking at 

improved efficiency of the current rating procedure, 

which uses the EER of the equipment, full load EER. 

And it screened out the criteria that -- or screened 

out design options that didn't meet any of the four 

criteria that have been demonstrated in DOE's 1996 

process rule. 

 These are whether a design option was 

technically feasible, whether DOE felt that it was 

practical to manufacture, install, and service by the 

effective date of the rule, whether a design option 

had any adverse impact on the product's utility or 

availability of products within the market, and, of 

course, whether there's any impacts on health and 

safety. 

 For the most cases, there were only really 

three types of design options that were not included 

in this -- or not passed on to the engineering 

analysis. Those included the use of non-HFC -- HCFC 

refrigerants, the use of a technology called 

electrodynamic heat transfer enhancement, and the use 

of cooper cast motors, which the Department felt were 

not going to be ready for prime-time. 

 Other than that, the Department selected a 

suite of design options that could be used for further 

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consideration in the design option portion of the 

engineering analysis. That suite is shown here. Most 

of these are fairly familiar to industry members, and 

they're used in one form or another to improve product 

designs. 

 A couple of them are less familiar. None 

of them are required to be used in a design option 

analysis. They are just technologies that were not 

screened out based on the process rule criteria. 

 FACILITATOR BROOKMAN: My instinct is to 

stop here just briefly, scan this list, see what you 

think, make comments now on it, if you think it's 

appropriate to do so. 

 Yes, Jim Crawford. 

 MR. CRAWFORD: The immediately preceding 

discussion makes it challenging to figure out exactly 

the degree to which we should be commenting on this. 

Some of the options up there are either very wellknown and inapplicable technology or not feasible for 

one of a number of reasons. 

 And, you know, I would cite things like 

the air-foil and backward-inclined blowers as an 

example. And I would just make the observation that 

there seems to be a notion that industry is unaware of 

these things. The Department has paid contractors at 

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least three times over the last 25 years to examine 

these, and each time the contractor has said what they 

were told to say, which is they are wonderful -- and 

they aren't -- for these applications. 

 We're well aware of them. My company has 

been making backward-inclined huge fans, 8, 10 feet in 

diameter, for decades. There is nothing there that we 

are unaware of, but they are totally inapplicable from 

the standpoint of efficiency, noise, cost, to air 

conditioning products of the type under discussion. 

 And we could go on with some of the other 

technologies that have been on the threshold of just 

revolutionizing the world now for at least a decade or 

two and haven't come to fruition because they don't 

hold the promise that their promoters would have you 

believe. 

 And I'm not going to go on and on about 

this, but the point is I'm going to operate on the 

assumption that -- that things are going to happen as 

they ought to happen, and that is that we're going to 

proceed with the agreement that was outlined or 

discussed in the preceding section. 

 And it's a shame that Michael has left, 

because -- Ron is still here -- I would emphasize -- 

 FACILITATOR BROOKMAN: Michael is here. 

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 MR. CRAWFORD: Michael is here? Okay. 

You're hiding back there. 

 (Laughter.) 

 Oh, I'm sorry. My friends Steve and 

Michael, if I criticize anything that they -- that 

they said at all, it would just simply be that they 

are just wildly optimistic about the ASHRAE process. 

 (Laughter.) 

 The opportunity to get it right is here, 

and we can snatch defeat from the jaws of success. 

But I'd sure hate to see it happen. 

 FACILITATOR BROOKMAN: Jim, of course, the 

Department would welcome your specific comments on 

which one of these technology options, the design 

options, doesn't work and the specifics of why, so 

that they can proceed with that. And not just -- 

 MR. CRAWFORD: Micro-channel heat 

exchangers, air flow and backward-inclined, increased 

evaporator, or condenser fan diameters, and whatever 

they meant by "high-efficiency propeller condenser 

fans." Those are basically -- those four are 

fantasies as far as their potential to significantly 

impact the efficiency of these products. 

 I might go along with deep coil -- deep 

coil heat exchangers have applications. The principal 

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application of a deep coil heat exchanger is not to 

get a more efficient, cost-effective product. It's to 

get a product that has a greater latent capacity, and 

they are outrageously expensive. 

 Each successive row of a multi-row coil 

loses somewhere around 30 to 40 percent of its 

efficiency. So by the time you're in the third row, 

the efficiency of that third row is something on the 

order of .6 or .7 to the third power. And you rapidly 

realize when you get to six and eight rows that the 

contribution of that last row is negligible relative 

to its cost. And, you know -- 

 FACILITATOR BROOKMAN: Okay. Thank you. 

 Other comments on these design options? 

Okay, Dave. 

 MR. WINIARSKI: Okay. Well, the -- 

walking through the design options, basically, as I 

said before, these are technologies that the 

Department felt had the potential to at least 

contribute to enhancing the EER or full-load 

efficiency of products. 

 However, that leads us to the first issue, 

which is really there -- these products -- the energy 

use of these products is not characterized purely by 

full-load efficiency necessarily. There is part-load 

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efficiency issues to contend with, and the Department 

invites some comment on its use of EER as the metric 

and how it should treat technologies that can enhance 

the part-load efficiency but really don't provide a 

significant benefit on the actual full-load EER 

metric. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. This also kind of reminds me of 

the residential rule for air conditioning and heat 

pump rulemaking. But, again, I don't know if the 

Department has had a chance to review it, but I would 

say if the Department could work with industry, if 

there's data out there about, you know, I'll say EER 

and part-load performance, and just any correlations, 

there might be some data out there that you might want 

to look at. 

 I know there was some posted for 

residential product. Maybe there's information out 

there about commercial part-load information, as well 

as EER, and if there's any sort of trend data that 

might be useful for your analysis. 

 FACILITATOR BROOKMAN: Thank you. 

 Other comments on EER as the metric, and 

other part-load efficiency questions? Okay. Not at 

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this time. Yes? Jim Crawford. 

 MR. CRAWFORD: Karen is going to kick me 

if I talk too often here today. 

 FACILITATOR BROOKMAN: Karen, scoot close 

there. 

 (Laughter.) 

 MR. CRAWFORD: I think we need to keep a 

sharp focus on the fact that EER is the metric 

mandated by law. 

 FACILITATOR BROOKMAN: Thank you, Jim. 

Okay. 

 MR. WINIARSKI: With that, I will turn 

this presentation segment over to Aris Marantan, who 

will discuss the engineering analysis project. 

 MR. MARANTAN: Thank you, David. 

 Good morning, everyone. My name is Aris 

Marantan. I'm with Navigant Consulting, and I'll be 

summarizing the Department's engineering analysis. 

 As you can see on this slide, the 

engineering analysis is described by this flow 

diagram. It can be broken up into several discrete 

steps. The first step is product selection, and that 

includes defining equipment classes and establishing 

the baseline units to be evaluated. 

 The second step is the cost model 

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development, which includes selecting the teardown 

units, performing the teardowns, developing a detailed 

bill of materials, developing a cost model, and 

validating the cost model. 

 The third step is the cost efficiency 

curve development, which is the basis for the costbenefit calculations that are performed later on in 

the LCC portion of the ANOPR. That includes 

developing the manufacturer's cost efficiency curves, 

normalizing the curves, and aggregating the curves to 

an industry curve. 

 The next step is the design option 

analysis, which is used to validate the cost 

efficiency curves at higher EER levels. That includes 

identifying the design options, developing the 

performance model, applying the cost model to the 

design options, validating the cost efficiency 

relationships. 

 And, finally, additional analyses are 

conducted, which include the R-410A analysis, which 

compares the cost efficiency behavior of R-410A 

equipment to that of R-22. 

 And, finally, incorporating stakeholder 

feedback in updates to the engineering analysis. 

 Okay. This first step is product 

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selection. The Department considered 30 different 

products for the engineering analysis. Eighteen 

products were chosen for evaluation, and they are 

summarized here on this graph. Four units were chosen 

for physical teardowns, and the remaining 14 were 

chosen for catalog teardowns. 

 Now, the Department, as Dave mentioned 

earlier, identified four product subclasses, and those 

are unitary air conditioners and unitary heat pumps 

between 65,000 and 135,000 BTUs per hour, and unitary 

air conditioners and unitary heat pumps between 

135,000 and 240,000 BTUs per hour. 

 The Department also chose representative 

capacities of 90,000 and 180,000 BTUs per hour to 

represent those two product classes. Those correspond 

to 7-1/2- and 15-ton capacities. 

 Now, the products that were selected were 

selected in consultation with the manufacturers, and 

they represent high shipment volume products within 

those capacity ranges. 

 The next step in the process is the 

development of the cost model. You can see here on 

this slide a breakdown of the components that are 

included in the cost model. I'll describe a few of 

them here. 

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 The direct materials are included as well 

as direct labor. Those include manufactured 

materials, products -- purchased materials, 

fabrication labor, assembly labor, indirect materials, 

that sort of thing. It also includes factory expense 

and shipping, and those combined total up to a 

manufacturing cost. 

 Also included in the cost model are 

corporate expenses such as profit, general expense, 

and sales expense, and those two combined total to a 

total manufacturing product cost. Now, the total 

product cost, in addition to distribution markups, 

equal the total or final consumer price. 

 Okay. This next slide shows a summary of 

the cost model validation. What you see here is a 

summary of the cost breakdown structure for a given 

manufacturer. This cost breakdown structure was 

produced for every manufacturer of the baseline units, 

and represents the individual production cost for the 

components. 

 Individual cost models were generated for 

each product analyzed and reviewed by manufacturers, 

and their feedback was incorporated into the cost 

model. 

 The next step in the process is the 

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development of the cost efficiency curves. You can 

see in this slide that there is a three-step process 

involved with this. The first step is to fit an 

exponential curve to each of the manufacturer's data 

points individually. 

 This was done by using a method of least 

squares on individual manufacturer's data points and 

applying an exponential curve fit to those points. 

The second step is to translate the cost data from 

absolute costs to incremental costs by normalizing 

each of the manufacturer's individual cost efficiency 

curves and translating them down to the ASHRAE 90.1 

1999 level. 

 This corresponds to a 10.1 EER level for 

equipment between 65,000 and 135,000 BTUs per hour, 

and 9.5 EER for equipment between 135,000 and 240,000 

BTUs per hour. 

 The third step and the final step is to 

take the normalized data points and extrapolate the 

industry curve slightly to 12 EER. This is later 

verified in the design option analysis using design 

options. 

 This next slide is a summary of the 7-1/2-

ton cost efficiency results. As you can see here, the 

cost efficiency curve is represented by the black 

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line, and you also see the upper and lower bounds of 

the 95 percent confidence interval. 

 Now, the confidence interval describes the 

accuracy of the curve based on the scatter of data, 

and the Department chose a 95 percent confidence 

interval in this case, which means that the cost of 

the mean value of a sample of products will fall 

within this 95 percent interval. 

 Okay. The next step in the engineering 

analysis the design option analysis. And, again, this 

is used to validate the cost efficiency curve at 

higher EER levels, particularly between 11-1/2 and 12 

EER. And that was done primarily because there were 

no commercially-available products above 11-1/2 EER 

during the time the teardowns were performed. 

 Now, the simulated design option points do 

not influence the industry cost efficiency curves. 

The Department didn't consider these points in the 

curve-fitting procedures. They primarily served as a 

check on the accuracy of the curve at those higher EER 

levels. 

 FACILITATOR BROOKMAN: Yes. Jim Crawford. 

 MR. CRAWFORD: Jim Crawford. I've been 

trying to figure out where to intervene here. And I 

just want to refer to Chart 12, but you don't need to 

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go back to it. But we raised several issues yesterday 

dealing with markups, with discount rates, and I'm 

going to go on the assumption that we do not need to 

repeat all of that again today. 

 I mean, we've got the same recorder, we've 

got the same department people here, we shouldn't need 

to reiterate all that today. 

 The second point that I would like to make 

-- I realize that in looking at these charts I'm 

looking at just kind of heuristic information that is 

not real data on some of this. The suggestion of 

Chart 14 is a very substantial scatter between 

manufacturers, and there's a general tendency to think 

that perhaps the more expensive manufacturers are also 

the ones that are very small. And there are certain 

implications associated with not giving adequate 

attention to the very small manufacturer sort of 

thing. 

 And when I get on to Chart 15, the point 

kind of comes home, because it's real easy for a 

layman like myself to misread that chart when I hear 

95 percent confidence, but I believe I heard the words 

that those are the 95 percent confidence limits on the 

mean. They're not the 95 percent confidence limits on 

the population. 

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 So the scatter suggested by Chart 14 is 

real, and it exists, and it is not reflected in the 

chart on -- is not reflected in Chart 15. That, again 

-- we have to be careful that the intrinsic scatter is 

not buried here through analytical procedures. 

 Thank you. 

 FACILITATOR BROOKMAN: Do you want to say 

why you used that statistical method? 

 MR. MARANTAN: Well, maybe I can explain 

this a little better. The chart that you see on 

Slide 14 is just illustrative, first of all. The 

exact values for the manufacturer curves have not been 

presented, so the chart on the left is just an 

illustrative example of what we're seeing. So the 

relative scale of each of the lines is not exact in 

that case. 

 For Chart 15, the 95 percent confidence 

interval, as Jim stated, is correct when he says that 

that represents the mean value of the population and 

not the population. 

 FACILITATOR BROOKMAN: Other comments, 

please. Tom Eckman. 

 MR. ECKMAN: Am I correct in interpreting 

that Chart 14 is really representing the absolute 

cost, and the chart on page 15 is really representing 

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the difference in the -- 

 MR. MARANTAN: That's correct. 

 MR. ECKMAN: -- incremental cost. So 

we're really talking about two different scales here. 

One is the representation of a slope on the same 

manufacturer's product lines, and the other is a 

representation of a comparison of the prices in 

absolute terms between different manufacturers. So 

it's not even the same -- measuring the same 

attribute. Is that right? 

 MR. MARANTAN: Yes, it is. 

 MR. CRAWFORD: But the manufacturer -- Jim 

Crawford. The manufacturer variability, which 

underlies whatever the real data on 14 look like, is 

gone in 15. It isn't there. 

 FACILITATOR BROOKMAN: Okay. Jim 

Crawford. 

 MR. MARANTAN: Some other questions? 

 FACILITATOR BROOKMAN: Oh, yes. Charlie 

Stephens, please. 

 MR. STEPHENS: Charlie Stephens. We've 

got quite a bit of experience with this stuff lately. 

I've been on quite a few rooftops lately, but the 

variability diminishes substantially when you look at 

incremental costs. And we find it interesting that 

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the smallest manufacturers have the least concern 

about any of this, at least to the point that they 

have -- that they worry about their input. 

 The other thing I'd like to agree with Jim 

on when it comes to markups is that, to a great 

extent, the pricing of a lot of this stuff in 

actuality in the marketplace is arbitrary, almost 

completely arbitrary from what we've seen. 

 And so all you can do in analyzing this 

stuff is come up with some reasonable approximation 

from the kind of curve-fitting that's done of what a 

typical case might look like. It certainly doesn't 

cover all of the ground that we've seen. Sizing turns 

out to be fairly arbitrary as well, but -- 

 (Laughter.) 

 -- you know, we'll talk more about that 

later when the time comes. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

Steve Rosenstock. 

 MR. ROSENSTOCK: Hi. Steve Rosenstock, 

EEI. Just on a little different topic, I'm not sure 

when these curves were created, whether it was this 

year or last year or two years ago, but I am kind of 

curious, especially for the analysis being -- that's 

going to be done for the NOPR is -- at least from what 

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I've read -- read in the trade press, it looks like 

the basic price of steel has doubled in the last two 

years, and the price of copper has gone up by a good 

40, 45 percent. And I'm not sure about other key 

components that go into this equipment. 

 But -- and, again, sorry I wasn't here 

yesterday or the day before that this issue came up. 

I am kind of curious if your model and industry input 

can make adjustments for the fact that, you know, the 

-- you know, the basic components of this equipment 

has gone up and, you know, the curve might be changed 

because of the recent -- what has happened in the last 

two years. 

 Thank you. 

 FACILITATOR BROOKMAN: Graham. 

 MR. STEVENS: Yes, I'd like to speak to 

that issue. The answer is yes, it can, and we will 

make those adjustments. 

 MR. ROSENSTOCK: Steve Rosenstock. Thank 

you. 

 FACILITATOR BROOKMAN: Okay. Did I see 

one other person who wished to comment? I guess maybe 

not. Okay. Then, proceed. 

 MR. MARANTAN: Okay. Continuing on 

Slide 17 now, this slide describes in a little more 

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detail the design option analysis approach, and I'll 

just briefly summarize this. Basically, the 

Department's approach was to examine the condenser 

coil and the evaporator coil and make slight 

modifications to this to arrive at design targets for 

the design option analysis. 

 There was also a limit -- several limiting 

factors that the Department considered, which are 

summarized under this modeling parameters chart here. 

 Okay. Slide 18 shows a summary of the 

7-1/2-ton validation of the cost efficiency curves. 

What we see here are the green points on top of the 

cost efficiency curve for 7-1/2-ton equipment. And as 

a summary, all of the design option points that were 

simulated fall within the 95 percent prediction 

interval. 

 And now in this case the Department used a 

95 percent prediction interval, which means that the 

estimated cost of any particular unit at a specific 

EER level is within that prediction interval, rather 

than the mean of a population as was described for the 

confidence interval. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Are you saying that that 

incorporates the inter-manufacturer variability? 

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 MR. MARANTAN: I'm not sure what you mean 

by that. 

 MR. CRAWFORD: The variability suggested 

by the illustrative information on Chart 14 suggests a 

significant manufacturer to manufacture variability. 

And I'm asking whether or not we're looking -- whether 

that factor is reflected in what you're calling these 

95 percent prediction intervals. 

 FACILITATOR BROOKMAN: Yes, please. 

 MR. ROTH: Yes. Kurt Roth, TIAX. The 

answer is yes, for incremental cost on that curve. 

 MR. CRAWFORD: Okay. 

 FACILITATOR BROOKMAN: Thank you. Jim, do 

you have a follow-on? 

 MR. CRAWFORD: Yes. Sorry. Jim Crawford, 

a follow-on. Maybe I'm misreading this curve, but 

this curve doesn't say that these are incremental 

costs. It says product cost. 

 MR. MARANTAN: Delta. 

 MR. CRAWFORD: Ah. Well, maybe I'll get 

the other glasses out. 

 (Laughter.) 

 Thank you. 

 MR. MARANTAN: Okay. Okay. The next 

slide is ANOPR Issue Number 4. This is on design 

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option analysis and maximum energy efficiency levels. 

And the Department is requesting comments on four 

specific items, and I'll just read through those. 

 The Department invites comments on the 

approach used to conduct the design option modeling 

for verifying manufacturing costs and efficiency 

relationship on the design options selected for 

estimating the manufacturing cost and efficiency 

relationship beyond 11-1/2 EER, other design options 

that the Department should consider, and also 

assumptions for evaluating a maximum technologicallyfeasible design. 

 So with that, I'll open up the floor to 

comments or suggestions on those. 

 FACILITATOR BROOKMAN: No comments on this 

series of questions? Yes, Tom Eckman. 

 MR. ECKMAN: This may be jumping ahead a 

bit, but -- Tom Eckman, Northwest Power and 

Conservation Council. 

 FACILITATOR BROOKMAN: Can you hear him 

okay? 

 MR. ECKMAN: The presumption -- 

 FACILITATOR BROOKMAN: Tom, can you get a 

little closer, please? 

 MR. ECKMAN: The presumption that's done 

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in the performance evaluation for the life-cycle cost 

analysis assumes that the economizer cycle actually 

functions on a -- "flawlessly" I think is the word 

used. And that has not been demonstrated to be the 

case in the field, at least in our neck of the woods. 

 And since economizer functionality in the 

northwest has a lot to do with the performance of the 

system, on an annual basis these two things are 

connected in the sense that if you're not looking at 

design options that improve economizer functionality, 

then the EER that we're getting, because we're 

modeling a flawless performance of the economizer, is 

incorrect. 

 So I don't know exactly how to address 

that, given the discussions earlier about an 

agreement. But looking at design options that make 

the economizer functionality flawless as opposed to 

less than flawless, like maybe de-rated by 50 percent, 

would be something I'd be interested in seeing. 

 FACILITATOR BROOKMAN: Thank you. 

 Charlie, do you have a comment? Charlie 

Stephens. 

 MR. STEPHENS: Yes. Charlie Stephens, 

Oregon Department of Energy. Just a follow-on thing 

to that. I'm not sure we expect that a current 

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baseline model economizer performance would be any 

different than the economizer performance in an 

upgraded, say, EER 11 system unless there was 

something, as Tom suggested, that -- some sort of 

design option that in the upgraded version, the new 

standard level, there was something there to make 

those systems more reliable. 

 So we were looking to see if anything the 

Department would do would address that in particular, 

and, therefore, would there be any basis for modeling 

the performance of the base case versus the upgraded 

case any differently. So far I haven't seen anything 

that would suggest that you could do that. Am I 

right? 

 MR. WINIARSKI: I think so. What I was 

going to suggest -- 

 FACILITATOR BROOKMAN: Dave Winiarski. 

 MR. WINIARSKI: Yes. Dave Winiarski, 

Pacific Northwest Laboratory. What I was going to 

suggest is to move this discussion on economizers into 

the section on the building system and load analysis. 

The economizers, although they affect the load on the 

equipment, are really not a design option for looking 

at EER in the equipment. 

 They in turn, instead, affect the base 

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load that the equipment is under and really have more 

impact on the life-cycle cost analysis. 

 FACILITATOR BROOKMAN: Go ahead, Charlie. 

 MR. STEPHENS: Yes. I think what we were 

looking at there is the fact that if you look at real 

buildings and their energy use, and then you make 

presumptions about the function of the equipment that 

delivers that level of energy consumption and 

efficiency in order to calculate an EER or where that 

building is operating. 

 You may be -- if you've assumed that its 

economizer is operating 100 percent of the time the 

way it's supposed to, then maybe you have the wrong 

EER. 

 MR. WINIARSKI: Right. 

 MR. STEPHENS: Because that does affect 

the overall energy use of the building. And to the 

extent that you're starting with that and calculating 

a performance of the system, then you're probably off 

the base. 

 MR. WINIARSKI: Right. You'd be -- 

 MR. STEPHENS: Right. 

 FACILITATOR BROOKMAN: Dave, get close to 

the mike. 

 MR. WINIARSKI: Sorry. Dave Winiarski. 

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That you may arrive at the wrong EER. That's 

definitely a possibility. 

 FACILITATOR BROOKMAN: Okay. Yes, Jim 

Mullen. 

 MR. MULLEN: Jim Mullen, Lennox. As long 

as we're on the subject, I think one of the -- 

 FACILITATOR BROOKMAN: Jim, closer please. 

These mikes are pretty dreadful, folks, I'm sorry to 

say. You've got to just get them right square in your 

face. 

 MR. MULLEN: One of the thoughts we might 

carry forward to the next time we do this analysis is 

that probably the maintenance costs are understated if 

there are a lot of economizers or other things that 

aren't working on existing equipment. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

Charlie? 

 MR. STEPHENS: Charlie Stephens. Well, 

maybe they're overstated. Maybe we're assuming that 

maintenance is happening that isn't. You know, maybe 

that's why they don't function. I don't know, and I 

don't know -- we'd have to have a basis for assuming 

that that's going to change. And right now our 

research says we don't, but maybe we can make that 

happen. 

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 But there's probably a lot of issues that 

we'll get into I guess in the life-cycle cost 

analysis. We can pick that up then. 

 FACILITATOR BROOKMAN: Thank you. 

 Okay. Yes, Harry. 

 MR. MISURIELLO: Yes, Harry Misuriello 

with the Alliance to Save Energy. As part of the 

design options analysis, I was noting in the ANOPR and 

also in the technical support document that you did a 

lot of model validation, trying to model the actual 

performance of air conditioning units in the lab and 

develop a model to test the performance. 

 And I noticed that in Table 5.8.1 in the 

technical support document there's a table that notes 

the prediction versus the testing results for these 

different models. And it looks as if you hit it 

pretty much dead on within a few percent of actual 

performance compared to the predicted performance. Is 

this the basis of evaluating the design options that 

you considered in this ANOPR? 

 MR. MARANTAN: Yes, it is. One of the 

baseline units was sent to ITS for testing, and that's 

where the results come from. 

 MR. MISURIELLO: So you took existing 

models off -- physical specimens and you tore them 

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down, you developed a series of models to model all 

aspects of the performance of those units, and then 

compared it to actual test results in the lab, and 

came up with performance that looks like it's within 2 

to 3 percent of -- the actual performance was within 2 

or 3 percent of the predicted performance. Is that 

about right? 

 MR. MARANTAN: Yes. One of the baseline 

units was purchased and physically tested at ITS, and 

we have results for that. Subsequent to that it was 

torn down, and a bill of materials was created and the 

development of a cost model was used in conjunction 

with the performance data to create the curve. So 

yes. 

 MR. MISURIELLO: Okay. It looks like a 

lot of care was taken in doing this analysis, and that 

the predicted results conformed well with the actual 

laboratory tests. Is that right? 

 MR. MARANTAN: Yes. 

 MR. MISURIELLO: Thank you. 

 FACILITATOR BROOKMAN: Thank you. 

 Richard Lord. 

 MR. LORD: Yes. Richard Lord with 

Carrier. I was involved somewhat when they did some 

of those models and know what they did, but I'll 

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caution you that if you take a unit and you test it at 

a low EER, and then you try to extrapolate that data 

to a high EER, that you may mislead yourself. Air 

distribution, refrigerant distribution, all become a 

major factor. You're approaching the points with, you 

know, 11-1/2 EERs and 12 EERs of technological limits, 

and things become very unstable up in those regions. 

 And you almost have to go back and retest 

at your extrapolated data. I'm almost concerned that, 

you know, you have extrapolated from 11.5 to a 12, 

which appears to be a linear curve, which it's not in 

reality. 

 FACILITATOR BROOKMAN: Thank you. 

 Jim, please. 

 MR. CRAWFORD: Jim Crawford. I always 

look forward to an opportunity to agree with my 

competitors. 

 (Laughter.) 

 Extrapolation is a word that I shudder 

every time I hear it, particularly in this context. 

That's the way people go off a cliff. They just 

extrapolate the path and right on beyond the edge of 

the cliff. And you're in never never land, and any 

extrapolated data that is not underlain by well-known 

physical laws that justify that is totally without 

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merit. 

 FACILITATOR BROOKMAN: Please. 

 MR. GOETZLER: Just as Jim welcomes the 

opportunity to agree with his competitors, I welcome 

the opportunity to agree with Jim. 

 (Laughter.) 

 FACILITATOR BROOKMAN: Say your name for 

the record. 

 MR. GOETZLER: We understand those 

limitations, and we, of course, have that feedback, 

and that's why we're eager to work with manufacturers 

on accurate modeling for products in those higher EER 

regions, and we began to do that. And in the future 

analysis, as we refine it, we'd be eager to continue 

to do that. So we understand those limitations. We'd 

like to do it right. 

 FACILITATOR BROOKMAN: Thank you. That 

was Bill Goetzler. 

 MR. GOETZLER: Oh, sorry. 

 FACILITATOR BROOKMAN: Okay? Okay. Other 

comments on this slide before we move on? Let's 

proceed. 

 MR. MARANTAN: Okay. Moving on, this next 

slide describes the last step in the engineering -- 

 FACILITATOR BROOKMAN: One process note. 

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In a little bit, folks, we'll take a break, just so 

you're -- for those of you that are interested in 

knowing. 

 MR. MARANTAN: Okay. The final step in 

the engineering analysis is additional analyses, and 

that includes the R-410A analysis. This slide 

describes some of the issues and concerns with R-410A. 

 As mentioned earlier, the purpose of the 

R-410A analysis is to identify any substantive 

differences between the cost efficiency behavior of 

R-410A equipment and R-22 equipment. This is 

important because in 2010 R-22 refrigerant will be 

phased out of new equipment. Several potential 

replacement refrigerants -- it's generally agreed that 

the most likely candidate for replacing R-22 is 

R-410A. 

 In general, the properties of R-410A are 

different than for R-22 including higher operating 

pressures. Thus, there is a requirement for 

modification of components within the system. It's 

important to keep in mind also that the important and 

critical parameters in this analysis are the cost 

differential between the baseline and the higher 

efficiency units, rather than the absolute costs, and 

whether this cost delta differs for R-410A and R-22. 

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 Okay. This slide shows some of the 

preliminary assumptions that were used in conducting 

the R-410A analysis. I'll just run through these. 

Although the design pressures are higher, the diameter 

and thickness of the copper tubing remains the same in 

the simulations. R-410A scroll compressors are at 

least -- are less efficient than comparable R-22 

scrolls but more efficient than low-efficiency R-22 

recips. 

 Higher heat transfer coefficients of 

R-410A provide for slightly lower condensing 

temperatures than R-22 for similar coil designs. And, 

finally, the evaporating temperature limits for R-410A 

systems are the same as those for R-22. 

 FACILITATOR BROOKMAN: Questions on the 

assumptions? Charlie Stephens. 

