**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 UNITED STATES DEPARTMENT OF ENERGY **PUBLIC MEETING ON THE PRELIMINARY ANALYSES FOR RESIDENTIAL REFRIGERATORS, REFRIGERATOR–FREEZERS, AND**  **FREEZERS** U.S. Department of Energy Room 8E–089 1000 Independence Avenue, Southwest Washington, D.C. Thursday, December 10, 2009 9:00 a.m. Participants DOUG BROOKMAN, Facilitator AMANDA STEVENS Pacific Gas and Electric Company STEVEN ROSENSTOCK Edison Electric Institute TIM BALLO Earth Justice DEBRA BRUNK Association of Home Appliance Manufacturers STEVEN CHURCH Whirlpool MARTIN SEVERANCE General Electric KELLY KLINE General Electric RON LEWIS Department of Energy STEVEN STODDARD Navigant Consulting, Inc. ASA HOPKINS Lawrence Berkeley National Laboratory GREG ROSENQUIST Lawrence Berkeley National Laboratory**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 Participants CONSTANTIN VON WENTZEL Navigant Consulting, Inc. DETLEF WESTPHALEN Navigant Consulting, Inc. JENNIFER AMANN American Council for an Energy Efficient Economy DAVID HALL Electrolux RICHARD TOPPING Subzero ANDREW DELASKI Appliance Standards Awareness Project TOM ECKMAN Northwest Power and Conservation Council CHRISTOPHER JOHNSON LG Electronics USA CLAUDETTE PAPATHANASOPOULOS Greenpeace Research Department CHRIS KENT U.S. Environmental Protection Agency NOAH HOROWITZ Natural Resources Defense Council JEFF HARRIS Alliance to Save Energy JEFFREY KINGMAN Navigant Consulting, Inc. MICHAEL KIDO Office of General Counsel Department of Energy LUCAS ADIN Department of Energy**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 Participants JEFFREY GREENBLATT Lawrence Berkeley National Laboratory KERT DAVIES Greenpeace Research Department GRAHAM PARKER Pacific Northwest National Laboratory SEAN GOUW Southern California Edison**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 A G E N D A AGENDA ITEM : PAGE : Welcome Doug Brookman 6 Lucas Adin 6 Opening Remarks, Introductions and Agenda Review 7 Doug Brookman Rulemaking Overview 11 Lucas Adin Brief Opening Remarks from Interested Parties Debra Brunk 16 Association of Home Appliance Manufacturers Market and Technology Assessment, Screening 21 Analysis, and Engineering Analysis Detlef Westphalen Markups to Determine Product Price Analysis, 109 Energy Use Characterization, and Lifecycle Cost Analysis Greg Rosenquist Asa Hopkins Afternoon Session Shipments Analysis and National Impact Analysis 186 Asa Hopkins Preliminary Manufacturer Analysis 203 Steven Stoddard NOPR Analyses 214 Jeff Kingman Greg Rosenquist**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 A G E N D A AGENDA ITEM : PAGE : Discussion of Other Issues and Final Remarks 239 From Interested Parties Debra Brunk Association of Home Appliance Manufacturers Next Steps and Closing Remarks 241 Lucas Adin 1**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 P R O C E E D I N G S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9:06 a.m. WELCOME DOUG BROOKMAN MR. BROOKMAN: Good morning, everybody, and welcome. This is the U.S. Department of Energy’s Public Meeting on the Preliminary Analysis for Residential Refrigerators, Refrigerator–Freezers, and Freezers. My name is Doug Brookman. Glad to see you here this morning. We’re going to have welcoming remarks from Lucas Adin. WELCOME LUCAS ADIN MR. ADIN: Good morning, everyone. I’ll keep this rather brief, but as Doug said, I’m Lucas Adin from the Department of Energy. I’m the project manager for the residential refrigerators rulemaking. I just wanted to welcome everyone. Thank you for coming today. This is a very important part of the rulemaking process. They’re all important, but this particular stage essentially lays the analytical foundation for the rulemaking that we’re going to be doing. Getting feedback from everyone here is very important. We appreciate you coming, and we look forward to hearing what you have to say about it.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 OPENING REMARKS, INTRODUCTIONS, AND AGENDA REVIEW 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DOUG BROOKMAN MR. BROOKMAN: Thank you. Let’s start off by doing introductions, as we typically do. We’ll start with you. Your name and organizational affiliation. MS. STEVENS: Sure. Hi. I’m Amanda Stevens. I’m with Energy Solutions, here on behalf of Pacific Gas and Electric Company. MR. BROOKMAN: Thank you. MR. ROSENSTOCK: Steve Rosenstock, Edison Electric Institute. MR. BALLO: Tim Ballo, Earth Justice. MS. BRUNK: Debra Brunk, Association of Home Appliance Manufacturers. MR. CHURCH: Steve Church with Whirlpool. MR. SEVERANCE: Marty Severance, General Electric. MS. KLINE: Kelly Kline, General Electric. MR. KIDO: Michael Kido, DOE, Office of the General Counsel. MR. LEWIS: Ron Lewis, DOE. MR. BROOKMAN: Adin introduced himself. Please. MR. KINGMAN: Jeff Kingman, Navigant Consulting.