 MR. STEPHENS: Yes. Charlie Stephens, 

Oregon Department of Energy. I assume that all of 

these things are listed. You're assuming air 

conditioning. 

 MR. MARANTAN: Yes. 

 MR. STEPHENS: Not heat pumps. 

 MR. MARANTAN: Yes, you're correct. 

 MR. STEPHENS: Okay. 

 FACILITATOR BROOKMAN: Thank you. Other 

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questions on these assumptions listed? Yes, Richard 

Lord. 

 MR. LORD: Yes, Richard Lord. Your 

comment on compressor efficiencies being lowered, it's 

actually not the compressor, it's the refrigerant. 

And it's well known in the industry that 410A is 

6 percent less efficient than R-22. Compressor ice 

and tropic efficiencies actually are the same. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. MARANTAN: Okay. This next slide 

shows sample results for the 7-1/2-ton R-410A 

analysis, and what we see here are the green points 

superimposed over the R-22 cost efficiency curve. 

And, in summary, the cost efficiency behavior of 

R-410A equipment is not substantially different from 

that of R-22, as shown by this analysis. 

 Are there any questions on this slide? 

 FACILITATOR BROOKMAN: Yes. Richard Lord. 

 MR. LORD: Yes. Just kind of back on my 

earlier comment about extrapolation, with a 6 percent 

efficiency degradation ,extrapolating from 11-1/2 to 

12 even becomes more exponential. And, you know, we'd 

contend that the curve probably is in error in that 

area. 

 FACILITATOR BROOKMAN: Would you say how 

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you would address such a thing? 

 MR. LORD: Well, with a 6 percent 

efficiency hit, the obvious way to compensate for that 

is added surface area, added material, some of the 

solutions that you have to resolve the problem. As 

you get higher up in the efficiency ranges, those 

costs become more exponential. So I would contend 

that in our data internally analyzing this shows the 

curve to be much more exponential. 

 FACILITATOR BROOKMAN: Thank you. Any 

comments on -- yes, please, Jim Crawford. 

 MR. CRAWFORD: Jim Crawford. Obviously, I 

don't have the model in front of me, but it rather 

looks to me like Chart 22 is, in fact, a direct 

conclusion of Chart 20 and not really an analysis. 

Chart 20 says -- it kind of looks like they followed 

the same trend. 

 And you get over to Chart 22 and say, "Gee 

whiz, look, it follows the same trend." If that's 

what you put in the analysis, that's what you get out. 

 FACILITATOR BROOKMAN: Additional 

comments? Yes, please. Jim Mullen. 

 MR. MULLEN: Mr. Lord's comment reminded 

me that while you should not extrapolate the fans -- 

or the refrigeration system, the same would apply to 

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fans. I think some of the higher EERs in the analysis 

were gained by significantly reducing the blower 

watts. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

 MR. MARANTAN: Okay. The next slide is 

ANOPR Issue Number 2, alternative refrigerant 

analysis. So the Department seeks comments on data 

that can refine or verify the incremental cost 

efficiency relationship associated with R-410A 

systems, and the Department seeks comments on 

alternative refrigerants other than R-410A that the 

Department should consider. 

 FACILITATOR BROOKMAN: Any alternatives 

that come to mind? 

 MR. MARANTAN: Okay. Moving on, the last 

issue in this section is ANOPR Issue Number 1, 

approaches to analyses for split systems, heat pumps, 

and niche equipment. Here the Department invites 

comments on applying the cost efficiency relationships 

developed for single package air conditioners to split 

A/C systems. 

 Secondly, the Department invites comments 

on the approach to address niche equipment classes, 

such as portable units and explosion-proof or 

hazardous duty units. And I'll save the last item for 

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the next slide, which is explained in a little more 

detail. 

 FACILITATOR BROOKMAN: Okay. Jim 

Crawford. 

 MR. CRAWFORD: Jim Crawford. I really 

feel dumb here this morning. Could you explain to me 

what a portable 7-1/2-ton unit is? 

 (Laughter.) 

 MR. MARANTAN: Sure. It's actually a 

7-1/2-ton unit that's mounted on a trailer. It's 

primarily used for temporary cooling. 

 MR. CRAWFORD: That's a 7-1/2-ton unit. 

It -- okay. 

 FACILITATOR BROOKMAN: Jill? 

 MS. HOOTMAN: Jill Hootman, Trane Company. 

We don't design a 7-1/2-ton unit for a portable 

cooling application any differently. Is it on? Now 

it's on. Okay. 

 We don't design a 7-1/2-ton unit for a 

portable cooling application any differently, and we 

have a division of our company that sells portable 

cooling and does trailer application with generators 

on top of it. We make no consideration in the design 

for that application. So I don't think that, you 

know, you really have to consider that. 

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 FACILITATOR BROOKMAN: Thank you. 

 Other comments on these two? We're going 

to save the third one. 

 MR. MARANTAN: Okay. 

 FACILITATOR BROOKMAN: Yes. Richard Lord. 

 MR. LORD: Yes. Richard Lord again. Just 

one comment on heat pumps. Heat pumps are a much more 

difficult system to design. You have to worry about 

both the cooling and the heating operation. Chart 

balance is critical, and, you know, one of the obvious 

approaches to increase efficiency is increase 

condenser coil area, which can be an issue. 

 MR. MARANTAN: Okay. Thank you. The heat 

pumps are actually part of the final slide here, the 

approaches to analyses for split system heat pumps and 

niche equipment. In this case, the Department 

presented an approach at the framework workshop, but 

is, again, asking for stakeholder feedback here. 

 The Department wants to develop the heat 

pump relationship based on market information similar 

to what was done for the ASHRAE process. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. Just looking at this slide -- 

and, again, this language really wasn't kind of stated 

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in the ANOPR. The ANOPR said looking at the -- you 

can look at the -- I don't want to quote the ANOPR, 

but it's basically looking at the analysis and looking 

at the ASHRAE process and input. 

 The way it looks here on this Slide 25, it 

says, "DOE develops -- proposes to develop heating COP 

requirements as in an efficiency standard on the heat 

pumps on the heating side." Is that an accurate 

assessment? Because if it is, it's almost another 

rulemaking. And there was nothing in there, in the 

ANOPR whatsoever, about setting heating requirements 

for the commercial heat pump equipment. 

 MR. MARANTAN: I'll refer that to Dave. 

 FACILITATOR BROOKMAN: Dave Winiarski. 

 MR. WINIARSKI: Well, I'm not going to try 

to usurp DOE on this one. But, basically, the 

Department does a rule; the rule will incorporate 

those heating requirements. So any rule that gets 

published on heat pumps will have both an EER and a 

COP, I believe. 

 MR. ROSENSTOCK: But the reason I'm saying 

it -- is DOE looking to go above and beyond ASHRAE for 

the COPs? That is a very big issue. 

 MR. WINIARSKI: If the methodology was 

presented here, and based on just looking at the 

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curve, that would be the result. And that's what the 

comments -- you know, we're looking to get comments on 

that issue. In light of this previous discussion, I'm 

not sure what -- 

 MR. ROSENSTOCK: Well, then, as a followup -- I'm sorry. I'm sorry. 

 FACILITATOR BROOKMAN: Keep going, Steve. 

 MR. ROSENSTOCK: I'm sorry. 

 FACILITATOR BROOKMAN: No, keep going. 

 MR. ROSENSTOCK: As a quick follow-up, I 

would say, then, as a stakeholder that there should be 

another analysis based on the different design 

considerations, different engineering considerations, 

different life-cycle cost considerations, because -- 

to kind of sneak it through. 

 And there are competitive implications as 

well in terms of the heat -- commercial heating 

market, where one piece of equipment will have higher 

standards than other pieces of equipment, such as 

furnaces and boilers -- do not have higher standards. 

So there are a lot of implications if DOE, again, 

sets standards above and beyond ASHRAE for the COPs. 

 FACILITATOR BROOKMAN: Don Brundage, and 

then Steve Nadel. 

 MR. BRUNDAGE: If you're adding a heating 

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mode COP requirement, don't you have to redo the test 

procedure for this product and open up a rulemaking 

for that? 

 FACILITATOR BROOKMAN: Steve Nadel. 

 MR. NADEL: It's my recollection that 

there currently is a federal COP requirement for this 

equipment. It originally came from 90.1 1989. It got 

adopted as part of federal law, so we currently have a 

COP requirement. And for -- be it commercial 

equipment or with residential equipment, when we 

revise the EER or SEER requirements, we also revise 

the appropriate metric for heating performance. 

 Furthermore, it's my recollection that 

whenever this has been done there has not been a 

really detailed analysis just on the heating. But the 

primary analysis is on the cooling, and then there is 

looking at, for a given level of equipment that passes 

this cooling requirement, what's the average, or 

what's a reasonable COP or HSPF? That's what got done 

in the residential central air conditioner rulemaking. 

 As I recall -- this is because I was on 

the committee at the time -- in 90.1, we developed the 

1999 standard. That's what we did for heat pumps. 

There was not a detailed heat pump analysis, and 

effectively DOE is proposing they do something similar 

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here. 

 FACILITATOR BROOKMAN: Let's let Karim 

follow on, and then we'll go back to you, Steve. 

 MR. AMRANE: Karim Amrane, ARI. Yes, just 

to confirm that, yes, there is a COP requirement in 

EPACT. It followed the ARI Standard 340/360, and, 

yes, I think I agree with Steve. The 90.1 did the 

analysis based on the air conditioners, and then 

correlated that with COP. 

 FACILITATOR BROOKMAN: Go ahead, Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Again, that's a given. That was done for the 

residential as well as 90.1. But as I recall, for the 

residential I believe in the ANOPR analysis there was 

some showing or some indication of what the proposed 

-- at least for the residential, the proposed HSPF 

numbers that DOE was looking at in the ANOPR analysis. 

 There is nothing in the current ANOPR 

analysis whatsoever about the levels that DOE was 

considering for the COPs for commercial heat pumps. 

So, again, it's just a matter of this is something, 

you know, that didn't seem to be even part of the 

ANOPR analysis that DOE was looking to go above and 

beyond ASHRAE 90.1 for COPs. 

 FACILITATOR BROOKMAN: Richard, and then 

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to Charlie. 

 MR. LORD: Yes. Just to caution you -- 

typically what has happened in the past, it's been to 

set the cooling efficiencies and then ratio the COPs 

up. As you raise efficiency levels, those ratios no 

longer really hold truth. And some of the tools that 

you use to get high efficiency and cooling cannot be 

done in heating, so it deserves more than, hey, let's 

just look at the ratio and say, hey, if it's 

10 percent better in cooling, it's 10 percent better 

in heating. 

 FACILITATOR BROOKMAN: Charlie. 

 MR. STEPHENS: Charlie Stephens, Oregon 

Department of Energy. The text here on Slide 24 at 

the bottom says that the Department is inviting 

comments on addressing the energy efficiency for heat 

pumps in a way that's consistent with the ASHRAE 

methodology. 

 Are we looking on the screen there at a 

visual representation of the ASHRAE methodology? Or 

is there some condensed version or description of what 

the ASHRAE methodology is? 

 MR. WINIARSKI: Dave Winiarski, PNL. What 

you're looking on on the screen is basically data from 

the -- I think it's ARI 2003 Product Directory for 

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commercial heat pumps, and the relationship between 

the full-load EER and the COP for those products. 

 MR. STEPHENS: And is that in a 

capsulated, visual form, what ASHRAE did for 90.1? 

 MR. WINIARSKI: I would say not exactly. 

What ASHRAE was provided with was not something that 

showed the scatter, but basically a curve from the 

industry that provided the relationship between fullload EER and COP. 

 MR. STEPHENS: Okay. I guess what I'm 

trying to say here is it's going to be tough for some 

of us who aren't familiar with the ASHRAE methodology 

to make a comment on whether it's appropriate to use 

it again, unless we know what it was in the first 

place. 

 (Laughter.) 

 MR. WINIARSKI: The -- 

 MR. STEPHENS: So we could use some help 

here on what that is. 

 MR. WINIARSKI: I was actually involved in 

that process a little bit. The basic methodology that 

ASHRAE used was the industry supplied a curve that 

related full-load EER to high temperature COP. The 

EER economics were developed, and an EER level was 

chosen for that product heat pump. And then the COP 

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was read off from the curve, and then that went 

through the ASHRAE negotiation process. But that was 

the first step in that process. 

 MR. STEPHENS: When you say "the curve," 

was this done for each model or each combination of -- 

 MR. WINIARSKI: This was done based on an 

assessment of heat pump products in the industry. So 

it covered a lot of products. Imagine if the -- the 

curve was the line on one class of equipment. 

 MR. STEPHENS: Okay. So you did it by 

class, and it was aggregated data, then. 

 MR. WINIARSKI: Right. For -- I believe 

there were two classes essentially, single package 

heat pump/air conditioners. I don't remember if split 

systems were included explicitly, or whether it was 

heat pumps together as one class. 

 MR. STEPHENS: Okay. Well, I think I'm 

kind of falling with Mr. Lord down here, that maybe we 

need a little more data, a little more -- a little 

closer look at this stuff, especially at the high end, 

before I -- I would be comfortable settling on a 

number here. 

 FACILITATOR BROOKMAN: And you're 

suggesting you need to know more about the ASHRAE 

methodology also. 

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 MR. STEPHENS: Yes. And I'd kind of like 

to see some analysis and detail of what this looks 

like as you go up the scale for the heat pumps. I've 

been focusing a lot on heat pumps lately, and I find a 

lot of credibility in what Mr. Lord has conveyed here. 

 FACILITATOR BROOKMAN: Michael Martin. 

 Steve, I'm coming back to you, and Don 

also. 

 MR. MARTIN: Yes. I was chair of the 

Mechanical Subcommittee while a lot of this was going 

on. 

 FACILITATOR BROOKMAN: Michael, you've got 

to get close to that mike. 

 MR. MARTIN: Okay. I'm going to swallow 

it here. 

 (Laughter.) 

 I think you give the methodology that 

ASHRAE used a lot more credit than it deserves. It 

was a negotiation between a lot of people who didn't 

agree, and it was based on input that was provided by 

ARI a very long time ago. But it's a convoluted 

negotiating situation, and I don't think you can be 

that precise as to what the methodology was. And it's 

certainly not well documented. 

 FACILITATOR BROOKMAN: Thank you. 

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 I saw Don, and then Steve, and then Jim. 

 MR. BRUNDAGE: I have a problem with how 

casually heat pump efficiency is being brought into 

consideration with no real obvious mention of it in 

meetings up to this time, because for my company it 

changes from an issue we're somewhat indifferent on to 

being a competitive issue. 

 So I think that you need to take a very 

close look and independent analysis at the heating 

coefficient side before making any decisions on it. 

 FACILITATOR BROOKMAN: Thank you. 

 Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Looking at Chart 25 -- and, again, I'm going to say I 

would guess that this is a pretty -- I would say a 

pretty accurate representation of the models and the 

various efficiencies out there on the market. 

 If you look at the square and the triangle 

where ASHRAE 90.1 is, and then you say, "Well, if we 

go, well, just maybe 8 or 10 percent above those 

levels, that doesn't sound too bad." Well, you're 

above 3.40, and looking at this graph there's only one 

dot there. I don't know how many -- if you look above 

a COP of 3.4, there's one dot. I don't know how many 

models or manufacturers that represents, but there 

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could be a product availability issue there, depending 

on where DOE decides to go. 

 So, again -- and, again, I don't know if 

there is anything in the negotiation process that has 

dealt with this issue. It is good. There could be a 

lot of competitive issues out there that could have 

quite an impact on various heating markets. 

 Thank you. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Jim Crawford, Trane 

Company. I commented earlier about extrapolation, and 

another evil of comparable magnitude is using 

regression analyses on scatter plots. This data 

clearly is a very widely scattered set of data. And 

to throw a linear regression or any other single 

regression on that data is absolutely ridiculous. 

 And if any sense is to be made from that 

data looking for relationships -- and the data has got 

to be disaggregated some way or other to begin to 

understand what physical characteristics drive points 

to be on the left-hand side versus the right-hand side 

versus the middle. And without that, this aspect of 

the analysis has no merit whatsoever. Okay? 

 FACILITATOR BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: Just a comment from the 

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recently-concluded under 510 air conditioning rule. 

In that one, your HSPF, if I recall correctly, went 

from 6.6 to 7.7, about a 16 percent increase, while 

the cooling efficiency went from 10 to 13 to 30 

percent increase. So based on what you're seeing 

there, I realize it's different equipment, but it's 

harder to get improvements in heating than it is in 

cooling. 

 FACILITATOR BROOKMAN: Thank you. 

 Richard Lord. 

 MR. LORD: Yes. Just to back up Don's 

comments that, actually, as we started to design to 

some of those requirements, the heating has dominated. 

Even though it did not go up as much, we've had to 

push on the heating side. 

 One other comment, too, just to add into 

this -- that when you start looking at heat pumps, our 

industry has been changing, and the building 

construction is getting tighter and tighter and 

tighter. And what you find is the changeover 

temperatures are now much lower, so the amount of 

benefit you get in heating mode is now less. And you 

should look at that in your study as to what your 

economic benefit is going to be to the end customer. 

 FACILITATOR BROOKMAN: Steve Nadel. 

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 MR. NADEL: One other thing I'd add on 

this issue is as part of our consensus agreement we'll 

be making very specific recommendations for COP. And 

in general -- I don't even remember the exact numbers 

-- we didn't push as hard on COP I think as we pushed 

on EER. So this will become public shortly. 

 (Laughter.) 

 FACILITATOR BROOKMAN: Thank you. 

 Dave Winiarski, do you want to add 

something? 

 MR. WINIARSKI: I just wanted to add one 

last comment for Don, which is, if you want you can 

look at the chart there and look at the relative 

improvements in both EER and COP. And I think you'll 

see the same issues -- the relative improvement in COP 

is quite a bit less than it is in the EER. 

 FACILITATOR BROOKMAN: Thank you. 

 So any additional and perhaps final 

comments on the engineering analysis before we go to 

break? Then, let's go to break. It's -- we're about 

five minutes after 11:00. Let's resume here in this 

room at 11:20. 

 I think everybody knows the coffee kiosk 

is now one floor down. The snack bar is not in 

operation. At the bottom of the escalators there is a 

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coffee kiosk. The cafeteria is also open across the 

way. 

 11:20 we'll start back up. 

 (Whereupon, the proceedings in the 

foregoing matter went off the record at 

11:07 a.m. and went back on the record at 

11:27 a.m.) 

 FACILITATOR BROOKMAN: Please start taking 

your seats, folks. We'd like to begin here. 

 So let's begin, folks. Dave Winiarski 

presenting Life-Cycle Cost Analysis. And also Greg 

Rosenquist. 

 MR. WINIARSKI: Well, hi, again. This is 

Dave Winiarski, and I'll be again initiating the 

discussion of the life-cycle cost segment of this 

public meeting. Basically, in this segment we're 

going to discuss three separate analyses. These are 

the energy use and end-use load characterization 

analysis, the analysis for determining the markups on 

the equipment to the end user, and both of these will 

feed into DOE's life-cycle cost and payback period 

analysis. 

 I will, again, speak to the energy use and 

end-use load characterization, and Greg Rosenquist 

will speak to the other two analyses. 

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 The purpose of each of these analyses is 

shown on this slide. The energy use and end-use load 

characterization is designed to develop the electrical 

energy use as well as peak electrical demand 

characteristics for commercial buildings that use 

products covered under this rulemaking. 

 And we wanted to use that to provide these 

characteristics for selected efficiency levels for the 

equipment, as well as across a diverse set of 

commercial buildings and climates where this equipment 

is used. 

 The markup analysis is used to 

characterize the distribution channels from the 

manufacturer to the end user for these products, and 

from understanding those distribution channels 

characterize how the prices paid by customers for 

their products are related to the cost to the 

manufacturer. 

 Both of those pieces of information feed 

into the life-cycle cost and payback period analyses. 

The purpose of that is to develop the life-cycle cost 

savings for the customer for purchase of higher 

efficiency equipment. 

 There are a number of issues that the 

Department has recognized are relevant to this 

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section. These issues are shown on this slide. The 

first four of these speak to the energy use and enduse load characterization. The fifth, equipment 

markups, is one that we've heard before, and we'll 

allow people to make comment on. 

 And then, there's a number of issues that 

are directly related to the life-cycle cost analysis 

for improved efficiency levels in the equipment. 

 I'll pause for a second and let people 

look through the issues list. 

 FACILITATOR BROOKMAN: On Slide 4. 

 MR. WINIARSKI: I'll move quickly into the 

energy use and end-use load characterization. The 

Department felt that for this particular product that 

there was a need for a building simulation approach in 

terms of assessing the energy use and the impact on 

electrical demand, which are important in determining 

the actual cost to operate these products in the 

commercial sector. 

 The Department wanted to capture a broad 

diversity of cooling loads. These equipment are used 

in lots of different building types and in lots of 

different locations across the country. 

 And the Department felt that to -- again, 

to attack the problem of the cost of electricity on 

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these products that they needed to characterize in 

detail the impact of changes in the efficiency level 

of a product on the electrical energy profile for the 

building as well as look at the hourly and peak 

building electrical load impact. Those feed into the 

LCC analysis. 

 Briefly, I'll talk about the simulation 

process. Essentially, what's done is a three-step 

process. In the first step, we attempt to 

characterize a sample of building stock that used 

equipment that's covered under this rulemaking. In 

this case, because the rulemaking -- the ANOPR effort 

focused on packaged equipment, we characterized the 

building stock in the 1995 CBECS that reported the use 

of packaged cooling equipment. "Packaged" in that 

document generally refers to single-package rooftop 

air conditioning equipment, and there is some 

discussion of how that characterization was done in 

the building NOPR, how the building types were 

selected. 

 There is some data in CBECS that's used to 

characterize the building. Other data has to be 

developed from other sources, because CBECS is limited 

in the data that it can provide. But from that 

characterization, we build up the building models that 

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can then be simulated using an 8,760 hours a year 

energy simulation tool. 

 The tool used for this purpose is a tool 

known as BLAST. It's one of three tools now that have 

been supported in the past by the Department of Energy 

for doing these type of building energy analyses. 

 Finally, these simulations are performed 

using BLAST, and post-process to provide hourly 

streams of whole building energy end-use profile. By 

"end use" here I'm referring to things like cooling, 

ventilation, lighting, plug load energy. Those 

electrical energy streams are then sent to the lifecycle cost analysis. 

 Because the simulation methodology is a 

little bit complicated, I wanted to put this slide in. 

Basically, the process -- the first step of the 

process is we develop the characteristics for the 

building all with the exception of the geometry of the 

building, and develop a building prototype that has 

all of the characteristics but has this fixed 

geometry. 

 That building is simulated using the BLAST 

model and an ASHRAE design day simulation. That 

design day simulation is used to establish or make an 

estimate of the peak cooling loads that would be on 

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that equipment. 

 Once that design day run is accomplished, 

a certain amount of oversizing of the equipment is 

allowed for in the model. In this case, we chose 

numbers between 0 and 25 percent oversizing, based on 

the availability of discrete sizes of equipment models 

in any given manufacturer's line. 

 The equipment that has been sized in 

design day is then reput back -- the sizes are put 

back into the simulation, and the building is then 

resimulated in step 2 to provide an annual energy use 

stream -- again, for this building with all of the 

characteristics except geometry looking like a 

specific CBECS building. 

 A process is then used to modify the loads 

to reflect the actual or our belief of what would be a 

typical geometry for the building based on the data 

that we have from CBECS and other sources. That's the 

scaling process over in step 3. 

 And then, finally, an hourly stream of 

data comes out of that streaming or that scaling 

process, and that stream of data is then adjusted 

because -- for the fraction of the building that is 

not cooled by packaged equipment. 

 Earlier when I talked about the 

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development of the prototypes, we pulled samples from 

CBECs for buildings for which at least 70 percent of 

the building floor space was cooled by packaged 

equipment. We have to be able to adjust for the 

remainder of that floor space in this model, so that 

we can look at what the impacts of a change in 

efficiency of covered products would have on the 

electrical energy use profile for the building. 

 FACILITATOR BROOKMAN: A question? 

 MR. WINIARSKI: Yes. 

 FACILITATOR BROOKMAN: Please, Jim. 

 MR. CRAWFORD: Yes. I'm kind of surprised 

by the nature of the building you use as your 

prototype. I would have expected that to be a chiller 

building, not a unitary building. 

 MS. MEYERS: At least a very large unitary 

building. 

 MR. CRAWFORD: If it's three stories, it 

begins to present problems in itself. And then, when 

you start breaking it up into a zillion zones, it 

looks more like -- certainly, it does not look like a 

typical unitary building. And particularly when you 

start looking at the distribution size of the large 

unitary equipment, the building is probably also too 

large to be typical of the family of unitary 

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buildings. 

 MR. WINIARSKI: If I could speak to that, 

I don't want to go into the details of that analysis 

here. Those details of the choice of building and the 

scaling methodology are referenced in a report that 

was provided to industry I think back in 1996. There 

are some reasons for it, but the choice of building 

size here is not and does not necessarily reflect that 

of unitary equipment. I would agree with that. 

 FACILITATOR BROOKMAN: Charlie Stephens. 

Don Brundage first. 

 MR. STEPHENS: Charlie Stephens, Oregon 

Department of Energy. I think that is old 

information. Our data in our market suggests, along 

with comparisons to other people's markets, which 

finds that ours is not all that peculiar, that 

packaged rooftop equipment is going more and more on 

top of buildings that look like this, and chilling 

systems are used less and less, except for the largest 

of buildings. 

 We're seeing packaged rooftop stuff in 

places where we never really saw it 10 years ago, and 

that market is, we think, the growth market that's 

responsible for a lot of the escalation in shipments 

that you see that was referred to earlier. The 

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300,000 is low. 

 And one of the main reasons for this is 

because they are being used in multi-story buildings 

more and more. We see them on five- and six-story 

buildings out where we are. It's not that hard to 

overcome them -- the physical factors that allow you 

to put these things in anymore. 

 FACILITATOR BROOKMAN: Do you have the 

numbers, Charlie? Do you know what the shipments 

would be? 

 MR. STEPHENS: No, it's not the shipments 

per se. It's we participate in the design and 

specification of a large number of projects out where 

we are, because we offer tax credits for increased 

efficiency, and because we're consulted a lot on -- at 

the early stages of these buildings. And more and 

more we're participating in these processes. 

 They are selecting rooftop equipment. 

It's just -- that's the way it's going. Schools, same 

way. You know, we're seeing a lot of these things 

that are evolving. We participate directly in the 

process, so we see it directly every week. 

 FACILITATOR BROOKMAN: Okay. Don 

Brundage. 

 MR. BRUNDAGE: I would agree with Jim, and 

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I would also say that your sample building, while it 

may be possible to do a three-, four-, five-, sixfloor building with a packaged system, you really need 

to pick what's more representative. 

 If you look at single-level commercial 

space or one- or two-floor office space, that's where 

package units are. And it really doesn't have that 

much to do with square footage. A 200,000 square foot 

Wal-Mart Supercenter, which is all one story, will 

have a huge number of packaged rooftop units with more 

zones than you can count. But they're going to use 

packaged rooftop units. 

 FACILITATOR BROOKMAN: Jim McMahon. 

 MR. McMAHON: Jim McMahon from Berkeley 

Lab. There's a confusion here that I'd like to try 

and help clear up. The 15-zone, three-story prototype 

is the starting point for a simulation. But if you 

look on the right-hand side of the slide, where it 

says CBECS-inferred size and geometry, the buildings 

that are actually simulated are the ones that are 

taken from CBECS that use this kind of equipment. So 

it's dominated by smaller buildings. This is just a 

starting point for a prototype from which PNL scales 

to the appropriate building. 

 FACILITATOR BROOKMAN: Say why that's your 

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starting point. 

 MR. WINIARSKI: I can explain why that's 

the starting point and briefly detail -- it's really a 

mathematical construct. You know, we're running 

through a simulation program. The simulation program 

is basically building up mathematical models of heat 

transfer between different spaces in the building, 

different zones of the building. 

 The 15-zone, three-story prototype 

actually was developed originally with some of the 

ASHRAE work, or just slightly pre-dated that. It has 

-- you'll notice it's 15 zones. Basically, the idea 

here was for -- you have five zones per floor on the 

building, four perimeter zones, each with a specific 

orientation and a core zone on each floor. 

 What that allows you to do is you have at 

least part of the building that corresponds to part of 

any other building out there on the market. It has a 

top floor, it has a bottom floor, it has a east-facing 

or a west-facing floor. And having all that 

information together allows you to take the results 

from essentially those zones of the building, those 

orientations of the building, and mathematically 

construct what the impact would be on a smaller or 

larger size building -- for instance, expand the core 

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and change the perimeter size, that type of thing. 

 MR. BRUNDAGE: So one of your -- 

 FACILITATOR BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: Don Brundage. So one of 

your component zones would be -- would it include 

something like upper floor, west-facing, or -- 

 MR. WINIARSKI: Exactly. 

 MR. BRUNDAGE: Okay. Without knowing all 

the details of the modeling, it just seems like a 

three-floor large building is going to be so different 

from where your predominant usage of this equipment 

is. But if you did such as a top floor of a building 

with various orientations, that should reasonably 

simulate what a single-floor result would be in a 

commercial building. 