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 MR. BROOKMAN: I don’t think we need that. Just talk loudly, please. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. STODDARD: Steve Stoddard, Navigant Consulting. MR. ROSENQUIST: Greg Rosenquist, Lawrence Berkeley National Laboratory. MR. von WENTZEL: Constantin von Wentzel, Navigant Consulting. MR. WESTPHALEN: Detlef Westphalen, Navigant Consulting. MR. BROOKMAN: Please. MR. HOPKINS: Asa Hopkins, Lawrence Berkeley National Laboratory. MR. GREENBLATT: Jeffrey Greenblatt, Lawrence Berkeley National Laboratory. MR. JOHNSON: Christopher Johnson, LG Electronics USA. MR. ECKMAN: Tom Eckman, Northwest Power and Conservation Council. MR. HALL: David Hall, Electrolux. MR. TOPPING: Dick Topping, Subzero. MR. GOUW: Sean Gouw, Southern California Edison. MS. SULLIVAN: – Sullivan, DOE. MR. HENRY–RHOADS: Jack Henry–Rhoads, D & R**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 International. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. FOGLE: Ryan Fogle, D & R International. MR. BROOKMAN: Okay. So, again, thanks to all of you for being here on time so we can get an early start on it today. I think all of you received a packet when you registered at the registration desk. I’m going to run through the agenda very briefly. I think most of you, or many of you at least, are familiar with these proceedings and the general form of this. In addition to the agenda, you have in your packet the presentation slides that will be the basis for both presentation and discussion today. That will be the principal thing that you can be referring to, in addition to what is broadcast up on the screen. You can see we’re going to start off first thing with a rulemaking overview. Following that, there’s an opportunity for each of you, or anybody that wishes to do so, to make brief summary remarks about issues of concern to you. Following that, immediately we’ll be moving into market and technology assessment, screening analysis, and engineering analysis. We will probably take a break mid–morning, round about 11:00 or so. Then, from there, we’re going to be doing markups to**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 determine price analysis, energy use characterization, lifecycle analysis, which may take us as far as 1:00. Round about there, 12:30 or one–ish, we’ll pause for lunch. Then, following lunch, shipments analysis, national impact analysis, preliminary manufacturer analysis. We’ll take a break mid–afternoon. We’ll go from there to the NOPR analyses and discussion of other issues and final remarks, another opportunity for you to make comments at the end of the day, discuss the next steps and other closing comments. That’s the general plan for today. Questions and comments on that? (No response) MR. BROOKMAN: Okay. I think, then, we’ll proceed. I’d ask for your consideration. If you would, as we’re going along today, please speak one at a time. Please say your name for the record. There will be a transcript of this meeting provided, and it will be posted on the EERE website. What’s it take; a week, 10 days? MR. ADIN: A week. MR. BROOKMAN: Or so. Yeah, a week or so. Please, each time you speak, please say your name for the record. You don’t need to say your organizational**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 affiliation. We can trace it back to you one way or the other. I’m going to be queuing people as best I can by name to speak. I’m also wishing to encourage follow–on comments, so please feel free to do that. If you’d keep the focus here. Please limit your sidebar conversations. These microphones have improved and we can hear you. You need to push the button. It needs to have a bright green rather than a dull green in order for us to pick you up on the sound system, the little LED button. But if you’d limit your sidebar conversations. Also, be concise. Share the airtime. There’s a lot to cover here in this day, and if we can keep it focused, that would be helpful. Then, let’s proceed with a rulemaking overview. RULEMAKING OVERVIEW LUCAS ADIN (PowerPoint presentation) MR. ADIN: I’m going to go ahead and start by just giving a brief overview of the rulemaking process. A lot of these things many of you are probably familiar with already, so I’m not going to get into too much detail, particularly since we’re going to be**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 getting into a lot of detail over the course of today on many of these things. These are just the basic items that we cover with the public meeting and its purpose. I won’t go through those points specifically. Throughout the presentation, there will be some issues that we are specifically