 So if you -- 

 MR. WINIARSKI: Right. 

 MR. BRUNDAGE: -- did it that way, I can 

see where it would be okay. 

 MR. WINIARSKI: Right. 

 MR. McMAHON: Don, this is Jim McMahon. 

That's exactly right. What you do is take the CBECS 

building, the specific building, look at that and 

decide what part of this 15-story -- of the threestory, 15-zone prototype applies. And so you may 

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ignore the middle floor if it's a two-story, and so 

on. So you make it fit. 

 MR. WINIARSKI: Right. 

 FACILITATOR BROOKMAN: Yes, please. And 

your name for the record? 

 MR. PHAM: Hung Pham, Copeland 

Corporation. I just have a question I hope the 

Department could clarify. The part I struggle the 

most with is a chart -- something that simply relates 

for a given tonnage and a given EER. What is the 

range of energy consumption? 

 I just found that this -- the longest 

amount of details and all that stuff really boils down 

to that chart, and I couldn't find it anywhere. I 

have to plow through tons of material to get it. 

 FACILITATOR BROOKMAN: Can you state again 

which chart it is? 

 MR. PHAM: Can you plot for a given 

tonnage in the EER -- in this case, two classes -- 

7-1/2 and 15-ton -- plot the energy consumption range 

for a given EER? 

 MR. WINIARSKI: That could be done. 

 MR. ROSENQUIST: Yes. Greg Rosenquist, 

Lawrence Berkeley Lab. That's provided in the LCC 

spreadsheet if you do a sample calculation. 

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 FACILITATOR BROOKMAN: Can you look for 

that? 

 MR. ROSENQUIST: I also think it's 

provided in Chapter 6 of the TSD at the back. 

 MR. PHAM: I know -- sorry. Hung Pham 

again. I know that can be done, Greg, but can -- I'm 

just asking because I don't know how many of us in the 

room have looked at that spreadsheet and actually 

played with it. 

 FACILITATOR BROOKMAN: Okay. So maybe 

while we're continuing here, we can take a search and 

see if it's in the TSD. And we'll return back to you, 

okay? We'll look for that. 

 Other questions on these -- well, I guess 

we're still on simulation methodology and moving 

towards the simulation inputs. 

 MR. WINIARSKI: Right. Basically -- 

 FACILITATOR BROOKMAN: Excuse me. Steve 

Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock. EEI. 

This might be a little premature, but I was just kind 

of curious if you were able to actually get some 

actual, you know, metered -- end-use metered data, 

either I'll just say from either some electric 

utilities or other distribution companies or EPRI or 

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Primen. You know, there's a lot of end-use metering 

out there. I was just wondering if you had a chance 

to look over that data. 

 You know, you did the simulations -- and, 

oh, here's some utility data that kind of shows what's 

-- at least on a whole building basis kind of what -- 

your simulation versus the actual data, just to see, 

you know, how -- how good the correlation was. 

 MR. WINIARSKI: Right. I can speak to 

that a little bit. We have not gone through a lot of 

external data sources that might be available to the 

utilities for this. That type of information would be 

appreciated, if that could be brought to the 

Department's attention. 

 We did do a comparison with CBECS. We'll 

talk about that a little later. CBECS, however, is 

not metered data, and we're fully cognizant of that. 

 FACILITATOR BROOKMAN: So let me clarify. 

Hung, from where I sit, it looks like Charlie just 

showed you the table. 

 MR. PHAM: Yes, I just saw it now thanks 

to Charlie. I didn't see that page. 

 FACILITATOR BROOKMAN: Okay. And so is 

that all you need at this point, or do you want the 

Department to try and respond to something else? 

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 MR. PHAM: I think it doesn't show the 

variation, though. 

 FACILITATOR BROOKMAN: Right. 

 MR. PHAM: I think we talk about tons of 

buildings and tons of lightings and fan consumptions, 

all kinds of stuff. For a given tonnage and given 

EER, what is that range? That table doesn't show it. 

 FACILITATOR BROOKMAN: I see. So you 

interpret what he needs to -- 

 MR. WINIARSKI: I believe what you want is 

you want to essentially get a relative energy use per 

ton type number, and a range of how that varied across 

the U.S. market. 

 MR. PHAM: Yes. I think it would be 

relevant to see the sensitivity, because in the end 

what we are talking about is the tonnage and the EER 

standard. And we're talking about all kinds of energy 

savings. I have yet to see the sensitivity between 

the two. We make so many assumptions, it's very hard 

to capture it. I think a simple chart like that might 

give a better feel. 

 FACILITATOR BROOKMAN: Greg Rosenquist. 

 MR. ROSENQUIST: Yes. I just want to say 

we can provide that information. It's in the LCC 

spreadsheet. We can't extract it in a simple way, but 

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we can, again, compile it and provide that certain 

range of information for you. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. PHAM: Hung Pham again. I mean, all I 

was trying to get a feel for is if we go for a certain 

ER standard, does that represent the average of the 

energy savings among all the buildings? Is that what 

we're trying to do? I'm not sure I know what the 

range is. 

 FACILITATOR BROOKMAN: Okay. 

 MR. PHAM: That's why I'm asking. 

 FACILITATOR BROOKMAN: Okay. Can you 

answer that now? What the average would be in -- 

among the range of buildings? 

 MR. ROSENQUIST: Again, I think it's on 

that page in Chapter 6 that you provided with him. 

And we have the LCC spreadsheet, so we could actually 

look at it if you really wanted to get into it now. 

 FACILITATOR BROOKMAN: Maybe at lunch, 

Hung, maybe at lunch you could -- or even now you 

could look at it carefully and see if they need to do 

an additional run or provide additional information. 

 Charlie, go ahead. 

 MR. STEPHENS: Yes, Charlie Stephens. 

There is actually quite a bit of interesting 

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information right -- you know, plus or minus two pages 

of that page that I showed him. There's -- one of the 

most interesting and useful ones is the by building 

type, fraction of energy use, by the individual pieces 

of the system. 

 You can actually see that there's quite a 

variation depending on the building type you're 

looking at. You know, between a grocery store and an 

office building, there are some fairly major 

differences there in the end-use loads and those that 

are served by a rooftop unit. So you'll see some 

pretty big differences by building type. 

 And the problem is I think they did a 

great job on the analysis. You know, we've done a lot 

of modeling in our part of the world over the years, 

and I think they did a great job with the analysis. 

But it doesn't boil down really well to a 

simplification, unfortunately. 

 And they've done their best, but I think 

if you want to see something that's less aggregated 

you'd have to back up a few steps and present it in a 

different type of graph than what we've arrived at, 

which I think -- as Greg says they can do. But what I 

saw made a lot of sense based on what we know. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

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Jim Mullen. 

 MR. MULLEN: I was going to hold off until 

David made it through a couple of slides. But he's 

hopelessly bogged down, so I'll have -- 

 (Laughter.) 

 FACILITATOR BROOKMAN: I just passed the 

mantle of facilitator to Jim. 

 (Laughter.) 

 MR. MULLEN: All right. I'd like to point 

out that we have a very serious concern with the 

energy calculation and the results shown in this 

analysis. This I believe is probably the weakest, 

lowest confidence level part of this whole operation. 

 If you look at the review of analysis in 

support of proposed ANOPR funded and paid for by DOE 

with SENTECH, on comparison of BLAST simulation 

methodology and CBECS estimates of energy use, I'd 

like to quote a sentence. It says, "Unfortunately" -- 

 FACILITATOR BROOKMAN: Page would be? The 

page? 

 MR. MULLEN: 38. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. MULLEN: "Unfortunately, the analysis 

used to support the ANOPR is seriously flawed in a 

number of aspects, seriously calling into question the 

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accuracy of energy use, customer cost, and most other 

aspects of the analysis." And I certainly don't 

portend to be an expert on building loads and building 

simulations and building analysis. 

 But I think some of these people were 

probably fairly knowledgeable, and, therefore, I would 

caution that anybody that takes these numbers verbatim 

is probably walking on the long end of a short plank. 

 I think Dave talked about the building 

loads. The part that we do know something about is 

equipment simulation. The equipment simulation that 

was in blast I believe is based on a 40-ton cylinder 

unloading compressor with a fixed evaporator 

temperature and head pressure controls that kick in at 

100 or 110 degrees Fahrenheit, which is in no way 

representative of the equipment that's being modeled. 

 The equipment being modeled is generally 

multi-compressor. It does not have head pressure 

controls unless it's going to operate at ambience less 

than 35 or 40 degrees, which is a lot lower condensing 

temperature than 100 or 110 F. 

 In an easy, simple calculation that we 

did, I would guess that the equipment wattages per 

energy use is probably overstated in the range of 10 

to 20 percent. The other thing that was commented in 

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the SENTECH analysis is that the ventilation loads are 

quite aggressive for what probably exists in real 

practice, which, again, drives up the energy use. 

 MR. WINIARSKI: And Jim and I have spoke 

on this on a number of occasions, and we appreciate -- 

I think the Department felt that they wanted to get as 

much input at the same time from many stakeholders. 

 FACILITATOR BROOKMAN: Karim, do you wish 

to comment? 

 MR. AMRANE: Yes. This is Karim Amrane 

with ARI. I would like to second a point made by Jim 

Mullen here. I think this building simulation 

analysis is the weakest point in this analysis, in the 

whole thing. So it's very important that DOE look at 

the comments made by the peer reviewers and try to 

address their concerns, because we do agree with the 

comments made in this report. 

 FACILITATOR BROOKMAN: Thank you, Karim. 

 Additional comments on this subject, since 

we're on it? Yes. Pham? 

 MR. PHAM: Hung Pham again. Just one more 

clarification point for me, so I understand. Are we 

saying that a building characterization, the way we 

aggregate it, the energy consumption between 11 over 

10 EER assumption would be 10 percent? Is that how it 

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works? Or that's not quite the relationship? 

 MR. WINIARSKI: No. No, that's not how it 

works. 

 MR. PHAM: That's what bothers me is that 

-- if that's not the case, then I think we are kind of 

having two correlation, and we set a standard on one. 

That's confusing to me how we do that. I couldn't 

find that relationship in the charts anywhere. 

 MR. WINIARSKI: On the -- I don't recall 

the actual figure number. There is a graph at the end 

of Chapter 6, which shows the cooling energy 

consumption as a function of EER. You may want to 

take a look at that and look at the relative change. 

 MR. McMAHON: This is Jim McMahon. That's 

page 6-58. 

 FACILITATOR BROOKMAN: Thank you. 6-58. 

 MR. PHAM: Thank you. 

 FACILITATOR BROOKMAN: I want to -- Steve, 

before we go to you, I want to see if we can close as 

many of these issues as we can before we move on. 

 So, Hung, here comes 6-58 right there. 

 Jim, do you want to follow-on while he's 

looking, follow-on Jim Mullen's comment? Jim Crawford 

speaking. 

 MR. CRAWFORD: Jim Crawford. Yes, I just 

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-- I guess I'm kind of puzzled. If I understand 

correctly, the Department paid SENTECH to do this 

review of the activity, the analytical activity, and 

it certainly seems to have some significant bearing on 

these proceedings. And I guess -- SENTECH is not 

here, are they? 

 MS. KAPPAZ: I'm here, but I didn't take 

part in writing this. 

 MR. CRAWFORD: Yes. Well, I guess I would 

maybe just express a disappointment that SENTECH is 

not being -- has not been called upon to make a 

formal presentation of their report for balancing this 

meeting. And I guess I would like to state it more 

strongly, but I'll let it go at that. 

 FACILITATOR BROOKMAN: Thanks, Jim. 

 Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Just for everybody's information, if you look at 

Figure 6.3.4 in the technical support document, it 

does show, based on various building types, the six 

that are shown here, cooling load as a percentage -- 

the simulated percentage of the annual energy use -- 

cooling load ranges from 7 to 15 -- excuse me, 16 

percent from the annual energy usage. So just -- 

that's one little -- based on their simulation, so 

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just as another one point of reference for everybody. 

 One thing about the simulation -- and, you 

know, simulations are very tough, and they can be very 

complex. But especially with package units, and 

especially with multiple package units compressors, 

there is issue of usage and diversity factors. 

 Even on the EER day, you have 10 package 

units with two compressors per package unit, if you 

think that all 20 compressors are working on that peak 

day, it isn't going to be happening. Just based on my 

experience with demand-side management programs, in 

fact, we actually had the controls on second 

compressors of package units on a storage facility, 

like a Storage USA or one of those storage facilities. 

 And it was just amazing -- even on the 

hottest days that -- how many compressors were already 

off when the utilities sent out a signal to shut off a 

second compressor. 

 So I think part of the problem -- and, 

again, it can't be a difficult situation -- is the 

fact that with the diversity factors -- and, again, I 

know California utilities did a lot of analysis of 

diversity factors of cooling equipment, it does make 

it a lot tougher in terms of what is the actual energy 

savings because of the various loadings and unloadings 

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of, you know, compressors within a package unit and 

then multiple compressors across the same building 

with different units. 

 Thank you. 

 FACILITATOR BROOKMAN: Charlie Stephens. 

 MR. STEPHENS: Yes, I -- Charlie Stephens, 

Oregon Department of Energy. I think in responding a 

little bit to what Steve said, I think I made a 

comment earlier about sizing being random or -- 

 (Laughter.) 

 MR. ROSENSTOCK: Arbitrary. 

 MR. STEPHENS: I think you'll find that 

compressors not being on could have something to do 

with oversizing factors in the marketplace, because 

I've watched contractors size these things. And I 

don't know what rules they're using, but I can tell 

you they don't look at the load of the building very 

often. 

 So there's a lot of -- the problem I'm 

speaking to here is the fact that anybody who thinks 

that these units operate the way they're modeled in 

the lab or tested in the lab is deluding themselves. 

And the fact is, when you have to do some sort of a 

modeling exercise to come to a conclusion, so 

everybody can settle on one number for one class of 

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equipment, you're going to have to simply this 

somehow. 

 And until the industry manages to make a 

product that's divorced from the input of contractors 

who install the stuff, who design -- you know, who 

size the stuff and who maintain the stuff, you're 

forced to contend with matching actual performance if 

you're trying to go to a database like CBECS to see 

what the energy use of the buildings really are, and 

try to match that up with the behavior of the systems 

that are supposedly attached to it. 

 There's going to be some simplification. 

I don't find very many problems with the way the 

simplifications have been done here. I think in the 

data we've looked at just in our own marketplace 

50 percent of the economizers in the market are not 

functioning or not functioning the way they were 

intended to function. 

 And I think the age of the installation in 

that ranges from about one year to about 15 years, and 

there doesn't seem to be a lot of correlation between 

how long the unit has been there and whether the 

economizer is functioning properly. That's just one 

issue. 

 But there's lots of issues with equipment 

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actually in the field. And I don't want to see DOE 

get hung up on minutia as they try to parse out what 

the incremental performance is going to be from EER 9 

to EER 10, because the differences that you're going 

to see between EER 9 and EER 10 on the same building 

are a hell of a lot smaller than the arguments we're 

having over whether they've correctly characterized 

that one building's energy use. 

 FACILITATOR BROOKMAN: Richard Lord. 

 MR. LORD: A couple comments that go along 

with this. I was kind of holding off on them, but on 

the equipment models, one of the things that has 

happened over the years is the part-load operation of 

our units have changed quite dramatically, you know, 

where we've gone from single compressors with cylinder 

unloading to multiple compressors. 

 And I think the point that -- maybe it was 

Jim was trying to make -- was that you can -- if you 

base your model on this older technology for part 

load, that you may overstate your savings, that a lot 

of things that the manufacturers have done now for a 

given, say, 10 EER -- the part-load efficiency might 

be 30, 40 percent better than it was for the older 

unit. 

 And, you know, unfortunately, a lot of our 

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standards don't recognize part load. Even though 

there is an IPLV, it's really not a good measurement 

right now. And so that's one of the things just to 

look at. 

 The other comment on the economizers -- I 

was deeply involved in that study, and it was done in 

California. What happened on a lot of that is -- and 

it's, unfortunately, the way our contractors and 

service people run. They disconnect economizers 

because it's one less thing to maintain. So you find 

out a lot of economizers that may have worked have 

just been disconnected because they don't want to 

worry about the maintenance. 

 And, you know, it gets to the issues that 

I think ASHRAE is trying to address, and others are 

trying to address, is maybe some of the bigger savings 

that we could get in this country would come from good 

maintenance, not from just pushing the full load 

efficiency up. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. STEPHENS: Just a point of 

clarification. Charlie Stephens, Oregon Department of 

Energy. We're aware of the California study, but the 

study I'm referring to as our own, we're going to hear 

the report here on October 19th about the actual 

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results. But it -- we're not getting radically 

different results in our part of the world than 

California saw. 

 FACILITATOR BROOKMAN: Thank you. 

 Jim Crawford, and then Don. 

 MR. CRAWFORD: Jim Crawford, Trane. It's 

a shame that ACCA isn't here to take some of the 

beating for all of this. 

 (Laughter.) 

 There has been a few statements made that 

are potentially misleading. Charlie has used the 

"random sizing" phrase here two or three times. And I 

understand why he says it, and I'm not going to 

dispute him on that. 

 The point that I do want to make, though, 

is in most parts of the country a system that is sized 

to the EER measuring point -- 95 degrees Fahrenheit -- 

or to the local design condition is undersized. And 

that's kind of a heresy to say that. I live in a part 

of the country where it's not unheard of to experience 

temperatures that are 10 to 20 degrees above design 

temperature. 

 And when you are trying to satisfy a 

customer, the customer doesn't want to hear, "Well, 

ASHRAE says so and so." The customer buys an air 

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conditioner to provide comfort in that building, just 

like they buy a heating system to provide comfort in 

that building. And if a system is running flat out 

with design conditions, it's undersized. 

 FACILITATOR BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: I would agree with what Jim 

just said. There is legitimate reasons to slightly 

oversize equipment. If you didn't and it ever went 

off for some reason on a hot day, you'd never be able 

to catch up, which would be a highly undesirable 

result in most commercial buildings or buildings of 

any type. 

 The other thing -- we've been trashing the 

modeling pretty good here. And I -- I haven't had a 

chance to dig into it enough to know how truly bad it 

is, but very rarely in modeling are you looking at 

some double-blind test to see if you can get back to 

the energy use of a building, not knowing what it is. 

 Using it as you're doing it here, as a way 

of modeling efficiency options and the differences 

between the options, is a lot less tough a test than 

to perfectly model a building in that manner. So, 

yes, modeling is not perfect, but it's better than the 

alternatives. 

 FACILITATOR BROOKMAN: Thank you. 

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 Additional comments? We've spent quite a 

bit of time on this segment. Final comments on this 

section before we move on or keep going with the 

presentation? 

 Okay. Let's go. 

 MR. WINIARSKI: All right. If I can make 

actually one final comment, which is if there are 

ideas or methodologies or, in particular, suggestions 

for how this could be improved in the future, please 

don't hesitate to send them in to the Department. I 

mean, we're always interested in how this can be 

improved for, if not this effort, further follow-on 

efforts. 

 FACILITATOR BROOKMAN: Yes, Harry. 

 MR. MISURIELLO: Yes. I've been looking 

at building simulation models for a long time, and 

you're right; they're never perfect. But I think by 

focusing on what might be a few flaws in this process 

ignores the strengths of the overall effort, which is 

-- the results are tied into the major characteristics 

of the United States building stock that uses this 

kind of equipment. End-use metered data and accepted 

profiles used in analysis for standard-setting was 

fully incorporated in this process, looking at the 

ASHRAE profiles for standard-setting the ELCAP data, 

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and so forth. 

 And these are strengths that tie the 

analysis results into actual real building stock. 

This is not a true design exercise. This is based on 

real buildings. 

 And I guess one point I'd like to hear a 

little more about if we have time is about modeling. 

There were thousands of simulations done. Each 

building in the CBECS sample was modeled in some 

fashion to create an enormous database of results 

that, again, were tied to reality with the low 

profiles and the actual building characteristics. And 

I just wonder if you could just elaborate a little bit 

on that. 

 MR. WINIARSKI: Well, that actually feeds 

a little bit into the next slide here. The next slide 

-- I'll go over it very briefly, and you can ask 

questions on particular elements of it. But I try in 

here to discuss sort of the sources for the inputs, 

and the inputs are really what drive the simulation 

models for buildings. 

 There is a certain amount of information 

that we can get directly from the CBECS building 

sample. Some of this is the -- CBECS will tell us 

what type of building it is, they will tell us the 

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floor area of the building, they'll tell us the number 

of floors, and they'll give us some hints about things 

like the wall and roof construction and the occupancy 

of the building, at least in terms of times of use, 

etcetera, number of hours per week, that type of 

information. 

 That really isn't at a level that's 

detailed enough to actually build up the building 

model directly. So there are some other pieces of 

information that we have to infer from data that EIA 

CBECS has provided. For instance, CBECS doesn't tell 

us the location of the building. They tell us the 

location within, in some instances, maybe 3- or 400 

miles from where it might have actually been located. 

 That's -- so what we do is we've gone 

through a process to take the information that is 

available in CBECS in terms of the Census Division the 

building is in, and the climates, and try to assign 

those buildings using a probabilistic methodology to 

-- given annual weather data files that we can 

actually use in the simulation. 

 Other things that are very important -- 

window/wall ratio in the building. That's not 

available in the 1995 CBECS set, and so we had to 

develop a distribution of window/wall ratios by 

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building type from a previous CBECS survey and then 

assign that to any given -- probabilistically to any 

given sample in the '95 set. Aspect ratio and the 

building use schedules to a large extent. 

 We know the hours of operation reported in 

the survey, but that's about it. We don't know the 

hours of operation of the equipment within the 

building. 

 Finally, there is types of information 

that are derived from completely exogenous sources. 

Those are things like the equipment power densities, 

the actual occupancy density for the building in a 

large number of cases, and the system oversizing 

factor that we had developed an assumption for for 

this effort. 

 That type of data is probably developed in 

a fair amount of detail within the TSD. If there's 

particular questions, I can try to answer them up 

here, or I can answer them offline for anyone who is 

interested in how the modeling was done, how the 

buildings were characterized. 

 The results from the simulation were for 

-- I didn't mention there were 1,033 buildings in the 

sample. For each of those buildings, we simulated the 

building at one of -- or each of 10 different possible 

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EER levels for the equipment. 

 Again, this is for single-packaged cooling 

equipment only, and from that we produced the streams 

of hourly electrical consumption data for the 

building, as well as an estimate for the number of 

either 7-1/2-ton or 15-ton air conditioners that might 

be used to serve the loads in that building, at least 

in terms of the packaged cooling equipment loads. And 

that data is then fed directly into the life-cycle 

cost analysis effort that Greg Rosenquist will talk 

to. 

 So are there any further questions? 

 MR. LORD: Can I ask one question? 

 MR. WINIARSKI: Yes. 

 FACILITATOR BROOKMAN: Richard Lord. 

 MR. LORD: Yes, Richard Lord. Dave, on 

the -- when you scaled the EER, did you scale the part 

load at the same ratio? 

 MR. WINIARSKI: The process in terms of 

scaling EER looked at the -- in the 15-zone model, 

there are a certain -- the building is then -- those 

15 zones are then collapsed to represent zones that 

might be served by one piece of equipment. And the 

EER -- or the EER at any given point, any given hour 

in the simulation from those -- the zones that are 

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collapsed together is weighted, given the amount of 

load on it. 

 So effectively that's exactly what's done. 

The part-load profiles are essentially scaled based 

on the loads that might be on that piece of equipment. 

 MR. LORD: My question was more aimed at 

the equipment models. You know, if the EER of the 

unit was 10, and then you scaled it up to 11, did the 

part-load scale by the same 10 percent? 

 MR. WINIARSKI: Yes, the part-loads scale 

directly. 

 FACILITATOR BROOKMAN: Okay. Jim 

Crawford. 

 MR. CRAWFORD: Jim Crawford. On the chart 

up there on the screen, what was the range of the 10 

efficiency levels that you analyzed? 

 MR. WINIARSKI: The range of the 

efficiency levels starts at the current baseline of 

8.5 and went up to 12. 

 MR. CRAWFORD: Thank you. 

 MR. WINIARSKI: Okay. If there's no 

further questions on that, there's a number of issues 

that are obviously developed from this whole process. 

The first of these is DOE's method for selecting a 

sample of buildings that it would use in this 

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analysis. 

 Again, the sample consisted of six 

particular building types that are shown here, and the 

sample selected was based on buildings for which at -- 

in effect, at least 70 percent of the floor space in 

the building is cooled by packaged equipment according 

to the CBECS survey data. 

 That -- to give you an idea of that, this 

sample represents, according to CBECS at least, 73 

percent of the cooling energy for packaged cooling 

equipment that's out there in the nation. 

 FACILITATOR BROOKMAN: Yes. Steve 

Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. Just as a quick clarification, in 

food services is that restaurants, stand-alone 

restaurants, or is that grocery stores, or is it both? 

 Just because it's -- 

 MR. WINIARSKI: Grocery stores I believe 

are separate. This is restaurants, essentially. 

 MR. ROSENSTOCK: Thank you. 

 MR. WINIARSKI: Mr. Crawford. 

 MR. CRAWFORD: Would you please say again 

what this 70 or 73 percent is, and how that 

corresponds to the words on the piece of paper? I 

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think I heard -- between heard and read three 

different interpretations. 

 MR. WINIARSKI: The selection process 

looks at the fraction of the floor space that is 

cooled as well as the fraction of the floor space that 

is cooled by unitary packaged equipment. The end 

process of that is that the selection process 

basically selects buildings for which at least 70 

percent of the floor space cooled -- pardon me, at 

least 70 percent of the floor space in the building is 

cooled by packaged equipment. I hope I said that 

correctly. 

 MR. CRAWFORD: Well, earlier you had said 

something about this representing 70 percent of the 

cooling energy of some category of buildings, and 

that's why I was confused. 

 MR. WINIARSKI: There are three numbers 

essentially that are discussed that are all sort of 

right around that 70 percent. Basically, if you look 

at the CBECS use, the total use for packaged cooling 

equipment in CBECS, this sample represents roughly 73 

percent of that total packaged cooling. 

 So there's about 27 percent of the 

packaged cooling that's in buildings that were not in 

this sample, again, according to the CBECS estimates 

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for cooling energy. 

 FACILITATOR BROOKMAN: Are there any 

additional comments on building sample selection, the 

process as featured there in Slide 10? 

 MR. WINIARSKI: The second issue we've 

gone into a little bit of detail. I'll just present 

it here again. I think we've heard some of the 

comments. But there is a simplification in the 

modeling here, which is that where air-side 

economizers were reported in the CBECS data sample, 

they were assumed for that building in the model and 

for all of the equipment in that building in the 

model. 

 Not only that, the assumption was that the 

equipment actually operated as it does in the 

simulation. In other words, it operated perfectly 

without failures. It was connected, and a further 

simplification is that it was modeled with an enthalpy 

control strategy which helps to maximize the benefits 

of the economizer. And there are other control 

strategies that could have been assumed. 

 So the Department is looking -- I think 

we've got some comments on that. We'd like to get 

further comments on what methodology would be a better 

choice for modeling this equipment, again looking at 

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what the performance might be 10, 15 years out, 

essentially when the systems are on the market. And 

also, whether the idea of using CBECS as the data 

source for which buildings should have the economizers 

was appropriate. 

 FACILITATOR BROOKMAN: Tom Eckman. 

 MR. ECKMAN: I don't have a good option 

for modeling these, because the mode of failure really 

determines how well they work, and we don't know the 

-- we're just beginning the process of sort of 

understanding why they failed and whether they're full 

open, full shut, etcetera, etcetera. So I can't 

really give you much assistance there right now. 

 I would note, however, that, you know, 

what this assumption does is make the economic 

analysis a conservative analysis, because it assumes 

that the refrigerant cycle is actually not being 

operated when the economizer is handling most of the 

load. 

 So the duty cycle on the refrigerator 

compressor unit is less than would be the case in 

actuality in the field, and so that any of the 

economic analysis that falls from this is on the 

conservative side. So, you know, while it's 

unfortunate that they don't work from a national 

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energy perspective, at least for the rulemaking 

process, we're -- we've got a conservative assumption. 

 MR. WINIARSKI: Right. At least in terms 

-- in that particular assumption, that aspect of the 

analysis. 

 FACILITATOR BROOKMAN: Yes. 

 MR. LORD: Yes, Dave, one point of 

reference that might help you is your typical 70 

percent thing. But our data says that about 70 

percent of our units get shipped with economizers. I 

don't know what your building model said, but you 

might go back and check that. 

 FACILITATOR BROOKMAN: Okay. Richard Lord 

that was. 

 Steve Nadel. 

 MR. NADEL: Yes. You should check with -- 

I think it's the New Buildings Institute. They 

recently did a study that looked at a sample of units 

and how well the economizers are working in practice. 

So there is some data about percentage of units in 

different types of categories. 

 FACILITATOR BROOKMAN: Excellent. Thank 

you. 

 Charlie Stephens. 

 MR. STEPHENS: Yes, Charlie Stephens, 

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Oregon Department of Energy. That study is the one 

they're doing for us. I would have -- 

 (Laughter.) 

 The other one -- I just -- one thing I 

would put in here at this point is I haven't yet seen 

anything in what has been presented in the analysis so 

far that tells me that I should use a different 

assumption at any given EER level than I use at other 

EER levels, with regard to economizer, economizer 

functionality, and everything else. 

 In other words, I don't see a higher 

likelihood that an economizer on an EER 10 unit will 

fail or be different in the way it behaves in the 

field than one on an EER 9 unit. They're essentially 

-- we treat them the same so far, because we haven't 

come up with anything that says that they're different 

on an incremental basis. So we just presume the same 

thing regardless of the EER level so far. 

 FACILITATOR BROOKMAN: Thank you. 

 Yes, Jim. 

 MR. MULLEN: Jim Mullen. A follow-up on 

the economizer conversation, and something Dick said 

sort of stirred this. But there is a lot -- I don't 

disagree that there's a lot of data that says 

economizers don't work and -- or aren't working on 

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equipment that's surveyed in the field. But the next 

piece of the puzzle that's needed is why they aren't 

working, and I never see that reported. 

 I don't know if economizers are -- if they 

break or, to Dick's point, if somebody disconnects 

them because they're too much of a maintenance hassle, 

or what the story is. But if you've got some data 

coming, Charlie, will it contain some of the rationale 

for why they weren't working? 

 MR. STEPHENS: That's what we're trying to 

get at, the failure modes and why the failure modes -- 

whether it was a control, whether it was linkage, 

whether it -- what caused the failure. 

 MR. MULLEN: Good. I applaud your 

efforts. Thank you. 

 FACILITATOR BROOKMAN: Richard. Richard 

Lord. 

 MR. LORD: Richard Lord. Actually, there 

was another peer project that looked at the 

economizers, and I was involved in that one. And some 

of the data is in there that says why they failed, and 

they've tested enthalpy switches, they tested linkage, 

and I believe there's actually some requirements 

coming out as to how to make them better. 

 MR. STEPHENS: Yes, that's -- 

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 MR. LORD: So it's good stuff. 

 MR. STEPHENS: Looking at the peer 

research, in addition to the ones that have been in 

the Northwest as part of the scope, that we've got 

NBI. 

 FACILITATOR BROOKMAN: Good. Okay. Other 

questions related to -- or comments related to 

economizer usage, control, strategy, and performance 

assumptions? 

 And, Charlie, you and Tom will make that 

report available as soon as it's available. 

 MR. STEPHENS: Yes. As soon as we have 

it, yes. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. WINIARSKI: A third issue that's very 

relevant to these proceedings is the Department's 

treatment of fan energy for this equipment. Most of 

the equipment that's covered under this rulemaking -- 

and, actually, there's a certain class that isn't, but 

most of the equipment covered under this rulemaking 

incorporates the supply fan blower, both in the test 

procedure and in the actual piece of equipment that's 

put in the building. 

 As such, that becomes sort of a covered 

portion of the energy use for this particular product. 

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 And it's covered not only during the -- or it's -- 

the use of the fan is not only for cooling within the 

building but also for the heating that might go on in 

the building when, for instance, the operation may be 

a furnace that's primarily being used here. 

 Because of the assumption the Department 

essentially accumulated all of the fan energy savings 

that might incur from a higher EER level, there was an 

assumption made as to what that fan energy improvement 

might be for those higher EER levels. And that's 

accrued for the energy savings analysis and passes 

into the life-cycle cost analysis. And the Department 

would like to get some comments on the assumptions for 

modeling fan power, whether a different approach 

should have been done, as well as how it's being 

treated in the analysis. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. Again, I have to say I really 

didn't look at this section, but I'm just kind of 

curious. I think for the fan energy usage you really 

need to seize it. Are they constant volume systems or 

variable air volumes? 

 Their constant volume systems -- again, or 

if you thought there was a percentage of them as 

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they're being used. Their constant volume systems 

savings are zero. They're always going to -- in many 

cases, they're always going to, you know, put out the 

same CFM regardless of cooling or heating or 

ventilation modes, until they're turned off by an 

energy management system -- you know, startup versus 

start-down. 

 FACILITATOR BROOKMAN: Richard Lord. 

Let's let him go first. 

 MR. LORD: Actually, to add a little bit, 

there's a lot of -- fans aren't applied very properly. 

I mean, first of all, we know ductwork is not sized 

right. It leaks. The other thing -- there's a study 

that was actually done along with the economizer where 

they looked at how fans are being run. 

 And to really meet code you've got to run 

an indoor fan continuously to meet ventilation. Found 

30 percent of them were cycling on and off, but the 

thermostats weren't even programmed. And so you can 

get different results depending on what it is, really. 

 So it's a hard one to judge. 

 MR. ROSENSTOCK: And, again, there is -- 

obviously, there is a cycling issue. It all depends 

on, you know, operation. But, again, are there -- how 

many of them are actually on, I'll say, a VAV system 

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and, you know, have some sort of control where it's 

actually reducing the energy output of the fan? I 

mean, it's one thing to obviously consider, but it 

could be, again, pretty small. 

 MR. WINIARSKI: The assumption that was 

used in the modeling is that all of these are constant 

volume systems, and I suspect that that's -- most of 

the shipments are constant volume systems. 

 FACILITATOR BROOKMAN: Okay. Charlie, and 

then Karim. 

 MR. STEPHENS: Charlie Stephens. Yes, I 

just want to agree with Dick. That is pretty much the 

way things are in the field, and I -- but I can also 

say that I don't think we found in our own work any 

incremental difference. I don't think there's any 

varying of those conditions based on EER. I think, 

you know, you see the same thing on a wide variety of 

efficiency of equipment out there. 

 And, you know, some industries have -- as 

Tom was pointing out to me, have -- have taken the 

trouble to make sure you can't do things backwards. 

You know, the aviation and electronics industry come 

to mind. But you can wire some of this stuff 

backwards or not turn it on or otherwise not connect 

it. You know, there's a lot of ways to screw these 

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things up, and we've seen them all. But it -- again, 

I don't think we see any variation based on EER. 

 FACILITATOR BROOKMAN: Karim. 

 MR. AMRANE: This is Karim Amrane, ARI. 

Dave, I mean, in your analysis I believe you have 

assumed that as the EER of the equipment increases, 

the fan power decreases. 

 MR. WINIARSKI: In the energy analysis, 

that's the case. As the EER improves, the process 

used was a steady decline in fan power at the 

different EER levels. There was no design option 

analysis there. 

 MR. AMRANE: Because the question is: how 

confident are you about this assumption? I mean, I 

think we've shared with you some data that shows that 

it's not -- it doesn't apply to all equipment. There 

is some equipment that you would guess it will happen. 

But for the equipment, the improvement in 

inefficiency was not achieved by decreasing the -- by 

decreasing the fan power. 

 MR. WINIARSKI: Right. For those who 

don't know, ARI did share data with us. We've also 

examined data out there on the market looking at 

product catalogs and everything. And he's exactly 

right. There's a huge scatter in how manufacturers 

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modify the fan power and the product at each EER 

level. 

 I think what we saw from some of the data 

was, you know, roughly half showed a definite 

improvement, and sometimes a more significant 

improvement than we actually modeled. And others 

showed no improvement whatsoever. 

 FACILITATOR BROOKMAN: Jim Mullen. 

 MR. MULLEN: To take on what Karim has 

said, and what David is mentioning here, I think on my 

top 10 list of what we could do better in an analysis 

next time -- this is about number 4. I think if you 

look at the data there is no clear trend that lower 

watts go down with higher EERs. 

 That's built into this analysis as it 

stands now, and it's a double whammy because you get 

part of it during cooling operation. But as I recall, 

about one in four watts charged to the cooling system 

are used in the ventilation mode. So essentially 

you're leveraging high ventilation loads and lots of 

lower operation to gain higher EERs in this analysis. 

 MR. WINIARSKI: That's exactly right. 

 FACILITATOR BROOKMAN: Other comments on 

fan energy consumption? Jim Crawford. 

 MR. CRAWFORD: Yes, Jim Crawford. There 

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was a comment made a few moments ago about the 

electronic industry practices and the aviation 

industry practices. And before you go too far with 

those kinds of analogies, I invite you to compare the 

cost or price per pound of delivered goods in our 

industry and in those industries. 

 We don't get $100,000 a pound. And if we 

could, we could probably solve that problem. 

 (Laughter.) 

 FACILITATOR BROOKMAN: Okay. Final 

comments on fan energy consumption. We're moving on 

to BLAST and CBECS estimates of energy use. Slide 13 

for those of you that are referring to your slides on 

your page. 

 MR. WINIARSKI: This issue is discussed a 

little bit in the review document that was mentioned, 

as well as in the TSD. Basically, the simulation -- 

or simulated cooling energy use for the building was 

compared against EIA's own estimates for the same 

CBECS sampled building, sort of at an aggregate level. 

 In looking at that, I believe that the 

BLAST modeling that was done for this showed about a 

10 percent increase, or 10 percent higher cooling 

energy consumption, than that CBECS reported from its 

own modeling efforts. 

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 The Department is basically seeking some 

comments on the value of comparing the simulated 

energy -- or cooling energy use with the CBECS model 

results beyond what's sort of shown in the document, 

in the TSD, given, again, that these are both 

estimates, and if there are other sources that should 

be provided or looked into. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: This is Jim Crawford. If 

you have a 10 percent difference between the model and 

the presumably measured data, it seems that you've got 

to do something to adjust your model, so that you 

offset that. Relative to -- and this would be in 

terms of on average, but if your average building from 

one source and the other source is about the same, and 

the variance is about the same, the fact that building 

to building happens to be -- or for a given building 

it happens to be off by even a significant amount, who 

cares? What you've done is you've simulated another 

building. 

 MR. WINIARSKI: Yes. And to be clear 

here, the CBECS end-use data at least is not -- is not 

metered data. It's basically from a different 

modeling process. 

 FACILITATOR BROOKMAN: Okay. Steve 

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Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Again, there is a lot of end-use data out there. 

There are studies -- ACEEE, some of their summer 

studies. There is also a database -- I think it's 

called MAISY. I think that's still around -- M-A-I-SY -- that does other -- has other either -- I'm pretty 

sure they received a lot of data from utilities or 

other sources where they put in information. 

 There's also BOMA for office buildings. I 

mean, different -- there might be different trade 

associations, like the National Restaurant 

Association, there might be some information out there 

that might be of use to you that kind of addresses 

some of these issues. But, again, EPRI and Primen 

might also have other end-use data or end-use metering 

type of data that might be of use to you -- again, 

just a comparison. 

 MR. WINIARSKI: As a calibration -- 

 MR. ROSENSTOCK: Yes. 

 MR. WINIARSKI: -- roughly -- 

 MR. ROSENSTOCK: Absolutely. 

 MR. WINIARSKI: -- we're in the right ball 

park. 

 MR. ROSENSTOCK: Absolutely. 

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 FACILITATOR BROOKMAN: Thanks, Steve. 

 Final comments on BLAST and CBECS? 

 MR. WINIARSKI: Okay. If there are no 

more comments, I'll turn this over to Greg Rosenquist. 

 FACILITATOR BROOKMAN: Do you all want to 

just get up and stretch? 

 MR. ROSENQUIST: Do you want to try to get 

through this really quickly? 

 (Laughter.) 

 MR. DePRIEST: It won't happen, Greg. 

 MR. ROSENQUIST: Well, Jim said that, you 

know, the first portion of this is going to be on 

markup, so because it was presented yesterday it's 

possible that we could get through it relatively 

quickly. 

 MR. LEWIS: This is Ron Lewis. I just 

want to make sure that -- that comment was a good 

comment. But if there are differentials that need to 

be considered between yesterday and today, if there 

are different thoughts, we need to capture those. So 

I don't want to rush by this with that assumption. 

 FACILITATOR BROOKMAN: Yes. Let's go to 

lunch. It's 12:35. My watch says 12:31, so -- and 

the cafeteria closes at 2:00. 

 MR. ROSENSTOCK: Is this room going to be 

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locked or -- 

 FACILITATOR BROOKMAN: This room will be 

locked. 

 MR. ROSENSTOCK: Okay. 

 FACILITATOR BROOKMAN: And so let's do 

resume on time at 1:30. Okay? 

 (Whereupon, at 12:32 p.m., the proceedings 

in the foregoing matter recessed for 

lunch.) 

 FACILITATOR BROOKMAN: So we're going to 

resume, and Greg Rosenquist is going to finish off 

with -- where are you, Greg? 

 MR. ROSENQUIST: I'm going to start off 

with the markups. 

 FACILITATOR BROOKMAN: The markups. 

 MR. ROSENQUIST: Markups for equipment 

price determination. 

 FACILITATOR BROOKMAN: And that is slide 

number? 

 MR. ROSENQUIST: Number 14. 

 FACILITATOR BROOKMAN: Thank you. 

 MR. ROSENQUIST: Of the LLC Analysis 

Package. So I'm hoping I can get through this 

relatively quickly, like I said before, but we'll see. 

So where I'm picking up is in the LLC Analysis with 

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the markups for equipment price determination 

analysis, and the purpose is to determine customer 

prices based upon manufacturer prices. We use markups 

to transform those manufacturer prices into customer 

prices, and we do that by characterizing distribution 

channels. That is how equipment goes from the 

manufacturer to the customer. And we analyze 

different market segments, specifically the 

replacement market and new construction. And for 

those companies that are involved with the 

distribution of the equipment, we look at their 

finances or balance sheets, and we analyze their 

direct cost, their expenses and their profits to come 

up with the markups. 

 Our inputs are firm balance sheets for 

trade associations representing the wholesalers, 

mechanical contractors, and we use U.S. Census Bureau 

data for general contractors. And the output are 

baseline incremental markups, which I'll discuss on 

the next couple of slides. 

 So this slide shows you the distribution 

channels. And again, this is the way in which the 

equipment goes from the manufacturer to the customer. 

And in the typical distribution channel where over 80 

percent of the equipment is distributed, we have a 

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manufacturer who sells it to a wholesaler, who in turn 

sells it to a mechanical contractor, and who in turn 

sells it and its installation to a general contractor, 

and then who finally sells it to a customer. So at 

each point in this distribution channel, we develop 

the markups to again transform that manufacturer price 

into a customer price. 

 In the other distribution channel, the 

national account, that's for customers who purchase 

large amounts of equipment, and who deal directly with 

the manufacturer, so they can typically negotiate a 

lower price for the equipment relative to what they 

could get in the typical distribution channel. 

 This next slide talks about the type of 

markups that we generate, which are these baseline and 

incremental markups. And both markups relate how a 

customer price relates to the cost of goods sold. And 

the cost of goods sold is how a wholesaler or 

contractor, what they do for -- how they cover their 

expenses relative to what they pay for purchasing and 

handling in the case of a mechanical contractor 

installing that equipment. It's also commonly 

referred to as "Direct Equipment Cost." 

 For the baseline markups, they're used to 

relate the price of the cost prior to a change in 

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equipment efficiency, so we're looking at how a 

wholesaler contractor would cover their expenses under 

the situation prior to the increase in equipment 

efficiency. 

 All the contractors and wholesalers 

expenses are covered under the situation plus profit, 

and we include such things as direct labor costs, 

which are the executive and sales personnel salaries, 

payroll and occupancy expenses like rent and 

utilities. We also include non-direct labor costs, as 

well, which are like advertising, insurance and 

depreciation. 

 We have a situation where some portion of 

that wholesalers or contractors costs don't increase 

when the cost of goods sold increases. And so for 

this situation we developed these incremental markups, 

and again, they relate to incremental change in the 

customer price to the incremental change in the cost 

of goods sold. 

 And again, in this situation, what we're 

looking at is when the cost of goods sold increases, 

not all of those expenses need to be covered, so we're 

assuming that direct labor costs that would be covered 

under the baseline markup are not covered in the 

situation of the incremental markup. 

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 What is included are the non-direct labor 

costs and the profit, so because fewer expenses are 

covered in the incremental markup situation, its value 

is always lower than in the case of the baseline 

markup. 

 This gives you an example of the type of 

values that have been generated through our markup 

analysis for the typical distribution channels and the 

national accounts. We characterize each one of the 

markups with a range of values with these probability 

distributions, and we're also providing the average 

value here, so you can see the relative magnitude of 

each markup. 

 Also note that you can see here that the 

average incremental markup value is lower than the 

baseline markup value. On the national account I'm 

just showing the average values there. They're lower 

than the -- the overall markup that you get in the 

national account is lower than the overall markup that 

you get in the distribution channel. 

 And then finally I'm showing in the last 

table the overall weighted average markups. And this 

is taking into account the weighted representation of 

the typical distribution channels in the national 

account, and you see that the baseline value is 2.31, 

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and the incremental value is 1.56. 

 FACILITATOR BROOKMAN: Yes, Jim Crawford. 

 MR. CRAWFORD: Let's back up, Greg. I 

have certain points - I didn't think I was going to 

have to do this, but I guess my first question is 

where is manufacturer markup? 

 MR. ROSENQUIST: Yes. This only covers 

the wholesaler and contractor markup, so these markups 

I'm talking about here are not covering the 

manufacturer markup. That was done in the engineering 

analysis. 

 MR. CRAWFORD: Well, did I see a 

corresponding table? 

 MR. ROSENQUIST: No. No. It's not 

provided here. For those stakeholders that were 

present at the Furnace and Boiler Workshop yesterday, 

the statement was made that there was no difference in 

the baseline incremental value for the manufacturer 

markup. It was identical, so for a change in the 

manufacturer cost, the same markup was used to get 

that into a manufacturer price. 

 MR. CRAWFORD: And what is that number? 

 MR. ROSENQUIST: Again, I think it's 1.23, 

but I'm not entirely sure. 

 FACILITATOR BROOKMAN: Graham. 

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 MR. STEVENS: One point two six. 

 FACILITATOR BROOKMAN: Graham Stevens. 

 MR. CRAWFORD: A 1.23 is a markup on COGS 

for a manufacturer, is a short road to bankruptcy. 

And I invite you, as I did yesterday, to look at a 

measure that you're not looking at, apparently, which 

is return on sales. And there are not very many 

manufacturers represented here whose total corporate 

annual report reflects only heating and air 

conditioning equipment, but there are one or two, and 

you will see returns on sales that suggest that if you 

erode the return on sales, which is what you're doing 

here. You're saying let's reduce return on sales for 

these various businesses. If you reduce the return on 

sales for these various businesses, you make them 

significantly less attractive businesses to be in. 

That's the first point that I would make. 

 The second point would be to inquire why 

taxes appear not to be incorporated in the national 

account. 

 MR. ROSENQUIST: They are. You don't see 

that level of disaggregation for the national account, 

but the way that national account markup value was 

arrived at was it was correlated to what you get out 

of a distribution channel. 

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 MR. CRAWFORD: So you're saying then that 

the markup for -- the total markup on the national 

account is less than 1.20 on incremental. 

 MR. ROSENQUIST: It's 1.24. 

 MR. CRAWFORD: No, that's including taxes. 

 I'm saying the real markup. 

 MR. ROSENQUIST: Oh, yes. That's correct. 

 MR. CRAWFORD: Okay. So it isn't the 1.23 

you talked about before. In this case, it's less than 

1.2. 

 MR. ROSENQUIST: Yes. When you take into 

account the sale taxes, yes. 

 MR. ROSENQUIST: Well, I can't -- if I 

markup a product, I can't spend those sales taxes. 

There's a government agency standing there with their 

hand out waiting for that. That's not money that does 

me any good. And again, your markups for 

manufacturers are unrealistically low. And that's 

probably true of almost any major heavy equipment 

industry. 

 FACILITATOR BROOKMAN: Additional 

comments. And, Jim, if it was possible to - and maybe 

this comes out in the NOPR analysis - to specify what 

the actual would be, then that would be helpful. 

 MR. CRAWFORD: Well, I'm not going to give 

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you our internal auditing results. I will tell you 

that if you check what I said yesterday and again 

today, if you check the annual reports of the major 

corporations present yesterday and today who are 

exclusively in heating and air conditioning 

businesses, you'll find that there are two companies 

with total return on sales on the order of 2 percent. 

Now you don't have to do very much monkeying around 

with markups, and that number becomes negative. 

 FACILITATOR BROOKMAN: Additional 

questions, comments on this set of slides? Ron Lewis. 

 MR. LEWIS: Jim, one of the things that I 

was interested in input on as well as the specific 

numbers, which I wanted you to re-verify in this 

presentation, but the steps along the way, that these 

are an accurate portrayal of the flow of the markups 

after it leaves the manufacturer. Is that an accurate 

description? Have they captured that? 

 MR. CRAWFORD: I think the flow is right. 

Whether the split is right between the three 

channels, I don't know. I think it's unfortunate that 

ACCA is not here because the biggest piece of the pie 

represented on the chart that Greg keeps wanting to 

move beyond - the biggest piece of the pie there is 

the ACCA members. I mean, we're not even on that 

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chart. And I'm speaking without a great deal of 

intimate knowledge when I get into the ACCA member 

arena, but the basic premise of eroding return on 

sales, that's universal. 

 FACILITATOR BROOKMAN: Okay. Thanks, Jim. 

 MR. ROSENQUIST: The next slide we're 

going to be talking about the issue that was brought 

up in the NOPR regarding equipment markups. And we've 

had some of that discussion here, getting some input 

on whether or not our approach was a good one. So I 

guess I'm just reopening it back up to the floor to 

get any comments on the approach we used to develop 

the markups, specifically on the expenses needed to be 

covered in the incremental markup situation. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Jim Crawford. Just one 

further observation, and that is that what we're 

talking about relative to these products is moving 

from the commodity product of today to the premium 

product of today, and making that premium product, 

which currently commands a premium markup, and moving 

that down into the commodity class by moving the 

standard. So the effect is, you've turned it upside 

down. I mean, there's a premium markup today on those 

that's factored into those financial results I was 

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talking about. And now you want to reduce that markup 

by about one-third. It's amazing. 

 FACILITATOR BROOKMAN: Richard, do you 

want to -- no, okay. 

 MR. ROSENQUIST: Okay. So then on to 19. 

So now that we're done with markups, I'm going to get 

back into sort of the overall LCC analysis. And what 

you're seeing here is the flow chart showing all the 

various inputs that go into the calculation of the 

life cycle cost and the payback period. 

 The first set of inputs here at the top 

are from the engineering analysis. This is what gives 

us our manufacturing price versus efficiency curve so 

we can develop baseline and standard level 

manufacturer prices. Next are the markups for 

equipment price determination, and we use those to 

transform those manufacturer prices into equipment 

prices to the customer. And then we couple that with 

the installation cost, which is essentially the labor 

and materials necessary to install the equipment and 

the cost to the customer of doing that to get the 

total installed cost. 

 These bottom set of inputs have to do with 

the operating expense of the equipment, and the first 

set of inputs, energy consumption and power demand, 

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come from the energy use and end-use characterization 

analysis. And again, as you heard earlier, these are 

developed for the baseline of each of the candidate 

standard levels. 

 We've coupled that with electricity prices 

to get our annual energy expense, and then we throw in 

the repair cost, the maintenance cost to get the 

annual operating expense. Then use lifetime the 

discount rate, electricity price trend to get the 

lifetime operating expenses. When you couple that 

with the total installed cost, you get the life cycle 

cost. And the payback period for any given candidate 

standard level is just the change in the total 

installed cost divided by the change in the first 

year's annual operating expense relative to the 

baseline. 

 Another thing I want to point out, each of 

these inputs are characterized with probability 

distributions or a large sample, so that the results 

we get aren't just a single value for the life cycle 

cost or payback period, but a distribution of results. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: I'm getting as tired of 

this as you folks are. We haven't had any discussion 

of installation costs, and I guess where we are now, 

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we're not likely to. You're talking about bigger, 

heavier equipment which will have some incremental 

impact on installation cost, increasing those costs. 

And in the new construction, it may be a modest 

number, may be. In the retrofit or replacement 

market, it could be very significant. If I have a 

bigger footprint, and bigger -- I mean, more widelyspaced mounts, et cetera, or appreciably heavier, I'm 

going to have a major retrofit to do, and I don't 

believe that's been considered. We don't know what's 

been considered, what's in front of us. 

 MR. ROSENQUIST: I'm going to get to that 

in another couple of slides, so I'll answer that 

question then. So one of the most critical inputs to 

the life cycle cost analysis, other than the 

engineering and markups, and the building simulation 

are the electricity prices. And we've used two 

approaches in our life cycle cost analysis for doing 

this; the first one is called the tariff-based 

approach, and this was the primary approach used to 

develop electricity prices for the LCC. It's based 

upon a collection of non-residential electric utility 

tariffs from the year 2001, and we collected 230 

tariffs from 90 different utilities. And we got about 

a 50 percent coverage of commercial customers in the 

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United States with that collection. 

 The next approach is the hourly-based 

approach, and this was the secondary approach used in 

the life cycle cost analysis for developing prices. 

It's -- we did this basically because we wanted to try 

to get after what prices may exist in a deregulated 

electricity market. And it's based upon the scenario 

where customers are directly charged for the cost 

incurred by an electricity provider to supply energy 

for air conditioning. 

 Both these approaches, the tariff-based 

and the hourly-based, are used to develop marginal 

electricity prices. And what we're doing there is 

we're taking our tariff and hourly cost data, coupling 

that with the building energy use simulation data 

which is providing us with the energy consumption and 

demand to get utility bill savings due to a particular 

candidate standard. Then we divide that by the 

electricity savings to calculate the marginal 

electricity price. 

 And I'll show you in the next slide, but 

the national average price we get from these two 

approaches is approximately 10 cents a kilowatt hour 

for commercial unitary air conditioning. 

 FACILITATOR BROOKMAN: Yes. Don Brundage. 

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 MR. BRUNDAGE: Don Brundage. How much 

validation did you do on the tariff-based approach? 

 MR. ROSENQUIST: We have our own internal 

process for dong that. We had several people 

collecting those tariffs, and then people reviewing 

the tariffs and how we modeled them. All that 

information is available through a website, so we're 

looking for input on how we modeled those tariffs from 

the stakeholders to see if what we did was correct. 

We believe it is. But we didn't have a peer review 

process, if that's what you're asking. 

 MR. BRUNDAGE: Well, specifically on your 

-- I had someone review the Georgia Power Rates that 

you had in there, and because it failed to include a 

rate rider of reduction in rate since the last major 

rate case, it was according to this person about 15 

percent higher than actual as of 2001. 

 MR. ROSENQUIST: As of 2001. 

 MR. BRUNDAGE: Yes. 

 MR. ROSENQUIST: I think Katie Coughlin is 

going to try to address that. 

 MS. COUGHLIN: Yes. I'm Katie Coughlin 

from Lawrence Berkeley Lab. We did look at that. It 

was actually about 8 percent on the energy only 

component, so it was about a 4 percent under-

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estimation, and that's been fixed. 

 MR. BRUNDAGE: Okay. Thank you. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. I've made several comments here 

and there about prices, everyone's favorite topic in 

here, I believe. But in terms of the hourly-based 

approach, and again especially even in the -- well, 

2001 was kind of a chaotic year, especially in 

California. I don't know how heavily of those 90 

utilities, how many were in the west, but especially 

in 2001, the summer prices due to low hydro and a 

whole bunch of other reasons were particularly a lot 

higher than they have been since then, so that might 

have pushed up some of those numbers, especially out 

west. 

 Secondly, for those customers in 

deregulated market, yes, hourly prices exist, 

especially on the wholesale market, but as I've 

suggested before, especially in deregulated markets, 

there is a large discrepancy between the availability 

of wholesale hourly prices and the actual number of 

customers that are actually using them, and the number 

of suppliers that are offering them. In many cases, 

the suppliers will offer for electricity and others, 

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and even natural gas, they will tend to offer flat 

prices for the supply/commodity portion of the bills, 

so even with the wild variations in the hourly prices 

on the energy side, retail customers, commercial and 

industrial customers aren't seeing them. And I 

suggested this before - if you could survey those 

customers, commercial and industrial customers in 

deregulated markets that have received competitive 

supply, it would give you an idea in terms of the 

retail prices, what they're actually seeing in the 

marketplace. And especially in terms of blending the 

energy demand, th at's a whole other issue. I'll wait 

for at least one or two more slides to give people a 

break. 

 FACILITATOR BROOKMAN: Okay. You want to 

respond, Greg? 

 MR. ROSENQUIST: I was going to try to 

respond to that. I mean, the tariff is what we try -- 

is primarily used to try to capture what the customer 

is currently seeing in terms of what they're providing 

for electricity. The hourly cost analysis is -- the 

big trick there is taking these hourly wholesale costs 

and transforming them into a pricing by the customer, 

so in a sense this is what we're trying to get after, 

what might occur under a de-regulated situation around 

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the whole country, so by no means are we trying to 

claim that this is the situation that customers are 

currently facing. The hourly cost situation, again, 

is sort of a construct. 

 FACILITATOR BROOKMAN: Don, do you want in 

here? 

 MR. BRUNDAGE: Yes. I have attempted in 

deregulated markets to try to look at costs, and it's 

a difficult task. And you will usually end up, 

because money is now going to multiple pockets instead 

of just to the utility, it is very easy to leave 

components out and under-estimate costs on this 

between all the different parties who receive money 

out a transaction, so I could sympathize that it's a 

difficult task, and just be careful with it. 

 FACILITATOR BROOKMAN: Charlie, did you -- 

 MR. STEPHENS: Charlie Stephens. Yes, I 

think in some markets, and I know our's is this way, a 

lot of what you saw in 2001 is not radically different 

than what you're going to see today in terms of rates 

that customers face. Much of the volatility that 

Steve referred to, which was true, was deferred. The 

impacts of that on rates was deferred, and we're just 

now this fall starting to see the corrections that 

resulted from a lot of the deferrals, plus and minus, 

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that have taken place since 2001. The result has been 

very small increases in rates, very small, on the 

order of 1 to 2 percent, which is the ultimate change 

that occurred over about 3 years from the deferral in 

utility accounts. And so we're not seeing decreases 

in rates, but we're not seeing radical increases in 

rates right now either. 

 Whether or not that will remain the case 

as we look at the price of natural gas steadily rising 

in the future remains to be seen, because we do 

anticipate long-term rises in natural gas pricing; 

which, depending on where you live, will have varying 

impacts on your rates. 

 FACILITATOR BROOKMAN: Okay. Let me know, 

Greg. You predicted we'd get through this quickly. 

 MR. ROSENQUIST: Looks like I was maybe 

wrong. This table here shows you the type of marginal 

prices that we calculated from the two approaches, the 

tariff-based and the hourly-based, by region. And you 

have the handout so you can see the wide variance as 

you go from region to region in that marginal price, 

and within a particular region there's also this 

variation between the two approaches. 

 Another thing I want to point out, that a 

big component of that marginal price are the demand 

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charges. Where in the case of the hourly percent 

capacity, that translates into these basically demand 

charges for the customer. Both approaches, though, 

when you take the weighted average value, come out 

about the same value, which is around 10 cents a 

kilowatt hour. 

 FACILITATOR BROOKMAN: Comments. Yes, 

Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Again for clarification, using this approach, and 

again when you did the run in terms of the energy 

savings - and I'll say in particular energy cost 

savings - and I'll just start with the tariff-based 

marginal price, for example. In New England, when you 

said the higher efficiency unit that you simulated 

saved - just to make it easy - one kilowatt hour, you 

assigned a value of 9.5 cents to that savings, and 

then used that in the economic analysis. Is that -- 

 MR. ROSENQUIST: Yes. In simple terms on 

a weighted average basis, yes. 

 MR. ROSENSTOCK: Okay. The reason - and 

again, I tried to -- when you blend energy charges and 

demand charges, you tend to miss something because 

especially for when I said yesterday or earlier today 

about diversity factors and coincidence of multiple 

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compressors and multiple package units in the same 

building, you can put in high efficiency compressors, 

but there is a diversity such that you might think 

you're going to get - I'll say 20 kilowatt demand 

savings, but because of the building dynamics and the 

way the compressors are going to be cycling on and 

off, your actual demand savings are going to be a 

percentage of that. And California utilities, in 

particular, have done what they call coincidence 

diversity factor savings to try to account for that 

issue in terms of in theory you might save 10 

kilowatts, but because of coincidence diversity 

factors you might be saving 70 percent of that value 

just because of operating conditions, and just end-use 

metering, end-use studies, and diversity of multiple 

compressors. So that when you blend it and you say 9-

1/2 cents, I hesitate just because of some of the 

studies that I've seen in just retrofit situations 

where on the demand side, you're not getting 100 

percent of the savings like you thought would because 

of all the other factors involved. On the energy 

side, it's a different story. 

 MR. ROSENQUIST: Right. Let me try to 

reply to that. That information, the demand peak 

savings and the energy reductions are coming from the 

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building simulation analysis, so in terms of these 

diversity factors you're talking about, they would 

have to be applied to that data before it gets 

processed into our utility bill calculations. 

 MR. ROSENSTOCK: And is there any factor 

like that being taken into account? 

 MR. ROSENQUIST: Go ahead. I'll let Dave 

Winiarski try to answer that. 

 MR. WINIARSKI: There's no direct factor 

taking that into account. The process was that each 

of the buildings has a number of different zones. 

There's a piece of equipment serving each thermal 

zone, and the loads on that equipment are really 

what's determining the peaks. It's the aggregate 

loads on each of those equipment when they're 

happening, on the east, on the west side of the 

building, whichever, that's determining that peak 

load. There's no additional diversity factor. And 

I'm a little confused about where the diversity factor 

that you're talking about, what it's being based off 

of. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. In California utilities, it was 

being done as studies as part of DSM programs that 

says we've done end-use metering, we've done end-use 

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analysis. If you have 10 compressors on a building, 

10 compressors and package units on a building, if you 

retrofit all those compressors without doing anything 

else, if you're just focusing on the air conditioning, 

what kind of impact, what kind of actual demand 

impacts are you seeing on that actual building load 

shape base, and you say well, in theory because of the 

EER calculations, you should get 2kw per compressor, 

20kw in reality because one is on the east side, one 

is on the west side. The morning loads are higher 

than the afternoon loads; therefore, the first package 

unit works less in the afternoon than the second one, 

but the building peaks, the peak demand as it's 

calculated is in the afternoon. Therefore, on your 

bill, you're only getting 16 kilowatts of demand 

reduction on the bill, bill savings on your bill 

rather than the 20 kilowatts. And I know that was 

kind of simplified. 

 MR. WINIARSKI: Versus the original 

estimate of 20 kilowatts, depending -- 

 MR. ROSENSTOCK: Right. First there's a 

theoretical estimate based on just the EERs, and the 

kW before, kW afterwards, kW per ton. And then 

there's some of the, I'll say the building end-use 

metering, building analysis that says okay, because of 

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all of these different conditions, and it varies 

building by building, climate zone by climate zone, 

this is what you actually get because of real-life 

situations. 

 FACILITATOR BROOKMAN: Who should respond 

next, or who should -- should it be Jim McMahon? 

 MR. McMAHON: Yes, let me respond. Jim 

McMahon, Lawrence Berkeley Lab. Steve, you've raised 

an important issue, and I think part of it is covered, 

as Dave indicated, for a particular building, we're 

simulating a building with a set of equipment before 

standards, and then the same building with a set of 

equipment after standards. And because it's zoned, 

not all the equipment is on all the time, so I think 

you've characterized it as if we take one piece of 

equipment and calculate the watt savings, and multiply 

that times the whole population, we're going to overestimate the savings. And the truth is, that's not 

what we've done. We've taken a set of units at a 

building before standards and after standards, so the 

diversity within the building is captured. 

 Now I think to be fair, there may be an 

additional diversity factor. I'm not sure whether 

there is or not, when we take a population of 

buildings, and that's something that maybe we should 

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consider. 

 FACILITATOR BROOKMAN: Charlie and Harry, 

both. And do you wish to speak? He was in the queue 

first. And please, your name for the record. 

 MR. TURNBULL: Yes. Peter Turnbull of 

Pacific Gas and Electric. Sorry if this is anticlimatic, but you have -- the last line for California 

you have under tariff-based 18.5, hourly-based 8.5? 

Okay. But that's what you concluded. 

 MR. ROSENQUIST: Yes. From looking at the 

data, that's what we did. You have to remember for 

the -- I'm assuming you're raising your eyebrows about 

the hourly cost number? 

 MR. TURNBULL: Right. 

 MR. ROSENQUIST: Yes. And what we're 

doing again is taking that -- I'm sorry. I'll let 

Katie Coughlin answer that. 

 MS. COUGHLIN: This is Katie Coughlin, 

LBL. The data for the hourly analysis was taken from 

1999 and 2000. And in particular, for California we 

used the 1999 market data, so for that year the 

markets were fairly well behaved, and there were no 

wholesale price spikes. So that's why -- the hourly 

analysis is, to a certain extent, testing out the 

hypothesis that if you tried to bill people for the 

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direct cost of running air conditioning, you would see 

a very different answer than if you used the tariffs 

that are currently in place in most utilities. So we 

did that analysis knowing that -- we're doing 

something very hypothetical, but we wanted to do a 

draft analysis and try to address that question. 

 FACILITATOR BROOKMAN: Charlie, and then 

Harry. 

 MR. STEPHENS: Charlie Stephens. The only 

thing that I don't know whether anybody is capturing 

here is that the demand rates that a building would 

pay are based on a ratchet, where in many cases it's 

the highest 15-minute demand period in a 30-day 

period. And that sets the demand charge, and it's 

much less likely that you will never see all of the 

compressors on the building running at the same time 

during any 15-minute period in a 30-day period, then 

the diversity factor -- than you would if you looked 

at any given 15-minute period. Somewhere during the 

month, you may have all of those things setting your 

demand charge for a 30-day period, and you can have 

all the diversity you want, but if even one 15-minute 

interval during the course of 30-days, all of them are 

running, that is your demand charge for the month in 

most of these tariffs. 

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 FACILITATOR BROOKMAN: Thank you. Harry. 

 MR. MISURIELLO: Yes. Harry Misuriello. 

These phenomena dealing with diversity factors are 

real things, but in the model they're accounted for. 

Not only do you have an installed capacity for 

equipment, but you also have it for lights and all the 

other equipment in the building. And that installed 

capacity is scheduled every hour of the day according 

to an equipment profile that's been developed from 

end-use load data and fed in through the ASHRAE 

standard-setting process and so forth, so I believe 

that all that diversity that's being discussed has 

been captured in the model through the techniques of 

using the schedules appropriately. So it is a real 

phenomena, but I believe it's been addressed in the 

engineering analysis in the correct manner. 

 FACILITATOR BROOKMAN: Okay. Jim Mullen, 

and I'll come back to you, Steve. 

 MR. MULLEN: Yes. Two questions, or one 

comment and then a second comment, I guess. 

 FACILITATOR BROOKMAN: Yes. 

 MR. MULLEN: The first one is, I'm not 

sure how well it is addressed in the model because the 

model doesn't simulate the equipment. 

 FACILITATOR BROOKMAN: I can't tell how 

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big this is as a factor compared to other factors. 

That's the question that -- 

 MR. MULLEN: Somebody just needs to model 

it right and we'll find out. That's the first one. 

The one though is, there's a diversity that's not just 

because of building load, it's because of energy 

management systems on buildings. And I don't believe 

that's been accounted for in this study at all. A lot 

of equipment today goes on an energy management system 

on a building which is their way of limiting peak 

demand, which it's far beyond me how it all impacts 

this, but I'm sure it lessens the peak, and probably 

lessens some of these power rates. 

 Mr. Martin's compatriots at the California 

Energy Commission in the Demand Response Section just 

put on their website an ICF Consulting Report dated 

June 10th, 2004, which I think is quite interesting. 

They looked at 1,037 sites which represented 17 

projects, which had a total load of 64 plus kilowatts. 

 These are typical stores for this type of 

application, like Auto Zone, Block Buster, Dollar 

Tree, Linen & Things, et cetera. In 96 percent of 

those sites, they did something to cut off the HVAC to 

limit peak demand, and lighting was the other thing. 

And essentially, they realized a 40 percent reduction 

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in demand. 

 FACILITATOR BROOKMAN: Charlie, do you 

want to follow on? 

 MR. STEPHENS: Yes. Charlie Stephens. 

I'd like to follow that up a little bit. Again, I 

agree with that, and I think we're starting to see 

more of that happening in the marketplace. But then 

again, I think what we're trying to get at here in 

this rulemaking is let's presume we have units on the 

roof being controlled by such a system that are built 

to today's standards, and then we'll go forward in 

another scenario where they're built to tomorrow's 

standards, 2010 standards. And I think you'll find 

that the increment doesn't change nearly as much as 

the absolute levels of all these things. 

 I mean, you'd have to assume something 

different about that energy management system after 

standards than before in order to come out with a 

significant change in the incremental demand that's 

due to the equipment EER, I think. 

 FACILITATOR BROOKMAN: Go ahead, follow 

on, then I'll come back to Steve. 

 MR. MULLEN: Again, I totally don't 

understand the impact, but somebody needs to sit down 

and figure it out, because if the unit was off, it 

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doesn't make any difference whether it's an 8 EER or a 

14 EER, the power draw is the same. 

 The other thing is that the cost per ton 

to do this, or cost per kilowatt hour saved is $240 

with an energy management system, as opposed to about 

six or seven hundred dollars going from a 10 to an 11 

or 12 EER unit. And for these 1,037 sites or whatever 

it is, it's equivalent to changing the EER in about 

16,000 10-ton units. 

 FACILITATOR BROOKMAN: So that was Jim 

Mullen speaking. Don, you're next, and then back to 

Steve. 

 MR. BRUNDAGE: I don't think these issues 

are really that important in the modeling, as long as 

you model it correctly, which is the same assumptions 

on things like load control, diversity factors, et 

cetera in the base case and in the post standards 

case. Okay. 

 Say you've got -- you're modeling eight 

compressors in a building and they actually have 10, 

only 8 of them are running, you're still only modeling 

8 of them that are running. And it gets somewhat 

speculative on some of the demand control stuff 

because that changes from year to year how much of 

it's in place, and et cetera. I think this may not be 

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an area of the study we need to spend this much time 

on. 

 FACILITATOR BROOKMAN: Yes. Steve 

Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

As a follow-on, if large percentage of the buildings 

do have energy management systems with demand 

controls, if we're looking at the demand portion of a 

bill and say that the building did have a demand of 

100 kilowatts, and with the demand controls on the 

compressors it's down to 95 kilowatts, it can make a 

difference in terms of how many compressors you 

replace in terms of will you see the demand savings, 

or does the system -- have you already gotten the 

savings from the energy management system. So just in 

terms of modeling, there is -- I didn't really think 

about it. I should have thought about that factor 

before, but in terms of you get a high efficiency 

compressor, you still might not get any demand 

savings, so again, it comes back into the blended part 

of this. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

Who's going to respond here? Peter. 

 MR. TURNBULL: Peter Turnbull, PGE. A 

slight counterpoint to that is, of course, when you do 

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demand control, you're not delivering the same amount 

of air conditioning to the building either, so that's 

-- the price thing needs to be looked at, but apples 

and apples would suggest you have the same amount of 

air conditioning to look at. 

 FACILITATOR BROOKMAN: Okay. Ron Lewis. 

 MR. LEWIS: Jim, the report that you were 

just looking at, that was for the State of California, 

but I wasn't sure whether the message that you were 

sending was because of the national accounts, whether 

that's typical across the nation, even though it was 

just California. Was that what you were -- by using 

the -- 

 MR. MULLEN: Good point, Ron. The report 

simply was from California, and I suppose most of 

these stores were in California. But from Lennox' 

perspective, we see a lot of national accounts, to 

your point, adding energy management systems or 

putting those units on energy management systems. 

Jill or Jim, or somebody can comment on their 

business, but as you try and project forward in time, 

I think from where we're at today to where we were a 

couple of years ago, there's been a substantial 

increase in the use of energy management systems, and 

there will be in 2010 or whenever this rule takes 

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place. 

 But the other point is to Mr. Turnbull's 

point, that when these things are off at peak, it also 

reduces the energy consumption, not just the peak 

demand, so the actual BTUs or kilowatts that the 

building took over time has probably gone down. 

 FACILITATOR BROOKMAN: Steve, you want to 

follow on? 

 MR. ROSENSTOCK: Just a quick follow on. 

I work with National Council as one of my roles in 

EEI, and basically, if there's a high percentage of 

them with energy management systems in California, 

there's going to be an equally high percentage across 

the country. They tend to standardize their control 

systems throughout the United States, so again 

percentages as compared to the total population, 

another thing to look at. 

 FACILITATOR BROOKMAN: I'm getting mindful 

we're spending a tremendous amount of time on this, 

and there's a lot of additional content to cover. Jim 

Crawford. 

 MR. CRAWFORD: Jim Crawford. Since the 

recorder can't see nodding heads, I just wanted to say 

that Tarne concurs with what Lennox and EEI are 

saying. 

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 FACILITATOR BROOKMAN: Thank you. I 

noticed that there were several manufacturers that 

seemed to be nodding their heads in agreement with at 

least some of this. Francine Pinto. 

 MS. PINTO: Francine Pinto, Office of 

General Counsel. The question I'm left with listening 

to all this technical discussion which I basically 

don't understand is, are there specific suggestions 

that you can give in your written comments of how you 

would tweak the model to make it better. We've heard 

all these concerns. I would be wanting to know well, 

okay, what do we do differently? 

 FACILITATOR BROOKMAN: Yes. And in your 

written comments, not necessarily in detail now. 

Harry. 

 MR. MISURIELLO: Yes. Harry Misuriello. 

The larger question might be policy-related. Would 

you back off the level of the standard because of the 

presence of controls or energy management systems in 

facilities. And I think the answer to that is 

probably no, you wouldn't. So that's where I think 

some of this discussion could be leading, what kind of 

choice are you going to make about the standards 

level? Do you take into account the fact that some 

buildings have energy management systems in them as a 

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reason for backing off the standards level. And I 

would say from a policy standpoint that's a dead end. 

 FACILITATOR BROOKMAN: I saw Charlie 

first. Do you wish to speak? 

 MR. STEPHENS: This is Charlie Stephens. 

As Peter suggested, when you do energy management 

controls on kW per ton essentially on a building, you 

are delivering less cooling when you do that. And 

typically you're letting temperature in the building 

float a little bit during a period where you're trying 

to save money. And I find it ironic that the biggest 

incentive you have to do that comes when you don't 

change the standard and you run inefficient equipment, 

which gives you the most kW to knock off line with an 

energy management control system; whereas, if you 

improve the efficiency of the equipment, perhaps you 

don't have quite as much -- in other words, you might 

not let the temperature float to 84. You might let it 

float to 82 if you're pricing is such -- you don't 

have that much demand on line. You're not saving that 

much money if you have more efficient equipment. 

 Now I don't know how those are going to 

play out, but I can tell you we expect that most 

systems by 2010, which is an enormous distance away 

from now, will be delivered with the capability. And 

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most people when offered the capability will use it to 

some degree, but you're still talking Delta kW here on 

the equipment or EMS, and the combined effect might be 

quite cost effective. 

 FACILITATOR BROOKMAN: Richard Lord. 

 MR. LORD: This is Richard Lord. One 

thing you might not have thought of is the typical 

person that's putting in an energy management system 

is the high tier customer. He's already buying a unit 

that's well above Energy Star limits, so the changes 

that we make in the standard aren't going to impact 

him anyway because he's already well above it, because 

those guys do energy analysis themselves. 

 FACILITATOR BROOKMAN: Steve. I hope we 

can finish this off and move on here. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Really in terms of policy, I wasn't really addressing 

policy at all. It was just a matter of for the life 

cycle cost analysis, for the demand portion of that 

bill, I was just -- we were all, I think, just putting 

some -- trying to give information that says here's 

how to improve the analysis. 

 FACILITATOR BROOKMAN: Great. Thank you. 

 Okay. So now let's do move on. Greg. 

 MR. ROSENQUIST: Okay. When we get to I 

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won't say our first issue, the first issue identified 

in the ANOPR as it pertains to the marginal price 

analysis. As we've been discussing, and we were 

talking about these electrical loads, and we're 

getting these from the building simulation analysis 

and coupling them with our tariff-based and hourly 

cost data to come up with customer utility bills. 

What we haven't done is we haven't included light 

industrial buildings into this analysis, and by not 

doing so we've implicitly assumed that those light 

industrial buildings have the same loads, can see the 

same electricity prices as the commercial buildings. 

So what we're seeking comment on here is whether these 

light industrial buildings, first of all, have 

substantially different loads than commercial 

buildings. And if they do, whether there's enough of 

these unitary AC shipments going to these type of 

buildings to warrant their inclusion into the 

analysis. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. In terms of shipment, I will 

defer to the experts at ARI in terms of where the 

shipments are going, the packaged units are going. 

 In terms of electric rates, when you say 

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light industrial buildings, I think we need a little 

bit more definition, because even a light industrial 

building might have a load of over 1,000 kilowatts 

because they can range anywhere from under, I'll say 

500 kilowatts to over 20 megawatts, depending on the 

industrial facility, so it really depends. 

 Do they have different electric loads? 

Absolutely. Industrial facilities have different 

process loads, always more motors, usually tend to 

have flatter loads, not the camel-hump like a lot of 

commercial buildings, office buildings. So yes, 

different electric loads and different electric 

prices, because some of them are going two or three 

shifts using more energy during the off-peak period. 

 If you look at the EIA data, just 

industrial customers as a class compared to 

residential and commercial industrial customers, and 

that's combined energy and demand, always have the 

lowest rates. It might show -- well, EIA data might 

show about typical rates of about 7.8 cents per 

kilowatt hour for commercial customers. For 

industrials I didn't bring it with me. It's down in 

the 5 cent range, a big substantial difference. 

 FACILITATOR BROOKMAN: Karim, do you want 

to follow up? 

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 MR. AMRANE: Karim Amrane with ARI. I 

just want to refer DOE to the peer review report 

again. I mean that clearly shows that the impact will 

be significant, so I would like to urge DOE to read 

the report and to address this issue. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

Yes, Charlie Stephens. 

 MR. STEPHENS: Charlie Stephens, quick 

question. When you say there's insufficient data, 

does that mean that you can't characterize, or you 

can't separate out the light industrial facilities 

that have commercial rooftop equipment, and therefore, 

understand what they are? Or once you've done that, 

you don't have any kind of energy use data? 

 MR. ROSENQUIST: Both. I mean we don't 

know how many unitary air conditioners are going to 

these type of buildings. That's one. And two is that 

we don't have a survey like CBECS. There's MECS but 

it doesn't try to characterize these facilities at 

all, so basically don't know how to simulate them. I 

mean, they could be, so we don't have a good idea of 

what the electrical loads are in these type of 

buildings either, so that's why we're looking for 

data. 

 FACILITATOR BROOKMAN: Dave Winiarski. 

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 MR. WINIARSKI: Yes, I was going to say 

just as a follow on that this is one area where a 

large sample of metered data from an industrial or 

light industrial customers as best we can identify 

them would be very useful. 

 FACILITATOR BROOKMAN: Okay. So please, 

Peter. 

 MR. TURNBULL: Yes. Peter Turnbull, 

PacifIC Gas and Electric. By and large our light 

industrials, so to speak, are on the same rates as 

commercial customers. They aren't really 

differentiated by end-use. They're differentiated by 

amount of load. So if they have an air conditioner, 

the air conditioner responds to how hot it is. So 

marginally, it would seem to me, to be consistent with 

the commercial. 

 FACILITATOR BROOKMAN: So your experience 

and your definition of light industrial differs from 

what Steve was saying. 

 MR. TURNBULL: Our rates would be not 

differentiated by whether or not the use is 

industrial. 

 FACILITATOR BROOKMAN: Right. 

 MR. TURNBULL: It's the load, how big is 

the load. 

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 MR. ROSENQUIST: To clarify that, the 

tariffs that we've collected are either residential or 

non-residential. They're not commercial and 

industrial. 

 FACILITATOR BROOKMAN: Is that they way, 

Steve, your's are broken out? Are they by load or are 

they by usage? 

 MR. ROSENSTOCK: For many utilities in the 

United States they will specifically have commercial 

versus industrial loads. I know in California's case 

that commercial and industrial are based by peak 

demand, up to 500 kW or 500 kW and above. But most 

utilities in the United States - again they might have 

some sort of breakout industrial load below or above a 

certain kW level, like 1,000 kW, but they specifically 

have industrial tariffs, whether light, medium, or 

heavy industrial. They will specify that as an 

industrial tariff versus a commercial tariff. 

 FACILITATOR BROOKMAN: Okay. Dave 

Winiarski. 

 MR. WINIARSKI: Just one other comment, 

which is that a part of the kind of built-in or 

implicit assumption here is that if you have an office 

building that is being served by unitary equipment 

that's on an industrial site, that it's going to have 

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a load profile similar to that of an office building 

in another location. One of the things that's 

difficult is what to do if you have a piece of unitary 

equipment that's actually going on the industrial 

portion of the industrial facility. 

 FACILITATOR BROOKMAN: Okay. We need to 

keep the pace up here, folks. Jim Crawford. 

 MR. CRAWFORD: Jim Crawford. Just a short 

observation, and that is that if you're going very far 

down this path, you need to specify a lot more clearly 

what you mean by light industrial. It's quite logical 

and many people would call our plant light industry by 

the nature of what goes on in the building. We've got 

over 1 million square feet under roof, a couple of 

thousand people working in that plant, and one heck of 

a lot of machinery. We have our own substation. 

We've very much on an industrial rate. It doesn't 

look like any of the numbers I've seen here today. 

 FACILITATOR BROOKMAN: Okay. Let's move 

on to hourly-based electricity prices, slide 23. 

 MR. ROSENQUIST: Yes. This is the next 

issue identified in the ANOPR for the marginal price 

analysis. And this again speaks to the hourly-based 

analysis. And again, I want to point out this was our 

secondary approach, not our primary approach for 

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characterizing electricity prices. 

 We collected an extensive amount of data 

to do this from de-regulated regions of the country. 

We collected wholesale cost data, and from regulated 

regions we got the hourly system lambda data to do 

this. 

 The big part - well, not the big part but 

one part of this analysis to come up with a customer 

price is to transform that hourly cost into a customer 

price, and utilities have ways to do this. They have 

these price models to do this. The one that we used 

was based on avoided cost methodologies traditionally 

used by utilities to characterize demand reduction 

programs. So what we're looking for input here on is 

any other price models that may exist for transforming 

these hourly wholesale costs, if you want to call them 

that, into customer prices. And the second point is 

we're looking for comment on whether or not the 

secondary approach should be pursued still. 

 FACILITATOR BROOKMAN: Are you doing this 

now? 

 MR. ROSENQUIST: Yes. 

 FACILITATOR BROOKMAN: You are. Okay. So 

Steve -- Don Brundage and then Steve. 

 MR. BRUNDAGE: I have a little concern 

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about doing this because what you're basically looking 

at is the equivalent of a very short-term spot market 

price, and it can very much get distorted with how 

much -- whether a market is capacity short. I don't 

know that it's a reasonable basis for setting longterm equipment standards. Maybe if you had a long 

track record of these prices you could average over a 

number of years, but I would feel more comfortable 

with keeping the tariff-based approach as being your 

primary approach here. 

 MR. ROSENQUIST: Yes. Just one point of 

clarification on the load data. We collected that for 

a specific year, but that was then, normalized with 

TMY data, typical meteorological year data. So we 

basically tempered out the effects of weather on that 

load data. 

 MR. BRUNDAGE: Weather is not the biggest 

factor in spot prices. You have a huge difference in 

spot prices where the reserves are 5 percent or 10 

percent. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

So specific comments on whether DOE should do this in 

their modeling and any sources of data. Steve 

Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

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Electric Institute. To follow on what Don Brundage 

was saying - again, if you can do customer surveys in 

de-regulated markets - I don't know if there's any 

time, but that might be one approach to take in terms 

of seeing what actually the customers are paying for 

the supply. And again, in terms of avoided cost 

methodologies traditionally used, just as a 

background, a lot of that avoided cost methodology 

that was used by utilities for DSM programs was the 

avoided cost of generation. That was the primary - in 

fact, usually that was the only component that 

policymakers and utilities were looking at for the DSM 

programs. 

 Now in deregulated states you have 

electric distribution companies that have sold off all 

their generation, so their avoided cost of generation 

is zero because they are not responsible for the 

generation. So if you really want to do avoided cost 

methodology for New England where most of the 

utilities have sold off their generation, the avoided 

cost is zero. So just another comment. 

 FACILITATOR BROOKMAN: Okay. Final 

comments on this one. Other inputs. 

 MR. ROSENQUIST: Yes. What this slide 

shows here are all the other inputs necessary for 

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calculating the life cycle cost in the payback period. 

The first one is the installation cost, and this is 

the cost of the labor and materials needed to install 

the piece of equipment, and the price paid by the 

customer for that. We used R.S. Means data to come up 

with typical baseline installation cost for 7-1/2 ton 

and 15 ton units. We assumed that these costs varied 

in direct proportion to the equipment weight, so 

because the equipment varies with efficiency, that's 

what we found, we have our installation cost varying 

with efficiency, as well. 

 On the electricity price forecast we get 

those from the Annual Energy Outlook. We used the 

2003 version for the ANOPR analysis. What we're using 

these for is to get a forecast of future electricity 

prices. We get our tariff-based and hourly-based 

marginal price in 2001, and we used the AEO to get 

that projected price out into the future. Discount 

rates are used to get the present value of future 

operating expenses, and these are derived from 

estimates of the cost capital to companies that 

purchase unitary AC. This cost of capital is 

calculated from the weighted average cost of capital 

to the firm to obtain equity in debt financing. And 

we looked at a sample of 7,300 companies in order to 

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do this. And the weighted average value we got was 

6.1 percent real. 

 The next input is the equipment lifetime, 

and here we use the ASHRAE handbook to get a 15-year 

median lifetime. And we constructed a survival 

function by using a Weibull probability distribution. 

Repair costs are the costs to repair or replace 

components that have failed in the equipment. And we 

developed annual repair costs of $158 for 7-1/2 ton 

units, and $291 for 15 ton units. And here again, we 

assume an increase in direct proportion to the 

equipment manufacture price. And because the 

manufacture price increases with efficiency, we assume 

that the repair cost did, as well. 

 Finally, we have the maintenance costs, 

and these are used to maintain the operation of the 

equipment. These are different than the repair costs. 

And again we used R.S. Means data to do this. The 

R.S. Means said the maintenance costs don't differ 

based upon a capacity for this 3-24 ton capacity 

range. We came up with an annual cost of $200, and we 

assumed that it did not change with efficiency. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Jim Crawford. Relative to 

the equipment and lifetime, to say you use Weibull 

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probability distribution is almost meaningless. I 

mean, that's a whole family of distributions that can 

have any shape you want depending upon what parameters 

you pick. Therefore, I would ask what parameters did 

you pick? 

 MR. ROSENQUIST: Yes. What I didn't say 

is that we used the same shape of the retirement 

function that we came up with for residential heat 

pumps. That was constructed for that residential 

rulemaking. 

 MR. CRAWFORD: That being the case, that 

is demonstrably inappropriate, incorrect, inconsistent 

with all reliability theory, inconsistent with 

experience because it shows this stuff basically has 

no failures until you get out to about 12 or 15 years, 

and then crashes. And that just simply is not what 

happens, and it's a misuse of the Weibull distribution 

or anything else. Next question, unless you want to 

comment further on that. 

 FACILITATOR BROOKMAN: Any other comments. 

 Are these other inputs? 

 MR. CRAWFORD: I'm on -- 

 FACILITATOR BROOKMAN: You're going to 

keep going on the other inputs? 

 MR. CRAWFORD: Sure. Yes. 

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 FACILITATOR BROOKMAN: Steve, please. 

Proceed. 

 MR. ROSENQUIST: Well, all I can say is 

that we just used the only data that we had available 

to come up with that shape, and so that's why we used 

it. 

 MR. CRAWFORD: Well, I would suggest to 

you that in the residential area, that the U.S. Census 

Bureau has data that you could have used that would 

have been far closer to what actually is correct. And 

I wouldn't be surprised that if you went into the 

Census Bureau data on commercial buildings, you might 

find equivalent information on the population versus 

age of equipment from which you can derive a pretty 

reasonable estimate of what the modality curve looks 

like. 

 FACILITATOR BROOKMAN: Don, follow-on. 

 MR. BRUNDAGE: If he's finished, it's a 

slightly different subject along the same lines. One 

thing that's different with commercial than 

residential is you have non-failure obsolescence with 

commercial being much more common. You have 

commercial properties being redeveloped. You have 

equipment being scrapped before the end of its useful 

life because the property is redeveloped. Some 

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attempt to include that factor where equipment is not 

used to the end of its useful life would be useful for 

commercial, because I suspect that it's much more 

common to have a building torn down after 5 or 10 

years and something else put there, than would be in 

residential. 

 MR. CRAWFORD: Doug. 

 FACILITATOR BROOKMAN: Yes. Go ahead. 

 MR. CRAWFORD: I'm back now for the last 

point on that chart, the maintenance costs. And it 

says that the maintenance costs are proportional to 

the equipment cost - I think that's what it says. To 

the degree that the incremental technology applied 

involves things like EHD, which was mentioned earlier, 

but said well, we didn't really do that. 

Electronically commutated motors, other high tech, 

particularly electronic techniques - I would suggest 

that the cost of maintenance probably goes up to 

somewhere between the third and the fifth power of the 

incremental cost. 

 You're dealing with a service base that 

doesn't like anything more complex than the relay and 

a contactor, and what happens is micro electronic 

costs, service costs are very, very expensive. As 

anybody knows who's got an automobile that had to 

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replace the computer on your engine, same phenomenon. 

 FACILITATOR BROOKMAN: Thank you. Other 

comments on other inputs? Tom Eckman. 

 MR. ECKMAN: One of the hazards of being 

involved in all three rulemakings is you look for 

consistency between them, and in the transformer 

rulemaking you were using 7.46 percent for the 

discount rate for commercial customers, and in this 

one it looks like you're using 6.1 for basically I 

think the same cadre of folks. 

 MR. ROSENQUIST: My initial reply would be 

that was a different sample of customers, because 

there are different customers for commercial unitary 

AC as there are for transformers, but I see one of my 

colleagues in the back of the room who's involved with 

the transformer analysis, and I'll let him try to 

answer that question. 

 MR. ECKMAN: I would think that most of 

these buildings may have a different mix of 

transformers, but they probably all have transformers 

given this equipment. 

 MR. ROSENQUIST: This is Robert Van 

Buskirk. 

 MR. Van BUSKIRK: Where did you get the 

mix of owners for the commercial AC? We got a mix of 

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owners for all buildings based on CBECS data, and then 

used that sort of set of categories of owners to come 

up with the weighted cost, to come up with the 

discount rate for transformers. If you had a 

weighting depending upon whether they had package AC, 

then that weighting would be a different subset of the 

CBECS data than for the transformers case. 

 FACILITATOR BROOKMAN: Yes, Jim. 

 MR. ECKMAN: I'm agnostic as to which one 

it is. 

 MR. ROSENQUIST: You're just looking for 

consistency, and the answer I want to give you is that 

a different weighting was used because of the 

different customers. 

 FACILITATOR BROOKMAN: Okay. Jim 

Crawford. 

 MR. CRAWFORD: Jim Crawford again. 

Picking up on Tom's point, I would suspect that the 

discount -- that the interest rates paid by those 

people who buy power transformers are lower than the 

interest rates paid by those people who own commercial 

space, which has 7-1/2 and 15 ton units on average. 

And so the difference that he has cited suggests well, 

maybe they shouldn't be the same. But the one for 

this ruling should be higher than the 7.4 percent to 

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use in the transformer rulemaking. 

 FACILITATOR BROOKMAN: Thank you. Yes, 

please, Robert. 

 MR. VAN BUSKIRK: A point of clarification 

- the discount rate that Tom was referring to was for 

the purchasers of dry-type transformers. For the 

transformer rule in general, the discount rate for the 

liquid-immersed transformer purchasers is 4 point 

something percent. 

 FACILITATOR BROOKMAN: Okay. Thanks for 

the clarification. Are we done with this one? Other 

inputs? No, a few more. Richard Lord. 

 MR. LORD: Yes, just one comment. In 

there I didn't see anything in terms of other inputs 

and regards to the engineering and capital cost to 

develop new products. Where does that get factored 

in? 

 MR. ROSENQUIST: I'm assuming that gets 

accounted for in the engineering analysis when you 

come up with the manufacturer price. 

 MR. LORD: It would be incremental to what 

we're doing now. 

 MS. HOOTMAN: Right. It wasn't 

considered. 

 FACILITATOR BROOKMAN: Mike Rivest. Come 

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on up here. 

 MR. RIVEST: I'm sorry. Could you repeat? 

 You wanted to know specifically -- 

 MR. LORD: Yes. My question is to meet 

these requirements would require incremental 

engineering, incremental capital. 

 MR. RIVEST: Right. 

 MR. LORD: Where does that cost get into 

the calculation on payback? 

 MR. RIVEST: Right now it's incorporated 

in two places; in the engineering analysis we put in 

values based on the cost modeling. And also in the 

GRIM analysis we put the same numbers in the cash flow 

GRIM and we'll be reviewing those with you when we do 

the MIA. 

 FACILITATOR BROOKMAN: Okay. Any more 

comments on inputs? Jim Crawford. 

 MR. CRAWFORD: The more I hear, the less 

comfortable I feel, because one of the earlier charts 

that Jill was flipping back for, and I'm not going to 

dig it out right now, indicated that the cost for 

these various levels of this distribution chain 

starting with the manufacturer kind of remain constant 

for office staff as the level of the efficiency 

increases, and this is getting very much at the heart 

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of the point just being raised. And so in one place 

we're saying the costs are constant, and then we're 

being told well, they'll be accounted for later. 

Well, zero now or zero later is still going to be the 

same, and it's wrong in both cases. 

 FACILITATOR BROOKMAN: Okay. Then we're 

done with inputs at this point. On to forecasts of 

electricity prices, one of my favorite topics. 

 MR. ROSENQUIST: Okay. I have a momentary 

glitch there. This is the next issue identified in 

the ANOPR again pertaining to the life cycle cost 

analysis and forecasts of electricity prices. I just 

want to reiterate for the ANOPR analysis we used the 

2003 Annual Energy Outlook to get our future 

electricity prices, and we plan to use the most recent 

AEO for our analyses for the NOPR, so the Department 

is looking for comments on whether there's any other 

credible price forecast that could be used for NOPR 

analyses. 

 FACILITATOR BROOKMAN: Did we hear about 

one yesterday? Charlie Stephens. 

 MR. STEPHENS: Charlie Stephens. I have 

just a quick question. The most recent, do you know 

what that means in the case of this rulemaking and the 

schedule that it's on, and when you're going to have a 

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new one? 

 MR. ROSENQUIST: I'm not going to answer 

that question. I'm joking though. I mean, it's up to 

DOE to decide its schedule, what time the analysis are 

done, and what AEOs are available at the time. 

 MR. STEPHENS: So you don't have any 

forecast of when the next AEO forecast is actually 

going to become available, and how it relates to the -

- 

 MR. ROSENQUIST: There is a hard copy 

published in either December or January, December of 

2004/January of 2005 for the AEO 2005. 

 MR. STEPHENS: Okay. So you could 

conceivably use that for your analysis here. 

 MR. ROSENQUIST: Yes. 

 MR. STEPHENS: Okay. 

 FACILITATOR BROOKMAN: Any other credible 

sources? That's the question on the table that people 

would refer to or refer the Department of Energy to. 

I see none. Okay. Additional comments on this block? 

 We're moving onto equipment lifetime, ANOPR Issue 11. 

 MR. ROSENQUIST: Yes. We've already 

gotten some comments on this one on lifetime. Again, 

using that 15 year median life and creating a survival 

function using a Weibull probability distribution, so 

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if there's any additional comments that people have on 

the lifetime, I'd like to hear them. 

 FACILITATOR BROOKMAN: Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. To follow up what Don Brundage 

was saying earlier, there might be some Department of 

Commerce statistics or U.S. Census Bureau about small 

businesses and survival rates of small businesses, 

because I can't remember the statistic, but for many 

small businesses, and I'll just say restaurants 

because restaurants typically have package units, is 

that less than 50 percent of restaurants survive more 

than three years, so that's going to have a huge 

impact. It might be a brand new restaurant with a 

brand new package unit, but in three years that 

package unit might just be sitting there, or replaced 

or removed. There might be other instances where the 

equipment will obviously last a good 15, 20 years, but 

whether it's in use for 15 or 20 years, especially in 

terms of the economic analysis that's a different 

story. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

Comments. Don Brundage. 

 MR. BRUNDAGE: Well, my view point is a 

little bit different than Steve's. You can have five 

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restaurants go through at a particular location, and 

they'll probably never touch the basic mechanical 

systems. But you do have redevelopment and changes of 

land use for commercial, which is much more common 

than residential. So making an attempt to include a 

non-failure replacement factor into the data would be 

useful, because a lot of these equipment ends up 

getting scrapped for reasons other than equipment 

failure. 

 FACILITATOR BROOKMAN: Okay. Do you have 

any source for that, Don? 

 MR. BRUNDAGE: Not a clue. 

 Mr. BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Yes. I want to go back to 

the point that I made earlier in support of where do 

you get numbers. I'm not sure what the Census Bureau 

data has on commercial, but if we're going to say 

well, it must be like residential, and Don is 

suggesting that residential would be optimistic, and I 

don't disagree with what he's saying - then you can go 

to the Housing Survey Data in the Bureau of Standards 

- Census Bureau. Go to the Census Bureau on their 

Home Page, click on housing, and then start going 

through the housing surveys, and you'll find in there 

equipment life time, or equipment age. And from the 

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equipment age, you can derive an implicit survival 

function. And the only assumption you've got to make 

is a constant population. And that's not a bad first 

order assumption with the magnitude of the numbers 

we're dealing with. And that will give you a survival 

curve that has at least some substance to it, rather 

than something that happened to be in ASHRAE handbook 

somewhere. 

 FACILITATOR BROOKMAN: Okay. 

 MR. CRAWFORD: This is government data. 

 FACILITATOR BROOKMAN: Additional 

comments? Moving on to the next slide. 

 MR. ROSENQUIST: This slide shows you an 

example of the LCC results, and as I mentioned before, 

we characterize all these inputs that go into the LCC 

calculation with these probability distributions, so 

we generate a distribution of life cycle cost results. 

This is called a Frequency Chart, and to generate it 

we use this sampling technique called Monte Carlo 

Simulation. So what we're doing is sampling from 

these probability distributions rate to the inputs, 

and in this case 10,000 times performed 10,000 LCC 

calculations. So what you see here is, again, the 

result of that, and we have 10,000 calculations 

showing the LCC savings for this particular equipment 

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class, which is the 65-135 kBtu/h for the 11 EER 

candidate standard level. 

 Specifically, this shows a range that goes 

from a life cycle cost increase of around $400 all the 

way out to a life cycle cost savings of around $3,300. 

The mean value from this particular distribution is a 

savings of $533. And what this chart also provides 

you with, indicated by the blue area, are those 

percentage of customers who are realizing LCC savings 

in moving to an 11 EER candidate standard level. So 

we generate one of these frequency charts for every 

candidate standard we analyze within each equipment 

class. 

 And this shows the same thing for the 

payback period, again the same 11 EER candidate 

standard level, the same equipment class, 65-135. 

Again, same technique, Monte Carlo Simulation gives us 

a range of payback results extending from just above 

zero out to 20 years, with a mean value of 3-1/2 

years. 

 MR. ROSENSTOCK: A quick question. 

 FACILITATOR BROOKMAN: Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Just looking at that payback period chart, and the 

chart above on page 27 you show people that have lower 

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life cycle cost savings. The numbers are obviously 

more than 20, they're infinite when you think of 

payback because they don't payback at all. Were those 

taken out in the payback period results in Chart 28, 

or how is that -- 

 MR. ROSENQUIST: Well, what I was going to 

say is that the payback is calculated on the first 

year's annual operating cost savings, so it doesn't 

factor in in the lifetime and discount rate, and those 

type of things. So that's why you can have a negative 

LCC, but a long positive payback period. 

 MR. ROSENSTOCK: But if they have a 

negative first year savings? 

 MR. ROSENQUIST: Well, you're not going to 

have that in this situation because always energy 

savings, and they're not going to be offset by the 

increased repair cost most likely. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

 MR. ROSENQUIST: So what you're seeing as 

life cycle cost is basically a total install cost 

increases outstripping the savings you're getting on 

the operating cost side. 

 FACILITATOR BROOKMAN: Okay. Jim 

Crawford. 

 MR. CRAWFORD: If a discounted cash flow 

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is negative, then it's a severe misrepresentation to 

suggest that there is any payback, and you can define 

your term such that you can make it look like an apple 

is an orange, but it's still going to taste the same. 

I mean, that's totally inappropriate to play that 

shell game. 

 FACILITATOR BROOKMAN: Jim McMahon. 

 MR. McMAHON: Jim McMahon, Berkeley Lab. 

I think there's a misunderstanding here. There's no 

shell game. The calculations are done for annual 

savings and equipment cost, and then these two metrics 

are calculated from that, so the payback is done from 

the first year energy savings. Since we're comparing 

a more efficient unit in the standards case to a less 

efficient unit, you always have energy savings. And 

it may take a long time to payback. That's just the 

ratio of the two numbers, but you do get a payback. 

Now when you do a life cycle cost, you impose a 

lifetime on that. Once you impose a lifetime and 

discount over a lifetime, it's possible that it goes 

negative, that you don't get the savings back within 

that lifetime. You might get it back two years after 

the lifetime, in which case the payback is longer than 

the lifetime. 

 MR. CRAWFORD: Jim Crawford. One would 

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assume it's going to be a best seller, and you should 

be using phraseology, I believe, that's understood by 

the general public. And when you talk about payback, 

and if they're out money over the course of the life 

of the equipment, there is no payback. 

 FACILITATOR BROOKMAN: We have different 

definitions of payback here, it seems. Charlie 

Stephens. 

 MR. STEPHENS: Yes. I don't want to beat 

a dead horse here, but the fact is that if the payback 

- simple payback, and I emphasize the word "simple", 

is beyond the lifetime of the equipment, it's on a 

Monte Carlo basis here. It's a probability 

distribution, and mathematically it comes out this 

way. Anything beyond 15 years is going to be a 

negative life cycle cost on the one graph, but it's a 

mathematical construct, and that may happen to a few 

people, but I wouldn't be making policy decisions on 

that basis. 

 FACILITATOR BROOKMAN: Okay. So final 

comments on these two graphs as we move to income 

taxes on life cycle costs. 

 MR. ROSENQUIST: WE're heading into the 

last couple of issues, at least the last couple of 

issues identified in the ANOPR. 

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 FACILITATOR BROOKMAN: You may get a round 

of applause, you know. 

 MR. ROSENQUIST: For the LCC analysis. 

 FACILITATOR BROOKMAN: It's a good thing 

we buoyed him with food before lunch. 

 MR. ROSENQUIST: So this is the effect of 

income taxes on LCC. And the reason why it hasn't 

been brought up before is because we didn't do this 

for the ANOPR analysis. We didn't take into account 

the effect of income taxes on LCC. 

 We've done a little bit of background 

research into it, though, and we believe that the net 

impact of taxes depends on how companies' accounting 

methods expense the purchase cost of the equipment, 

and also how their accounting measures measure 

profitability, methods measure profitability. So what 

we're looking for here is that for those firms that 

purchase commercial unitary AC, we're looking for how 

many of those firms are actually facing a net tax 

liability. And for those firms that do, we're looking 

for information on how that equipment is expensed and 

depreciated over time. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Jim Crawford, and I'm 

really out of my territory here, but I would have 

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thought that this equipment was more likely to be 

capitalized than expensed. 

 FACILITATOR BROOKMAN: Jill, for the 

record do you want to -- 

 MS. HOOTMAN: Jill Hootman. I would agree 

with most of the accounts that I've worked with, it is 

capitalized. 

 FACILITATOR BROOKMAN: Yes. Richard, do 

you have any experience in this? Richard Lord. 

 MR. LORD: Richard Lord. I'd go along the 

same line, it's typically always capitalized. 

 FACILITATOR BROOKMAN: I'm looking for any 

counterpoint that may be at the other end of the room 

there. Yes, Harry. 

 MR. MISURIELLO: Harry Misuriello. I'm 

not tax expert. 

 FACILITATOR BROOKMAN: You're a tax 

expert? 

 MR. MISURIELLO: No, no. I am no tax 

expert. I would just point out that there's been some 

recent tax legislation over the last few years, and 

some of it allows companies to expense things up to 

$100,000 in that first year, so there's a number of 

investments that companies can make that don't get 

capitalized and then depreciated, but rather they get 

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expensed. So if this is a significant issue, you 

might just want to call a tax accountant and ask if 

this category of equipment could fall into that. 

 FACILITATOR BROOKMAN: Yes, depreciation 

rates. Steve first, and then back to Jim. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Harry is correct, there is that law for small - but 

it's only for small businesses as identified by the 

IRS. There's also a 50 percent bonus depreciation, 

but those tax situations are temporary. They either 

run out at December 31 of 2004 for the 50 percent 

bonus depreciation, and for the expensing, it runs out 

December 31st, 2005. Whether they'll be extended, who 

knows, but just as an FYI. 

 FACILITATOR BROOKMAN: Okay. Thanks, 

Steve. Jim. 

 MR. CRAWFORD: Well, just the favorable 

treatment typically in recent years has applied more 

to business equipment, short-lived business equipment. 

And we don't want to think of it as short-lived 

stuff. And right now in the larger equipment, for 

example, the amortization period is 39 years - 

chiller, 39 years. 

 FACILITATOR BROOKMAN: That's really 

something. Steve Rosenstock. 

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 MR. ROSENSTOCK: Again, Steve Rosenstock. 

Again here I forgot to mention that, because a 

national accounting customer asked me about it, air 

conditioning and heating equipment is exempt from the 

expensing. They do not allow it. The IRS does not 

allow it. 

 FACILITATOR BROOKMAN: So then we're 

moving on to rebound effect. 

 MR. ROSENQUIST: This is the last issue 

that's been identified in the ANOPR for the LCC. And 

again, the reason why you haven't seen this before is 

because we didn't take this into account into the 

ANOPR analysis. The rebound effect, it occurs when a 

piece of equipment is made more efficient, is used 

more frequently to offset the energy savings that you 

could get from that more efficient piece of equipment. 

So, for example, maybe a customer realizes that they 

a more efficient piece of equipment, and thus they use 

it more frequently, realizing that their utility bill 

 won't -- this will get utility bill savings relative 

to what they could have gotten with a less efficient 

piece of equipment. So what the Department is looking 

for here is whether there's the presence of a rebound 

effect for commercial unitary AC customers. And 

second, if it does exist, we're looking for data on 

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how to calculate it. 

 FACILITATOR BROOKMAN: Charlie Stephens 

first, and then Don. 

 MR. STEPHENS: Charlie Stephens. I just 

want to endorse this notion that you haven't taken it 

into account. I would think taking it into account 

would be nuts. I mean, half the people in the 

building don't know how to take advantage of it, even 

if they could. They don't know how to use more air 

conditioning. The system is on and it works, and 

that's the way it's always going to be, so I don't 

think there's any documentation we know of in the 

commercial sector where you could actually document a 

rebound effect. And I think you'll struggle to find 

any. 

 FACILITATOR BROOKMAN: Don. 

 MR. BRUNDAGE: Agreed. 

 FACILITATOR BROOKMAN: Agreed. Okay. Jim 

Crawford. 

 MR. CRAWFORD: Jim Crawford. Agree. 

 FACILITATOR BROOKMAN: So okay, that made 

that easy. 

 MR. ROSENQUIST: That's a good way to end 

the analysis. 

 FACILITATOR BROOKMAN: Richard Lord. 

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 MR. LORD: Just one more question for you. 

 FACILITATOR BROOKMAN: For those of you 

that don't know, we've been doing this for about four 

days straight now. Richard. 

 MR. LORD: On the rebound effect, did you 

factor into this that as you raise the efficiency 

level and the cost of the unit goes up, you may get a 

customer that may not replace a unit that would have 

been replaced? 

 MR. ROSENQUIST: I take that back. No, we 

do take that into account when we do our shipments 

analysis. Okay. So we have a purchase decision model 

which I'll get to, which takes into account the total 

install cost increase, operating cost savings, and 

income when they factor in that decision whether to 

replace a unit, so we do take that into account there, 

not in the LCC. 

 MR. LORD: Because I mean it really does 

happen, people just say I can't afford this 

incremental cost, and they maintain a unit at a lower 

efficiency. 

 MR. ROSENQUIST: Right. 

 FACILITATOR BROOKMAN: Okay. So are there 

any other issues related life cycle cost analysis 

before we press on? Let me note that it's five 

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minutes after 3, and we're going to try and push 

through one more block. Anybody that wants to -- I 

think we should just keep right on going. Anybody 

that needs to take a quick comfort dash down the hall, 

please do so, because otherwise we're going to just 

keep pressing ahead, I think. Okay. So Greg, you 

already had a round of applause. Hopefully you'll do 

this well again. You're up. 

 MR. ROSENQUIST: So now it's the national 

impact analysis, and what I was going to say, like the 

engineering and LCC this is going to be a brief 

overview, but I don't think we've had brief overviews. 

But if we do happen to go through this quickly, 

there's the technical support document, actually the 

Federal Register notice if you want more details. The 

 national impact analysis, as you see in this flow 

diagram, is the last step in the ANOPR analysis. And 

it has two primary inputs, which are the output from 

our life cycle cost analysis and the output from the 

shipments model. 

 The purpose is, first of all, two things; 

to generate national energy savings from a particular 

candidate standard level, and then to estimate the 

economic impacts as measured by the net present value 

for those same candidate standard levels. Again, 

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because we also have to generate shipments forecasts, 

this is also another aspect of the national impact 

analysis, is to generate those shipments. 

 These are the four issues that have been 

identified in the ANOPR for public comment. I don't 

want to go through them here because after the 

presentation, we'll go over each one of these issues. 

So the next couple of slides will give you an example 

of the type of results that we generate with our 

national impact analysis. And what you're seeing here 

is an example for the 11 EER candidate standard level 

for the 65-135 equipment class. 

 What we did is we summed the annual 

national energy savings from the assumed effective 

date, and for the ANOPR it was 2008, all the way out 

to 2035. I note you get this steady growth in the 

annual energy savings due to the fact that new 

commercial air conditioning is coming into the 

commercial building stock. Because the lifetime on 

average is 15 years or plateaus in 2023, 15 years 

after the assumed effective date. 

 FACILITATOR BROOKMAN: Richard Lord, yes. 

 MR. LORD: Richard Lord. Quick question 

there, on your shipments, did you assume all units 

were going from the lower efficiency to the higher 

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efficiency? 

 MR. ROSENQUIST: No, we didn't look into 

equipment switching. Is that what -- 

 MR. LORD: You know, there's current 

products today that are being shipped that are above 

minimum efficiency. 

 MR. ROSENQUIST: Right. Yes, we did take 

that into account, and I'll get to that. And this is 

the example of our net present value results. And 

again, for the same candidate standard level, 11 EER 

for the same equipment class, 65-135, the top chart 

shows you the annual non-discounted economic impacts. 

And what you see here in the blue columns are the 

national annual operating cost savings. And like the 

national energy savings, those grow at a steady rate 

as new air conditioning comes into the commercial 

building stock, and it also plateaus in the year 2023. 

 Those light green bars are the national annual 

equipment cost increases, and that red line is the net 

impact, basically the difference between the operating 

cost savings and the equipment cost increase. So in 

this particular case, we start seeing a benefit soon 

after the effective date of 2008. 

 Another thing you'll see, you probably 

already noted here is that we account for operating 

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cost savings all the way up to 2065, and that's 

because we account for those shipments that come into 

the commercial building stock in the year 2035, and we 

keep on tracking them for their full lifetime. 

 The bottom chart is the same thing, but 

discounted annual economic impact - same thing, blue 

column on the operating cost savings, the light green 

- well, you can barely see it, is the equipment cost 

increases, and the net impact is the red line. Again, 

that discount brings it down to a present value for a 

particular year, and we're using a 7 percent discount 

rate in this example in the present year 2001. And 

the NPV is the difference between the sum of those 

national annual operating cost savings and the sum of 

the annual equipment cost increases. And in this 

case, it's almost $1 billion. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Over a 60-year period, am I 

understanding correctly, from now going forward? 

 FACILITATOR BROOKMAN: Fifty. 

 MR. CRAWFORD: So we're talking $15 

million a year over the next 60 years. 

 FACILITATOR BROOKMAN: Jim, get on the 

microphone. 

 MR. ROSENQUIST: Yes. I think what Jim is 

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going to say is what that discount rate does to those 

annual energy savings that you're seeing out in the 

future, is basically brings them down to a very, very 

low value. 

 MR. CRAWFORD: They never get very big. 

 FACILITATOR BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: I was just going to point 

out that the only reason it goes out 60 years is to do 

a proper life cycle on the last unit stuck in at the 

end and let it wear out. It's not really the benefits 

over 60 years. 

 MR. CRAWFORD: I understand that, but the 

fact still remains, taken out 30 years, the net 

present value of these savings for the people who are 

going to make the purchases are very, very small. 

 FACILITATOR BROOKMAN: Let's let Jim 

McMahon follow on there. 

 MR. McMAHON: Thank you, Doug. Jim 

McMahon, Lawrence Berkeley Lab. The reason for 

presenting the two graphs here is so that you can have 

a fair perspective. If you look at the top graph, the 

annual savings not discounted in the about 2030 period 

are about $300 million per year - that's the energy 

cost savings. And the equipment increase is under 

$100 million. I can't read the exact number from 

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this, but we have the information. When you discount 

at a 7 percent rate, anything 14 years from now is 

discounted by half, and so on. Every 14-year interval 

you get discounting by another half, so the things 

that are 25, 30, 50 years out, basically don't count 

very much when you add up the net present value. So 

it's not appropriate to take the net present value and 

divide it by the full time period. That doesn't give 

you a meaningful metric. 

 FACILITATOR BROOKMAN: Charlie Stephens. 

 MR. STEPHENS: Yes, Charlie Stephens. I 

was just going to make the observation that using a 6 

or 7 percent discount rate, real discount rate, 

anything at 25 years out is effectively worth nothing, 

so there's no sense looking out that far. 

 FACILITATOR BROOKMAN: Anything that 

depreciates. 

 MR. STEPHENS: Yes. 

 FACILITATOR BROOKMAN: Yes. Okay. 

Additional comments on this? Thanks for that 

explanation, Jim. 

 MR. ROSENQUIST: Okay. The next slide is 

a very simplified flow chart of the process that we 

use for calculating national energy savings and the 

national economic impacts. Again, there are two 

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primary inputs here, and those are the outputs from 

the LCC analysis, and the shipments forecast from the 

shipments model. 

 From the LCC analysis, what we're taking 

from that are the weighted average per unit values, so 

we're not using a distribution here, we're using 

actual weighted average per unit value for things like 

the total installed cost, annual energy use, repair 

and maintenance costs and so on. 

 The shipments model gives us the shipments 

forecast, that is the annual shipments out from 2008 

to 2035. And coupling that with our survival function 

gives you the stock of commercial unitary AC, so in 

very simple terms, to come up with these national 

energy savings and national costs and impacts, we're 

basically taking those weighted average per unit 

values that we're getting from the LCC analysis, and 

multiplying them by the stock of commercial unitary AC 

that we effectively get from the shipments model. And 

we quantify national energy savings with quads or 

quadrillion btus, or 10 to the 15th btus, and the net 

present value, we quantify that with billions of 

dollars. 

 So this lists many of the inputs that go 

into the national impact analysis. The first three 

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here, the total installed cost, the repair and 

maintenance cost, the annual energy use all come from 

the life cycle cost analysis. And as I just said, 

they're per unit weighted average values. 

 We take efficiency trends to forecast each 

one of those out into the future, because each one of 

those is a function of efficiency. And we build these 

efficiency trends, we build them for the base case - 

that's the case without standards in each candidate 

standard level case. And we developed them from these 

historical shipment weight efficiencies that we've 

gotten from ARI for residential and commercial air 

conditioners. 

 For energy prices, we're taking that 

weighted average tariff-based value from the life 

cycle cost analysis, which was 10 cents a kilowatt 

hour. And to get future marginal prices, like in life 

saver cost analysis we're using the Annual Energy 

Outlook to give us a price trend. And then using that 

to come up with a future price. And these energy 

prices are used to come up with the per unit annual 

energy cost by simply multiplying it by the per unit 

annual energy use. 

 Next are the electricity site-to-source 

conversion factors. And those are used to convert the 

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 energy savings at the site to the energy at the power 

plant. And again, we're taking these from the Annual 

Energy Outlook, and they take into account generation 

losses; that is, the efficiency of the power plant and 

distribution and transmission losses; that is, the 

losses associated with getting that power from the 

power plant to the site. And we're also taking into 

account how the capacity mix changes over time with 

those conversion factors. 

 Next we have the discount rate, and again, 

this is used to get the present value of those 

economic impacts. And Office of Management and Budget 

requires us to use discount rate values of 3 percent 

and 7 percent real, so what we're doing there is we're 

performing one set of economic impact calculations 

based upon the three percent real discount rate, and 

another set of economic impact calculations using the 

7 percent real discount rate. And for discounting to 

a year, we're using a year of 2001, we're using at 

least that for the ANOPR analysis. 

 FACILITATOR BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: On your shipments model, I 

know in the under 5-ton air conditioning there was 

some logic of major repair versus replacement into 

change in the cost of the equipment. Can you comment 

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on what sort of assumptions you're making on repair 

versus replacement scenarios, and availability of 

replacement parts after the standard takes into 

effect. 

 MR. ROSENQUIST: I have a slide, in two 

more slides I get to the shipments model. Can I defer 

that question until then? 

 MR. BRUNDAGE: That's fine. 

 MR. ROSENQUIST: Okay. Thanks. This goes 

into showing a little bit closer inspection, just of 

the inputs that go into the national impact analysis, 

and these both come from the LCC analysis, and it's 

the per unit total installed cost, and the per unit 

annual energy consumption. Just showing here the 

charts, and showing you how the per unit total 

installed cost and per unit annual energy use change 

with efficiency. Of course, note that we have two 

curves for each equipment class. 

 Okay. Now we get into the shipments 

model. And again, this is used to come up with our 

shipments forecast; that is, the annual shipments from 

our assumed effective date out to 2035. And as I 

mentioned before, when we couple that with the 

survival function, it gives us the stock of commercial 

unitary air conditioners. 

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 The first set of inputs are on the 

commercial building data, and specifically new 

construction data. New construction, of course, is 

one of the primary drivers for new shipments so that's 

important. We get our forecast of new construction 

data from the Annual Energy Outlook. We get 

historical data from the Census Bureau. Stock data, 

historical stock data gives us the amount of floor 

space, commercial floor space that uses unitary AC. 

And we're getting that from past surveys of the 

commercial building energy consumption survey. And 

CBECS actually gives us - when I say unitary AC, I 

mean all unitary AC in all capacity ranges whether 

it's air-cooled, water-cooled, or evaporativelycooled. Forecasted stock numbers comes from the Annual 

Energy Outlook. 

 This historical saturation data that we 

get from the Census Bureau allows us to go back to 

that CBECS data and actually pick out what percentage 

of that floor space is dedicated to the equipment 

we're interested in here, which is the air-cooled 65-

240. The replacement data, which is another big 

driver for shipments, we're getting our survival 

function from the life cycle cost analysis, again the 

one based on the 15-year median lifetime. So what the 

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shipments model does is it tracks all the stock of air 

conditioners by age, by vintage. And the survival 

function tells us when that equipment is likely to 

fail. 

 Now the next part which is trying to 

address Don Brundage's question, which is the purchase 

decision data. And we have these purchase decision 

models within the shipments model that - and this is 

the part that takes into account the effect of the 

efficiency standard through the increase in the total 

installed cost, and the drop in annual operating cost. 

And we also factor in the business income in these 

purchase decision models. And we get the total 

installed cost and annual operating cost from the LCC. 

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So again, this is the part of the model that accounts 

for the fact that when you have an increase in the 

price of the equipment, it'll try to forecast what 

that drop in shipments will be due to that increase in 

the cost. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. Again, I don't know what it is 

with commercial unitary package units. I know with 

other equipment that there's a lot of used equipment 

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floating around. And if there are commercial 

businesses that close, sometimes the equipment from 

one place goes to another place, or it gets 

refurbished, so I don't know. Again, I know like 

restaurants in particular, there's a lot of used 

cooking equipment out there that goes around, and 

refrigeration equipment that gets refurbished or keeps 

getting reused. There might be an interesting study 

in terms of used equipment and what kind of impact 

increased prices might have on use of I'll say used 

package equipment out in the market. 

 FACILITATOR BROOKMAN: Karim. 

 MR. AMRANE: Yes, Karim Amrane with ARI. 

Regarding your historical shipment data, you've used 

census data for that. However, it is my understanding 

that census data looked at everything that's shipped 

out of the factories, whether it's intended for the 

domestic market or for exports. So basically, your 

historical data includes exports, which are irrelevant 

for this rulemaking. 

 MR. ROSENQUIST: Okay. We got some 

historical data from ARI, and rather than jeopardize 

the confidentiality agreement we have with you, we 

just went ahead with the census data. But we did look 

at that date and make sure that what we have from the 

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census was reasonable. There are some discrepancies, 

and that's probably one of the reasons for that 

discrepancy. 

 FACILITATOR BROOKMAN: Jill, I don't want 

to put you on the spot. Did you have a response to 

what Steve was saying about used equipment? 

 MS. HOOTMAN: Jill Hootman. I really 

don't feel that in this marketplace there is a used 

equipment at all. I mean, the refurbishers of 

restaurant equipment, there is literally businesses 

that do that and refurbish it and resell it. And 

there are no such businesses of HVAC equipment, so it 

pretty much gets trashed. 

 FACILITATOR BROOKMAN: Thank you. Richard 

Lord. 

 MR. LORD: Maybe to help on that, if you 

look at the ASHRAE 90.1 Code, replacement equipment 

has to meet the minimum efficiency standard, so if 

you're doing a renovation to a restaurant, it has to 

have the latest efficiency equipment on it. 

 FACILITATOR BROOKMAN: Follow on, Charlie. 

 MR. STEPHENS: Yes, Charlie Stephens. I 

was going to say, it requires a mechanical permit in a 

commercial building, and you can't put old equipment 

that doesn't meet modern standards onto the building 

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regardless of the fact that it's an old building and 

an old piece of equipment. It has to still meet 

modern code. Not only that, but in some cases you'd 

pay more to put it on the roof and install it than you 

would for the equipment, depending on the size, so it 

really doesn't make much economic sense in most cases. 

 FACILITATOR BROOKMAN: Okay. Thank you 

for answering that. Other questions, comments related 

to the shipments model? Okay. I'm sorry, Jim. 

 MR. CRAWFORD: I just want to take -- if 

we can step back one chart to 9. I wanted to get - 

while Greg had it - he was on the roll there, I wanted 

to let him go. I'm of the opinion that this chart 

does not reflect some of the factors that were raised 

earlier. I think Dick Lord made a very strong point 

of the fact that the -- as you get out in the 11 to 12 

region, that the curve will tip upwards rather 

sharply, and I would say much more so than this. And 

if I look to the right-hand side of Chart 9, my 

eyeball tells me that those are straight lines, and 

the annual energy use is not a linear function of the 

SER. So when you're on a small region non-linear 

curves can look pretty linear, but we need to be 

careful that we don't get caught in that trap. 

 FACILITATOR BROOKMAN: Other comments on 

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the shipments model before we move on to maximum 

saturation. Let's go there next. 

 MR. AMRANE: Going back to my question 

about the shipment data, and the packages overestimated by at least to my calculation about 20 to 30 

percent, tells me that your energy savings analysis is 

over-estimated by 20 to 30 percent, as well. So 

that's significant, and that should be corrected 

because we have to justify energy savings in order to 

come up with new standards. 

 FACILITATOR BROOKMAN: Thank you. You said 

you had another source, his source that you could 

check back with. Right? 

 MR. ROSENQUIST: Right. And we'll talk 

when I get back to the office about that more 

specifically. 

 FACILITATOR BROOKMAN: Okay. 

 MR. CRAWFORD: Doug, I just want to pursue 

that further, just to reinforce the point that Karim 

has made. And further, that -- let me stick my neck 

out for the industry. I think that a very simple 

request will provide the correct data. We're not 

going to hide our cards here. We will provide under 

proper circumstances the correct data to the 

contractor. 

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 MR. AMRANE: This is Karim Amrane again. 

We have already provided the correct data, so he 

already has it. 

 FACILITATOR BROOKMAN: Excellent. Thank 

you for clarifying that, Karim. So let's move on to 

maximum saturation of -- oh, I missed one. Harry. 

 MR. MISURIELLO: Excuse me. I just want to 

get a clarification on that. On page 926 and page 923 

of the technical support document, there are 

forecasted shipments, and the base case is standards 

cases. Is this the data that's in question? 

 MR. ROSENQUIST: That's forecasted. 

 MR. MISURIELLO: Right. 

 MR. ROSENQUIST: Right. We're talking 

about historical. So since we're using historical 

shipments to calibrate our model, it's an issue of 

what those forecasted shipments would be as a result 

after that calibration. 

 MR. MISURIELLO: Okay. 

 FACILITATOR BROOKMAN: Okay. 

 MR. MISURIELLO: Thank you. 

 FACILITATOR BROOKMAN: So now we're moving 

on to maximum saturation of commercial unitary air 

conditioning equipment, ANOPR Issue 12. 

 MR. CRAWFORD: Harry, did you understand 

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the distinction between the census data and how -- 

 MR. MISURIELLO: No, I didn't get the 

distinction between the census data and the -- 

 MR. CRAWFORD: Census data is going to 

include -- I realize I'm not on the record. 

 FACILITATOR BROOKMAN: This is Jim 

Crawford speaking on the record. 

 MR. CRAWFORD: Okay. Jim Crawford. The 

census data is all shipments. That includes that 

which goes to the domestic market, and that which goes 

to the export. ARI has provided and will review it if 

it's desired, the data which distinguishes between the 

two, and enumerates those separately so that we can 

identify that which has gone to the domestic market. 

 MR. MISURIELLO: This is Harry Misuriello. 

Clarification - and the estimate is that 30 percent 

of the units are exported? 

 MR. AMRANE: Around 20 to 30 percent, 

there's a discrepancy -- 

 FACILITATOR BROOKMAN: Excellent. Thanks, 

Karim, for that clarification. Okay. Now we're on to 

slide 12. 

 MR. ROSENQUIST: Slide 11. 

 FACILITATOR BROOKMAN: Pardon me, 11. 

Issue 12. 

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 MR. ROSENQUIST: Issue 12. First issue 

identified in the ANOPR, applying the national impact 

analysis is this issue of maximum saturation of 

commercial unitary AC. Again, saturation is defined 

as the percent of commercial floor space with this 

type of equipment. And using the historical shipments 

and market data, current estimates are 12 percent of 

commercial floor spaces as cooled with unitary AC in 

the 65-240 kBtu/h range. 

 For purposes of forecasting, we assumed a 

maximum saturation of 20 percent, which is 

approximately 10 percent per equipment class. So what 

the Department is seeking comment on is whether this 

maximum saturation value is reasonable. 

 FACILITATOR BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

You say it's historical shipments market data indicate 

current is approximately 12 percent, and then you say 

maximum of 20 percent. Is there any time frame, or is 

that what -- I'm just kind of curious about the trend 

data, how you projected 20 percent at some point. 

 MR. ROSENQUIST: It was an estimate. It 

was our estimate, just based upon the data that we 

looked at, the historical data that we looked at, and 

what possibly it could be, so that's why we're 

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specifically looking for input on this number. 

 MR. ROSENSTOCK: Steve Rosenstock again. 

Just maybe for clarification, and it was probably in 

the technical support document but 10 years ago what 

was the saturation, what was it in `94 versus 2004, 

just out of curiosity. 

 MR. ROSENQUIST: You know, I don't have 

that number off the top of my head. 

 FACILITATOR BROOKMAN: Any additional 

thoughts or comments, additional information or data? 

 Yes, Tom Eckman. 

 MR. ECKMAN: Well, this is not national 

data. We've within the last year completed a 

commercial building stock assessment -- 

 FACILITATOR BROOKMAN: Louder, Tom. 

 MR. ECKMAN: While this is not national 

data, we do have a recent survey of northwest building 

stock, commercial building stock, and I'll submit 

that. It has a survey that was done in `87, and then 

the same buildings were re-surveyed in 2001, and we 

have construction building characteristics that go 

along with those, so there may be some information in 

there in terms of the change in saturations of this 

type of equipment over that period of time, so it 

might help some calibration. 

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 FACILITATOR BROOKMAN: Would you speculate 

that your markets are like the national markets? 

 MR. ECKMAN: I'd speculate and I'd be 

wrong. 

 FACILITATOR BROOKMAN: Just curious. 

Okay. I just wanted comments on that maximum 

saturation. And we're moving on to slide 12, Issue 

13, future building types. 

 MR. ROSENQUIST: Yes, future building 

types. I'm using commercial unitary AC. Again as I 

noted earlier, new construction is a primary driver 

for new shipments, and we got a new construction 

growth projections from the AAO. And th is provides 

us with an average value for all commercial floor 

space, so we didn't take into account whether or not 

any particular building type that uses unitary Ac 

would have a stronger growth rate of using this 

equipment, so again we don't disaggregate by building 

type. We apply this new construction growth rate to 

all building types. So what we're wondering here is, 

again if there's a building type, specific building 

type that uses this equipment, whether or not it has a 

stronger growth rate, because if it does, it may 

affect our shipments forecast. So what we're looking 

for input on is whether or not we should try to take 

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disaggregated growth rates into account, basically 

whether it makes any difference, whether you think it 

makes any difference on these forecasts. 

 FACILITATOR BROOKMAN: Tom Eckman. 

 MR. ECKMAN: I do note just from looking 

at some of the data that the "big box" retail in 

particular has been a huge square footage and a clear 

user of this equipment, and they weren't even in the 

1980s building stock assessment that we did. And they 

dominate the new construction market in terms of 

retail square footage now, so it's clear that there's 

a differential. 

 MR. ROSENQUIST: The other thing I haven't 

noted here is that in addition to those growth rates 

that are disaggregated by building type, and also like 

to know the shipments that are going to these 

different types, because that way we can account for 

it in our shipments model. 

 FACILITATOR BROOKMAN: Richard Lord. 

 MR. LORD: Richard Lord again. Just to 

comment on the big box builders, and most of those 

guys are buying premium efficiency units, so they're 

already up at the 10-1/2s and 11s-type ranges. And 

I'm not sure how you factor that in, because people 

are shifty based on rebates and things like that. 

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 MR. ROSENQUIST: Yes, we don't 

differentiate whether or not a particular building 

type uses more efficient equipment than another 

building type. 

 FACILITATOR BROOKMAN: Yes, Steve 

Rosenstock, then Jim. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

If these are the primary movers of the growth rate, 

and they're already putting in the higher efficiency 

equipment that should have an impact on your national 

energy savings analysis. If they're already buying a 

10-1/2 or 11, there will be -- just by numerically 

there has to be less -- there might be less energy 

savings because they're already doing it. 

 MR. ROSENQUIST: Yes. I said that was one 

of the primary drivers. The other one, of course, are 

replacements, and that's still the predominant driver 

for shipments. I just wanted to give you that piece 

of information. 

 FACILITATOR BROOKMAN: Steve, follow on. 

 MR. ROSENSTOCK: Yes. Well again, just 

for the new construction segment, that if that's the 

case, and if ARI or others have data that show that 

for new construction the "big box" retailers are X 

percent of the new construction, and they're already 

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buying high efficiency, it should be put into the 

model. Thank you. 

 FACILITATOR BROOKMAN: Jim Crawford, and 

then Charlie Stephens. Go ahead, Jill. 

 MS. HOOTMAN: Jill Hootman. I would say 

also that the big box retailers are on a cycle of 

replacement of their existing facilities, and also, 

they're replacing with a higher efficiency equipment. 

I mean it is equally at that very same level. So 

they're almost, in some cases, growing at a faster 

rate in that than they are in their new construction. 

 It depends on who you're talking about, but 

definitely big box retail, and even the smaller 

retailers. 

 FACILITATOR BROOKMAN: Charlie Stephens. 

 MR. STEPHENS: Yes, Charlie Stephens. 

Speaking from our own experience, it might be useful 

to look at who's already adopted ASHRAE 99 codes. I 

mean, we have, and so that is the floor right now in a 

lot of places wherever that's already been adopted. 

 MR. ROSENQUIST: I just want to say the 

way we take that into account are in this equipment 

efficiency trends, so because again per unit install 

costs and on and on, and on are a function of 

efficiency. Our efficiency trends allow us to 

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estimate what those costs would be then based upon 

efficiency. 

 FACILITATOR BROOKMAN: Jim. He defers to 

Richard. 

 MR. LORD: Richard Lord again. I guess 

the question is your base for the savings - was it the 

ASHRAE 90.9 or 90.199 level or 89 level? 

 MR. ROSENQUIST: No. In our base case, 

it's actually looking at what's in the market, and 

what we forecast to be in the market without 

standards, so we have a historical shipment rate 

efficiency values from ARI, and then those are 

projected out into the future based upon that 

extrapolation from those historical values. So to the 

extent that the shipment-weighted efficiencies take 

into account the product that's being sold at ASHRAE 

90.1 level, we take that into account. 

 MR. LORD: Clarifying question - so you 

have factored in the states who have already adopted 

the 90.1? 

 MR. ROSENQUIST: Yes. Implicitly, yes. 

 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Jim Crawford. I'm a little 

bit confused as to what will be the application of all 

this information that's been flowing out here the last 

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several minutes. I'm guessing that the penetration 

rate discussion relates to your projects of the growth 

of the installed base over a period of time. And if 

I just go by my causal survey, I think that commercial 

space is pretty close to saturated right now. Now 

I'll grant you that living in Texas, my viewpoint is 

skewed somewhat, but you have to ask are there major 

categories of property that are not air conditioned 

today in the commercial sector where there are likely 

to be air conditioners sometime downstream. And we've 

had decades of growth reaching a saturation level, and 

if air conditioning is substantially saturated in the 

commercial sector, you're not going to see growth 

other than growth in square footage. 

 FACILITATOR BROOKMAN: Jim Mullen. All 

set? Harry. 

 MR. MISURIELLO: Yes, Harry Misuriello. 

DOE last year issued a report forecasting the future 

of b buildings, their use, their construction type, 

and that type of thing. And it's a very interesting 

report. The author and the name escapes me right now, 

but maybe I could put that in my written comments as a 

source for -- 

 FACILITATOR BROOKMAN: That would be 

helpful. Was it EIA? 

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 MR. MISURIELLO: No, it was EERE I 

believe. 

 FACILITATOR BROOKMAN: Okay. Thank you. 

 MR. MISURIELLO: A very informative report 

about forecasting the future of building construction 

use and so forth. 

 FACILITATOR BROOKMAN: Additional comments 

on these two slides. We've kind of taken them 

together - 12 is what we left off on. Yes. No more 

comments there? Then on to 13. 

 MR. ROSENQUIST: The last two issues have 

been put on the same slide here, and they have to deal 

with the candidate standard levels, and the effective 

date of new standards and the phase-out of R-22. Just 

a little bit of background. 

 What we've done in the ANOPR analysis is 

looked at candidate standard levels from 10-12 EER in 

half EER increments. In addition to that, we actually 

did analyze the ASHRAE standard 90.1 1999 efficiency 

levels, although they assume the effective date for 

that one was basically immediate adoption in 2004. 

 The Department has already identified as 

possible alternative standard scenarios include an 

effective date that would coincide, effective date of 

the standard that would coincide with the phase-out of 

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R-22. The second one is a possible two-tier standard, 

moderate increase earlier followed by a more stringent 

increase later. 

 All this could be a moot point considering 

what we heard first thing this morning, but the 

Department is seeking comment on these standard 

scenarios, and specifically this issue of the 

effective date, and whether it should coincide with R22, the phase-out of R-22. 

 FACILITATOR BROOKMAN: Karim first. 

 MR. AMRANE: Karim Amrane. A couple of 

comments. First, regarding your ASHRAE 90.1 1999 

levels, and when you did your net energy savings 

analysis, you started in 2004. However, the impact is 

very specific, it gives starting date of two years 

after the ASHRAE effective date for products between 

65-135,000 btus, and three years for product between 

135-240,000 btus. So at least for the products from 

65 to 135, the starting date should be 2003, because 

the ASHRAE effective date was October of 2001. That's 

something that should be corrected in the analysis. 

 Regarding the effective date of the new 

standard as industry, of course, I mean as you heard 

this morning, I think the effective date in industry 

and energy efficiency is January 1st, 2010, which makes 

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sense from our point of view because it's the date 

where the R-22 is going to be phased out. 

 FACILITATOR BROOKMAN: Thank you. 

Richard. 

 MR. LORD: Yes, I just wanted to get back 

to a point I made earlier about the RND, the capital 

cost, the cost to do both an efficiency change and a 

refurbishment change are huge, trying to do them in 

two separate steps can be a big burden on the 

industry, so factor that in when you look at this. 

And plus, the timing associated with a typical average 

development cycle, 3 to 4 years with some significant 

time spent at that. 

 FACILITATOR BROOKMAN: So do them together 

and be thoughtful about the date. Please, Jill. 

 MS. HOOTMAN: Jill Hootman. I would 

concur with Mr. Lord, and I would say that as an 

industry we're faced with millions of tons of 

equipment that all have to be changed by 2010, this 

being one portion of them. If you look at what we 

have to add in product development cost and capital 

costs between now and 2010, it's amazing. And if you 

were to add incremental steps in-between there that we 

also have to change efficiency, it would be 

significant and double, triple our costs, so those 

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should be factored in here in the fact that they would 

escalate. And then they'd all drop off. 

 FACILITATOR BROOKMAN: Okay. You're 

beginning to make the transition to the next phase of 

the presentations, which is about the stuff that's 

prospective than NOPR. That means your comments 

relate there. So additional comments? Yes, Don 

Brundage. 

 MR. BRUNDAGE: This may not be strictly on 

the subject here, but it occurred to me when you 

started talking about the change out. With the 410A 

refrigerant, it's my understanding you can't just top 

it off because it's non-azerotropic. Is that the 

correct -- 

 MS. HOOTMAN: It is. 

 MR. BRUNDAGE: So you can top off, so 

there would not be a maintenance difference other than 

the price of the refrigerant going to 410A. Is that 

correct? Okay. 

 FACILITATOR BROOKMAN: Thank you. 

Additional questions or comments related to these 

ANOPR Issue 3 and 15 listed on slide 13. Jim 

Crawford. 

 MR. CRAWFORD: Jim Crawford, just very 

quickly. I would certainly encourage that we restrict 

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our thinking to single step rather than thinking about 

multiple tiers, one now, one later. I mean, people 

have been talking about times when this process 

started when I still had hair, and that was a long 

time ago. And the second point would be that the 

importance of timing here I think re-emphasizes the 

benefit to be derived from the agreement that was 

mentioned earlier today. We've got an opportunity to 

move forward, and I hope everybody can get on board 

and I hope everybody who's on board can stay on board. 

 FACILITATOR BROOKMAN: Thank you. As I 

just cast around the room, it seems that all the 

manufacturers share this viewpoint, not about the 

prospective agreement that you announced this morning, 

but about these things being lined up. Okay. All 

right. Don Brundage. 

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helpful in discussing this process to know what you 

agreed to that you can't tell everyone else yet, so 

when that information is available, I would be 

interested in hearing about it. But along these lines 

of the effective date, would the manufacturers be 

amenable to -- I mean, basically you're going to have 

to switch by 2010. Would you be amendable to an 

implementation date before 2010? 

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 FACILITATOR BROOKMAN: Jim Crawford. 

 MR. CRAWFORD: Not much before 2010. I 

think -- I believe it was Dick that said -- anyway, 

either Dick or Jill said about a four-year lead time, 

and that's per product. And the bottleneck in this is 

not just human resources, the bottleneck in this is 

the laboratory test facilities capable of doing the 

testing to the DOE standards for this equipment. And 

there's a very distinct limitation on that in the 

world, and it runs pretty close to saturation most of 

the time. And some of the larger equipment that is 

included in this agreement that we're not talking 

about would even further stress that challenge. 

 FACILITATOR BROOKMAN: Jim Mullen. 

 MR. MULLEN: Just a quick comment. I 

think 2010 is earlier than if this rulemaking 

concluded at a normal pace with a full implementation 

date. 

 FACILITATOR BROOKMAN: Karim. 

 MR. AMRANE: Karim Amrane, ARI. I just 

wanted to point out, as well, that 2008 is not 

realistic because we are in 2004, and if today we had 

to issue final rule, the rule would effective in 2008. 

 FACILITATOR BROOKMAN: Today. 

 MR. AMRANE: Yes. 

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 FACILITATOR BROOKMAN: Okay. And going to 

the earlier request from Don Brundage, I imagine that 

the Department will make its email list available to 

you from this workshop, for example, as a distribution 

source should that be something people wanted to use. 

 MR. BRUNDAGE: Don Brundage. We all know 

each other anyway. 

 FACILITATOR BROOKMAN: Okay. In a matter 

like this, you want to make sure that no one gets left 

out. Okay. Michael Martin. 

 MR. MARTIN: Yesterday we were talking 

about an unnamed appliance, and now we're talking 

about a mystery agreement. I would like to point out 

that it really was the intent of all parties that we 

would have this thing in front of you today, but it 

got held up in questions as to how much a commissioner 

can commit an unappointed commissioner who's going to 

replace him, and exact wording, and how we get all 

these manufacturers to sign one document. And it's an 

administrative problem, but we really did intend to 

have this out in front of you today. And it's a shame 

it's being handled as a half a secret. But I'm sure 

the minute we get the signatures on there, there'll be 

a press release. 

 FACILITATOR BROOKMAN: So we're about to 

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shift gears here and move to the prospective work; 

that is, the NOPR analysis in next steps, and there's 

also a period here prior to that listed on the agenda 

for discussion of other issues. Michael Martin, you 

said that you might like to raise one more issue. 

 MR. MARTIN: Yes, I have one minor issue 

which I hope is not an issue at all, but I'm a little 

scared about it. At the present time, we talk about 

the existing standards, and the existing standards are 

based according to the federal law on the standard 

that was in effect on the 30th of June in 1992. And 

DOE has been trying to update the standards to the 

current standards. And I learned at lunch time that 

the galley proofs for Federal Register were being 

proofread, and this was going to be published very 

soon. But what could conceivably happen is that 

having different test methods than the ones that we 

are aware of, we have another mystery document here. 

This could affect some of the meanings of some of 

these levels we're talking about. But I'm assured 

that that will get published very soon. I hope it 

will get published before the final date that we have 

to provide comments by. 

 FACILITATOR BROOKMAN: Yes. Steve 

Rosenstock. 

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 MR. ROSENSTOCK: Steve Rosenstock - 

clarification. Are you saying that the mystery 

document is like revised test procedures for this 

equipment? 

 MR. MARTIN: It's not really a mystery 

document. We had extensive rulemakings several years 

ago, but we never got a final rule out. 

 MR. ROSENSTOCK: So it would be a final 

rule for the test procedure for this class of 

equipment. 

 MR. MARTIN: That is correct. 

 MR. ROSENSTOCK: Okay. 

 FACILITATOR BROOKMAN: Francine Pinto. 

 MR. MARTIN: I don't think we forgot it. 

 MR. ROSENSTOCK: You never forget anything 

in California. 

 FACILITATOR BROOKMAN: Let's hear from 

Francine. 

 MS. PINTO: This is Francine Pinto, 

General Counsel's Office. Michael is referring to the 

four commercial test procedures, and they have been 

vetted quite extensively, so they shouldn't be a 

mystery to all of you. And those are the documents 

that Michael is referring to that are now in the 

galley proofs doing the final proofreading, and about 

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to be published. 

 FACILITATOR BROOKMAN: Okay. Michael. 

 MR. MARTIN: And I presume that they would 

also discuss within the Federal Register notice what 

effect this might have, or what the differences would 

be between the proposed final rule -- I guess it's not 

a proposed final rule, the final rule and the old 

standards. 

 FACILITATOR BROOKMAN: Francine. 

 MS. PINTO: Correct. Two of them, I can't 

remember which ones, will be direct final rules 

because there were some industry changes in the time 

within which these have been processed, and that will 

give all of you a short period of time, because we 

didn't think we were going to have significant adverse 

comment, to make any comments. So two of them will 

become effective in 60-days if we don't get 

significant adverse comment. And the other two I 

think are effective, what is it, 30 days? 

 FACILITATOR BROOKMAN: Thirty days. 

 MS. PINTO: Thirty days. 

 FACILITATOR BROOKMAN: Srinam. 

 MR. SOMASUNDARAM: Yes. Srinam 

Somasundaram. Of pertinence here is the commercial AC 

and heat pump test procedure rule. That is a direct 

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final rule, and so we're not worried about the other 

three test procedures here today. And just so 

everybody knows, the direct final rule will adopt ARI 

340/360 as the test procedure for these two classes of 

equipment, so no mystery. 

 FACILITATOR BROOKMAN: Thank you for that 

clarification. That's helpful. So I think we're 

ready to move then to the final presentation here, 

unless anybody else has any other summary comments or 

any other comments they'd like to make before we start 

looking ahead, as it were, if necessary toward the 

NOPR. Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Could we get a five minute break? 

 FACILITATOR BROOKMAN: Yes, I guess we can 

have a five minute break. Yes, we could, but let's 

not do more than five. Okay? Be quick. 

 (Whereupon, the proceedings in the aboveentitled matter went off the record at 3:55:17 p.m. 

and went back on the record at 3:59:58 p.m.) 

 FACILITATOR BROOKMAN: Okay, so our next 

presenter is Jim McMahon. And he will be accompanied 

for parts of this by Mike Rivest. 

 I would ask as a matter of courtesy, 

please -- hey, folks -- as a matter of courtesy, for 

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those of you that are leaving, please do it quietly so 

everybody else can hear the presentations well. 

 Ready? 

 MR. McMAHON: Yes. Thank you, Doug. Jim 

McMahon, Lawrence Berkeley National Lab. I'll be 

referring to handout entitled NOPR Analyses and Next 

Steps. 

 Slide 2 is a diagram that basically shows 

the flow of the -- on the top, the entire rulemaking 

and on the bottom, the NOPR analyses, in particular. 

And we're going to step through each of the steps on 

the bottom. 

 Starting with the first one is revise the 

ANOPR analyses. The ANOPR analyses included 

engineering analysis, life-cycle cost and payback, and 

national impacts analysis. 

 And after comments are received, the 

Department will consider the comments that were 

received today and in writing and those that are 

received in writing by the end of the comment period. 

 We will revise these analyses where 

appropriate using more recent data. And for the lifecycle cost analysis, we will conduct the life-cycle 

cost subgroup analyses. 

 And Slide 4 is the issue of the subgroups. 

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 For this product, small businesses have been 

identified as a possible subgroup but we do not have 

annual revenues for businesses in the buildings 

analyzed in the life-cycle cost analyses. So we're 

welcoming comments on building characteristics that 

can be used as an indicator of annual revenues in 

order to identify those smaller businesses. 

 Are there any comments or suggestions or 

questions at this time? 

 Steve? 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

In terms of indicate -- are you -- you're looking for 

indicators of annual revenues based on building 

characteristic? I'm -- 

 MR. McMAHON: Let me explain. We have the 

CBECS buildings, the 1,033 buildings that represent a 

large share of commercial buildings and that have 

unitary air conditions. But we have no way in the 

CBECS survey to identify small versus large 

businesses. 

 So if it's important to identify small 

businesses, we're wondering if there's any indicator 

that is in CBECS that we could use or that, you know, 

you can think of that we can use in order to separate 

those businesses that should be a subgroup. 

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 MR. ROSENSTOCK: Well, again, and again I 

have to dig into CBECS, but again, just the -- I think 

CBECS does dis-aggregate by size of building, does it 

not? 

 MR. McMAHON: Yes, it does. 

 MR. ROSENSTOCK: The smaller the building 

the smaller the business typically, especially if 

there's indicators that show it's a standalone type of 

operation. If CBEC shows under 5,000 square feet 

standalone building, it's more likely than not to be a 

"small business". 

 And, again, hopefully there's indicators 

that say what type of small business that, you know, 

that again -- and, again, in terms of "small business" 

in terms of the revenue, there might be information at 

the Department of Commerce, Small Business 

Administration, that might also help in terms of 

"annual revenues", annual sales. 

 But you can look at size or also -- 

there's also the -- if there's, again, peak demand 

data, for example use, you know, five to eight watts 

per square foot and you think it's, you know, 25 or 50 

KW peak demand, divide that by five or eight and it's, 

you know, other -- you get that on to the same square 

footage basically. 

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 So those type of indicators you can use, 

at least as a first order, it might help you out. 

 MR. McMAHON: Okay. Thank you. Any other 

comments? 

 (No response.) 

 MR. McMAHON: Seeing none, Slide 5 moves 

us to the next step, which is trial standard levels. 

Slide 6 defines these. The purpose of this step is to 

develop a list of standard levels from which impacts 

are weighed. And one of those trial standard levels 

would be selected as the proposed standard in the next 

round. 

 The trial standard levels are created by 

product class so it would be different for the product 

classes that we're dealing with here. Potentially 

they may be different. 

 And the NOPR analyses will assess the 

impacts for the trial standard levels, which is a 

composite of those developed for each of the classes. 

 So the method is to assemble the trial 

standard levels from the product classes. Typically 

in the past, the criteria that have been used to set 

up trial standard levels are such things as max tech, 

minimum life-cycle cost, three-year payback, or 

something else. 

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 So the next slide indicates that we would 

welcome comments about what kind of criteria should be 

used in order to select trial standard levels or any 

other comments on this topic. 

 (No response.) 

 MR. McMAHON: No comments? Okay. 

 Slide 8 moves us to the next topic which 

is manufacturer impact analysis, Mike Rivest. 

 MR. RIVEST: I'm Mike Rivest. I'll be 

performing the manufacturer impact analysis and also 

presenting today. I'd like you to keep in mind as I 

go through the slides, in the context of the 

negotiated rule, how we might alter this standard way 

that I've presented over the last couple of days. 

 The purpose of the manufacturer impact 

analysis is to assess the impact on manufacturers of 

increasing the standard levels. 

 And one of the very important aspects of 

the MIA is also to look at the cumulative burden of 

different regulations. It can be other regulations on 

these same products such as the refrigerant phaseout 

or it can be impacts of standards on other product 

lines made by the same manufacturers. 

 One other key aspect is to look at the 

industry subgroups which may exist. And I'll be 

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looking towards you to help me assess if there would 

be a need for assessing different subgroups of 

manufacturers. 

 And we have two primary tools to do the 

manufacturer impact analysis. One is the Government 

Regulatory Impact Model, or GRIM for short. And 

that's a discounted cash flow methodology which has 

been provided, in fact, by industry to DOE. 

 And the other tool is an interview guide. 

This guide has also been developed over the years 

over a number of MIAs that we've performed with 

industry, one, in particular, with ARI. 

 The output of the MIA is obviously a 

chapter in the TSD, which will document the cash flow 

results. And also qualitatively describe some of the 

other impacts that may be faced by the industry. 

 The MIA is performed into three phases and 

is concurrent with all aspects of the rulemaking. 

 In Phase 1, an industry profile, that's 

the part of the analysis where we look at industry 

10(k)s, for example, and get a feeling for the 

products that are being manufactured, by which 

manufacturers, the types of technologies employed, and 

the cost structure of those manufacturers. 

 Phase 2, it consists of putting together 

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our two tools, the GRIM and the interview guide. To 

give you a status, right now we have developed a 

strawman GRIM for the unitary product industry. And 

we've also got a draft interview guide. 

 They're not finished and the reason 

they're not finished is a lot of the inputs required 

for the GRIM are developed in the engineering 

analysis, for example, and in the shipments analysis. 

So until those analyses are firmed up, you know the 

GRIM is subject to change. 

 And when I say it's relatively ready, I 

mean that we have a working model that evaluates the 

base case impacts and we have proxies for a lot of the 

inputs required for the standards impacts. And those 

we will be validating during our interviews. 

 Phase 3, as shown here, is the interview 

process. And typically these interviews, in the 

normal course of a rulemaking, would be performed once 

the ANOPR analyses have been completely updated with 

all the new data and based on comments received. 

 This is just to show, as I mentioned, that 

the MIA is not necessarily just a step in the process. 

It's a parallel path where we consider impacts on 

manufacturers through, you know, the entire 

rulemaking. 

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 And we make sure that all information that 

we have is filtered into the various analyses. So, 

for example, development of the cost model in the 

engineering analysis is instrumental to understanding 

what the manufacturing impacts might be later on. 

 The industry profile, as I described, is 

used primarily to get an understanding of manufacturer 

products, product lines, and typical cost structures. 

The data sources are primarily public data sources 

such as manufacturer 10(k)s or industry reports. 

 This is just a simplified view of the GRIM 

model. The key point here is that the GRIM model 

really integrates a lot of data from various analyses, 

the manufacturing costs from the engineering analysis, 

financial information derived in the industry profile, 

manufacturing prices, which are also primarily the 

result of the manufacturing costs, and the shipments 

from the national energy savings spreadsheet. 

 The interview guide I would say has two 

primary functions. One is to validate the inputs that 

are used in the cash flow analysis so we'll review 

with manufacturers the engineering analysis inputs. 

We'll also be reviewing the shipments outputs from the 

NES, or inputs from the NES. 

 We touched on this -- we talked a little 

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bit about this earlier. One of the key drivers of 

impacts are the conversion costs or those first-time 

costs necessary to modernize or to modify the 

production facilities. 

 So we'll be spending a considerable amount 

of time talking about your costs such as increased 

tooling, increased plant requirements for R&D, or 

product testing, for example. 

 We do have values for those in the 

engineering analysis and in the GRIM but the 

difference here in the engineering analysis, what 

we're taking into account is depreciation, whereas in 

the cash flow analysis, it's the much more dramatic 

one-time costs that come in on the cash flow that 

we're modeling. 

 Other topics in the MIA include the impact 

on employment, consolidation and competitive impacts. 

We do work with DOJ and DOJ gets a copy of the 

interview guide. And we make sure that we incorporate 

the types of questions that they need to perform their 

own competitive -- their impact on competition 

analysis, which is part of the NOPR process. 

 As you see very explicitly, we will be 

looking at the impact of different implementation 

dates on the size of the impacts. 

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 MR. MISURIELLO: On the Department of 

Justice analysis, do you provide them -- I've got a 

couple of questions on that. 

 MR. RIVEST: Sure. 

 MR. MISURIELLO: How long does it take? 

And do they start from scratch? Or do you provide 

them with the basic industry information and they take 

it from there? 

 MR. RIVEST: We provide them with a copy 

of the TSD or draft versions of the TSD. And like I 

mentioned earlier, they do review our interview guide. 

And there are specific things that they're looking 

for. 

 They're concerned about how industry -- 

how some players may leave the industry resulting in a 

greater concentration of market share. And so they're 

particularly concerned about what they call 

asymmetrical costs between manufacturers. 

 So you may have one manufacturer who, 

because of a patent or because of a technology that's 

already in place in their plant, may have the ability 

to produce these new products at a lower cost than a 

competitor. And what that would cause is shifts in 

market share, for example. 

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 So those are the types of issues that they 

focus on. 

 In terms of the DOJ review, that's part of 

the NOPR -- it's post-NOPR? Or -- 

 MS. PINTO: I'm trying to remember. 

 MR. RIVEST: Yes. I think it's -- I think 

it runs concurrent with the comment periods of the 

NOPR but -- 

 MS. PINTO: I don't recall right now. 

 MR. RIVEST: Steve? 

 FACILITATOR BROOKMAN: Start by saying 

your names for the record please. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. 

 I remember with the residential air 

conditioner and heat pump rulemaking, Department of 

Justice, I believe, came out with their ruling -- 

actually that was at least -- that the A&O procedure 

was anti-competitive because it was 12 for air 

conditioners and 13 for heat pumps. 

 And I believe that was after the NOPR 

period and before the final rule. So at some point, 

they received some documents in that time period. 

Because as part of the final rule, they have to show 

that the Department of Justice has cleared it out. So 

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-- 

 MR. RIVEST: That's correct. And they 

typically write a letter which is incorporated in the 

-- probably in the final rule. 

 And they do conduct their own analysis so 

they'll be looking at our documents. But they'll also 

be interviewing manufacturers themselves. 

 MS. PINTO: This is Francine Pinto from 

General Counsel. The other thing that they are often 

concerned with is when there's -- for the 

refrigerants, they're usually concerned whether there 

is a sole source for manufacturers or whether 

manufacturers have several places where they can buy 

the refrigerant. 

 MR. RIVEST: That's true. 

 MS. PINTO: So that's a piece of 

information we would like to have. 

 MR. RIVEST: Did you have another question 

Harry? 

 MR. MISURIELLO: No, no, thank you very 

much. 

 MR. RIVEST: Okay. Once again, under the 

typical rulemaking, we would be finalizing the ANOPR 

analyses. I would be incorporating the finalized 

outputs and inputs into the GRIM spreadsheet. 

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 The process would then entail getting in 

touch with the manufacturers. Then about a month 

before any interviews, I would be sending a copy of 

what I call the strawman GRIM and an interview guide. 

Also copies of confidentiality agreements so we could 

put these in place before the interviews. 

 The hope is to give you ample time to 

review the documents and get together with people from 

your various departments. It might be marketing or 

engineering and finance, preferably all of them, so 

that you can get a sense of what the issues are that 

we'll be asking questions on and that you can, you 

know, also prepare issues that you might want to share 

with the Department at that time. 

 One thing that I didn't mention yesterday 

is frequently DOE has accompanied us on these 

interviews. And at times when it wasn't appropriate 

for them to be part of the discussion, you know, we 

might phase the interview as morning, afternoon, or in 

some cases DOE did not participate at all. 

 And that was left entirely up to the 

manufacturers. Some preferred having DOE there so 

that DOE could hear. 

 But as Francine, Tom -- like -- there's no 

possibility of setting up confidentiality agreements, 

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I think, right? Any notes that you might have from 

these interviews would be subject to FOIA. So -- 

 MS. PINTO: I'm not sure of the answer to 

that. I'm not sure -- well, I know that we're not 

allowed to disclosed confidential information. 

 MR. RIVEST: Okay. 

 MS. PINTO: So there probably is a way to 

do that -- 

 MR. RIVEST: Okay. 

 MS. PINTO: -- with DOE folks. 

 MR. RIVEST: All right. 

 MS. PINTO: I'm not sure we've had to do 

it before. But I think there probably is a way. 

 MR. DePRIEST: This is Tom DePriest from 

the Office of General Counsel. There are federal 

statutes about disclosure of private commercial 

business information. And that's always a grounds for 

not disclosing under the Freedom of Information Act. 

 MR. RIVEST: Okay. Great. Thanks. 

 Jim? 

 MR. CRAWFORD: Jim Crawford. In the past 

in rulemaking, it has turned out that the substance is 

somewhat different than the apparent practice because 

the period of confidentiality that DOE was prepared to 

commit to was so short as to be of little value. 

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 And, therefore, we have avoided exercising 

confidentiality agreements with DOE. You know a 

period of three years, for example, in this industry 

is almost worthless. 

 MR. RIVEST: Right. The last point, I 

reiterate, I don't, as I stand here, have a clear 

notion of how we might segment the industry to be able 

to identify those asymmetrical costs that DOJ and DOE 

are concerned with. So I invite any comment right now 

that you might have on that. And any comments that 

you might have further down the line. 

 Of course, there's always the possibility 

that as the interviews progress and things become 

apparent, that we have those conversations at that 

time. 

 MS. PINTO: I just want -- Francine Pinto 

again. 

 Jim, I'm not sure. I'd have to go back 

and look at the statute. But my thought would be, and 

I'd have to actually go and look at the actual 

language, that we never -- federal employees could 

never disclose confidential information without being 

in violation of the statute or getting permission. So 

we have to go look at that statute and check what the 

language is. 

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 MR. CRAWFORD: Jim Crawford. Basically on 

financial information, we would, in effect, seek 

confidentiality in perpetuity because our cost 

structure -- 

 MS. PINTO: Right. 

 MR. CRAWFORD: -- today is not that 

dramatically different than it's going to be ten years 

from now. 

 MS. PINTO: Francine again. It would just 

seem like the statute would probably provide for that 

but I think we have to look through the language. 

 MR. CRAWFORD: That would be helpful in 

enabling the Department personnel to be more 

intimately involved in that aspect of the activity. 

 MR. RIVEST: So that completes my 

presentation on the MIA. I think once again the 

thought I leave this room with is how might we adapt 

this in the context of a negotiated rule. Thank you. 

 MR. McMAHON: Jim McMahon. Taking up on 

Slide 17, there are four more pieces here. We'll go 

through them very quickly. 

 And the next is utility impact analysis. 

The purpose is to investigate the effects on 

utilities, in this case electric utilities, from 

reduced energy sales and peak load demand due to 

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potential standards. 

 The method is to use outputs from the 

national impact analysis, national energy savings, in 

particular, but also loads savings results. 

 As you recall, we do hourly simulations 

for this product, take those results and put them into 

the Energy Information Administration's NEMS model, 

and then look at the results. 

 The results that we will report back are 

changes in electricity sales and price by region, 

change in the mix of electricity generation, if any, 

and change in new capacity construction. 

 Steve? 

 MR. ROSENSTOCK: This is Steve Rosenstock, 

EEI. Just again looking at the ANOPR, you know, the 

outputs that were shown did talk about obviously the 

national energy savings over so many years. 

 I don't recall if there's been any 

rulemaking where you showed any sort of potential peak 

capacity savings or potential peak demand reduction so 

just as a -- again, just as a -- for an analytical -- 

are you trying to find those out? 

 And then just -- because it really says, I 

guess, all of the previous language, it says you have 

to calculate the national energy savings versus the 

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national potential peak demand savings. So, you know, 

is that -- 

 MR. McMAHON: There were peak impacts 

reported for the residential air conditioners. And 

our intent is to do that here also. 

 MR. ROSENSTOCK: Okay. I just didn't see 

anything in the ANOPR so I just figured -- 

 MR. McMAHON: No, it's not in the ANOPR. 

 MR. ROSENSTOCK: Okay. 

 MR. McMAHON: We have not done the peak 

impacts yet. It will be done in the next phase. 

 MR. ROSENSTOCK: Okay. Thank you very 

much. 

 MR. McMAHON: You're welcome. 

 Slide 19, we're moving to employment 

impacts. The purpose of the employment impact 

analysis is to report net jobs created or eliminated 

nationally in the U.S. as a consequence of new 

standards. 

 The method is to use a spreadsheet called 

IMBUILD. This was developed by DOE's EERE to look at 

building sector. It's adapted from the IMPLAN 

national input-output model. 

 Changes in equipment and energy 

expenditures are taken from the national impact 

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analysis as inputs into IMBUILD. And direct 

employment impacts are taken from the manufacturer 

impact analysis. 

 So the purpose of IMBUILD is to look at 

the other sectors. The manufacturer impact analysis 

will look at the impacts on the manufacturing industry 

of this product. But there are also other impacts on 

the energy sector and on other consumer purchases. So 

we're looking at those other sectors. 

 The output will be the change in 

employment by sector as a consequence of new 

standards. 

 Are there any questions or comments on the 

employment analysis? 

 Yes, Harry? 

 MR. MISURIELLO: Yes, I just had a 

question about what sectors are addressed with this? 

Are these building types or how do you -- 

 MR. McMAHON: No, this is the national 

economy broken into sectors. It's just with more 

attention to buildings -- 

 MR. MISURIELLO: Buildings, okay. 

 MR. McMAHON: -- than the normal inputoutput model does because we're focusing on equipment 

that's effective in buildings. But it's all sectors. 

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 So the sectors that we're likely to see impacts on 

are the manufacturing sector, the energy sector, and 

then other sectors where consumers spend the energy 

bill savings that they get on other products. 

 MR. MISURIELLO: Okay. Thank you. 

 MR. McMAHON: Seeing no further questions, 

we'll move to the environmental assessment. 

 Slide 22 shows that the purpose of the 

environmental assessment is to report environmental 

impacts as a consequence of new standards including, 

most importantly, changes in power plant emissions. 

 Energy savings results, again, are taken 

from the national impact analysis. As you can see, 

all of these are fully integrated. We, again, run 

through the EIA's NEMS model. This is done in 

parallel with the utility impact analysis. 

 And the output is an estimate of the 

national emissions reductions of oxides of nitrogen 

and carbon. 

 Steve, question? 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. I know with other rulemakings 

that because of SO2, that -- because of the caps and 

the cap in trade that you basically say there's no 

impact on SO2 or SOx from the rulemakings. 

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 We can envision, and we're hoping to 

envision in the industry, that there will be certain 

regulations, you know, Clear Skies especially, that 

will have a direct impact on NOx emissions in the near 

future, within the next few years that -- and there 

have been significant reductions in NOx anyway. 

 But we can see a regulatory environment -- 

we're hoping for a regulatory environment to provide 

more certainty on the NOx level. That's one issue. 

We're hoping by 2010. Hopefully the model can take 

that into account as one of the variables as a 

sensitivity analysis. 

 The second thing is that several states 

have installed their legislator renewable portfolio 

standards, including California and New York is about 

to, I believe, so other states have -- actually Texas 

has some renewable portfolio standards for new 

generation as well. 

 So you might want to look on a state-bystate basis because that might have an impact on this 

part of the analysis as well. Thank you. 

 MR. McMAHON: Thank you. 

 Normally we expect that EIA will deal with 

those things so they will include any impact of those 

two activities into their analysis. And then we will 

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just piggyback on that. We're not going to do primary 

analysis independent of EIA on other factors other 

than the standards. 

 Don? 

 MR. BRUNDAGE: This may not be a question 

you can answer but how much public input is allowed on 

the NEMS model? Because one of the things I see here 

is things like NOx emissions, the projections change 

almost weekly based on what utilities have announced 

they're going to install, what equipment. 

 Is there a way to get information on that? 

Or should we just -- that's probably just a question 

to direct to EIA, not to you. 

 MR. McMAHON: Is there a way to get 

information on what they are going to assume for 

future generation, is that what you're asking? 

 MR. BRUNDAGE: For the NEMS model on 

future emission reductions. 

 MR. McMAHON: Yes, I'd refer you to EIA 

directly. I don't know. I'm not really familiar what 

their review is. They're on an annual cycle. They're 

in the process of generating the AEO 2005 now, which 

we expect to receive in December or January. 

 MR. BRUNDAGE: Thank you. 

 MR. McMAHON: Any other questions on 

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environmental? 

 (No response.) 

 MR. McMAHON: Okay, Slide 23, we're moving 

to the regulatory impact analysis. The purpose is to 

investigate the national impacts. And I want to thank 

Jim Crawford for pointing out an error on this slide. 

You should strike the word "non-regulatory" the four 

times that it occurs here. 

 National impacts due to alternatives 

compared with mandatory efficiency standards. The 

alternatives that may be considered include several 

non-regulatory things including a no regulation action 

but also possible alternative regulation approaches 

like prescriptive standards. 

 So the non-regulatory cases are early 

replacement, tax credits on customers or 

manufacturers, customer rebates, voluntary efficiency 

targets, and government procurement. 

 The way that we do this is to modify the 

national impact analysis spreadsheet to consider 

different scenarios, one scenario for each of the 

alternatives. 

 In order to accommodate those scenarios, 

changes occur for several inputs. And those may 

include the ones listed here, energy prices, discount 

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rates, purchase prices, operating costs, and income 

elasticities, as well as the equipment stock data. 

 The output looks very much like the 

national impact analysis output for the standards case 

but is presented for each of the alternatives. That 

will include national energy savings and net present 

values. And then the impact of alternatives on 

purchase prices and energy use will also be reported. 

 Any questions or comments on the 

regulatory impact analysis? 

 Steve? 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. In this case, it might be good 

just a quick review of how you're going to incorporate 

the ASHRAE 90.199 into this analysis because since, 

you know, it was completed in `99 and in the ASHRAE 

standards, they were supposed to go into effect in 

2001 basically. 

 And because of what happened with DOE, DOE 

didn't certify it until 2002, which also kind of -- so 

I am kind of curious how you're going to take the 

ASHRAE actions kind of into account in this case. It 

was a voluntary efficiency action done by -- 

 MR. McMAHON: Right. Our intent is in our 

base case across the board, which here would be the no 

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new regulatory action case but it would also be the 

same base case that's used in the national impact 

analysis for comparison to the trial standard levels. 

We will have a projection that attempts to take that 

into account. 

 Any other questions? 

 (No response.) 

 MR. McMAHON: Slide 25 is a repeat of the 

slide that you saw as Slide No. 3 early in the day in 

the rulemaking overview. And it shows the seven 

factors that the Department considers when setting 

standards in the left column. And in the right 

column, it shows the analysis elements. 

 Earlier in the day we described to you the 

ANOPR results, which included results from the lifecycle cost analysis, national impacts analysis, 

screening and engineering analysis. 

 And we have now described to you the other 

elements that will be included in the next phase, the 

NOPR phase, the manufacturer impacts analysis, the 

environmental assessment, utility impact analysis, and 

employment impact analysis. 

 So I'm now going to turn the podium back 

over to Doug. 

 FACILITATOR BROOKMAN: Thank you. And I'm 

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going to turn the podium back to Ron Lewis and Jim 

Raba. 

 My thanks to all of you for a very 

productive day. And appreciate all of the lively 

discussion and the good humor. 

 Back to Ron Lewis and Jim Raba. 

 MR. LEWIS: First of all, I want to remind 

everybody that the final date for comments is November 

12th so that's what the target is here. 

 And I also want to relay or repeat our 

excitement to see the proposal that's going to come 

in. And we're quite anxious to see the details of the 

document referred to earlier in the day. So we thank 

everybody for attending and I'll turn it over to Jim. 

 MR. RABA: Jim Raba, Department of Energy. 

Thank you all for your participation, the lively 

discussion. Certainly the potential agreement that's 

coming down the line is very exciting. Indeed we have 

a lot more work to do based on the comments heard but 

certainly we appreciate -- I think the team especially 

would appreciate any data inputs or information you 

could provide to move this along because we need some 

concrete things to accomplish the tasks down the line 

as we're required to do. 

 But having said that, we do appreciate so 

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much your participation. All of this good discussion, 

we've accomplished that -- we being the Department, 

and you, the stakeholders, manufacturers, utilities, 

advocates, others -- have accomplished really a major 

thing here just to have some good discussion 

throughout and appreciate so much the comments you've 

made. And we will take every one into account. 

 I yield momentarily to Steve. 

 MR. ROSENSTOCK: Just a quick -- sorry 

Steve Rosenstock, EEI, just a quick question. For 

written comments, electronic files -- just a couple -- 

difference -- for electronic files? Word documents 

are okay now? Because it used to be WordPerfect. We 

can submit filings in Word? 

 MR. RABA: Yes. 

 MR. ROSENSTOCK: And/or PDF? 

 MR. RABA: Yes, I understand the answer is 

yes to that. 

 MR. ROSENSTOCK: Okay. 

 MR. RABA: WordPerfect, Word, PDF, the 

like. 

 MR. ROSENSTOCK: And the second question 

is -- 

 MR. RABA: And there are procedures in the 

ANOPR that kind of go to that. So if you have any 

 EE-RM-STD-01-375 COMMENT 25L
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COURT REPORTERS AND TRANSCRIBERS 

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(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

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questions, you may give Brenda Edwards-Jones a call at 

the number in the ANOPR. 

 MR. ROSENSTOCK: And still send it care of 

Brenda, too? 

 MR. RABA: Yes. 

 MR. ROSENSTOCK: Okay. Thank you very 

much. 

 MR. RABA: Was there another comment I 

heard coming up? Don Brundage? 

 MR. BRUNDAGE: On a personal note, I hope 

Brenda is feeling better soon. 

 MR. RABA: Thank you very much. 

 Indeed, you all deserve a round of 

applause. So give yourself a round of applause. 

 (Applause.) 

 MR. RABA: And thank you, Mr. Facilitator, 

Doug Brookman, ever popular, ever professional. 

 (Applause.) 

 (Whereupon, the above-entitled meeting was 

concluded at 4:35 p.m.) 

 EE-RM-STD-01-375 COMMENT 25L