requesting comment on, so these issue boxes will come up from time to time in the presentation. We will be discussing them. Those are things that we’re specifically soliciting comment on, so we just put those in there to make it a little more obvious which items we’re looking for input

on. The agenda. Doug pretty much went through this already, so I’m not going to belabor this point too much. This slide covers some of the previous rulemakings on refrigerators before today. The first one was published in 1989, and that was as a result of 1987 amendments to the Energy Policy and Conservation Act, or EPCA, as we more commonly refer to it. That was the first actual requirement for refrigerator standards, and those standards first went into effect January 1 st , 1993. That was the first round, so to speak.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There was a correction for three product classes in 1990, and then a second round of final rule for conservation standards was published in 1997. It went into effect July 1 st , 2001. Those are the standards that are in effect today. There was an analysis published in October 2005, to set priorities for the next rulemaking, and then the Energy Independence and Security Act of 2007, required publication of new standards by December 31 st of 2010, so next year, and then they would take effect January 1 st of 2014. This slide basically shows the rulemaking process overall. We went through the framework document process last year and had a meeting towards the end of 2008. Today, we are having the public meeting for the preliminary analysis. Some people who are familiar with this process as it was will probably know this stage as the advanced notice of proposed rulemaking. The Energy Independence and Security Act of 2007, actually removed the requirement for us to do that, so the ANOPR, as we typically called it, is actually no longer required by law. We kept this stage in there because the input that we get at this stage really is very important. We found that it was really important to keep it in there.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 That was something that was mentioned at the framework document meeting last year, and that’s how we’re going to continue. That’s where we are today. This slide just basically shows kind of an expanded version of this stage and all the things that are included there. These are the things that we’ll be discussing today, the things that make up the Technical Support Document. I’m not going to go through them individually, but that just shows the general flow of all those analyses. Some key documents describing the preliminary activities. The Technical Support Document has a number of sections which give an overview and describe how the analysis actually is laid out and how it works. There is an executive summary which pretty much just gives an umbrella overview of everything. Chapter 2 describes the analytical approach in detail. Then, the notice of public meeting. This is essentially what replaced the advance notice of proposed rulemaking, was the notice for today’s meeting. I take it most of the people here probably saw that. We did pass that out today. Then, the preliminary TSD. We’ve posted that on the website as well. The next stage will be the notice of proposed**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rulemaking stage. This slide shows the flow of the steps that are included in accomplishing that stage. I won’t go through them one by one, but you have them on the handout, and that basically shows how that stage works. That stage does include the proposal of possible standards that we might set, so we would be soliciting input on those at that time. Then, in the final rule stage, we’d just revise the proposed rulemaking analysis, conduct a final review, and then the publishing of the final rule would set the standards that would take effect on January 1 st , 2014. What this slide shows are the factors that we have to consider by law in EPCA. They are those seven factors on the left. Then, the analyses on the right side are just the corresponding analyses that we conduct in order to satisfy those requirements. They’re all pretty straightforward, and we do them for every rulemaking. Then, of course, we solicit comments from participants via statements or questions and comments at the public meetings like we’re having today. The comment period for this particular rulemaking will be open through January 15 th , 2010, so we can receive comments on this particular stage up**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 until that day. I think that covers my overview. I’ll turn it back over to Doug. MR. BROOKMAN: Thank you. Questions here based on any of this material? (No response) MR. BROOKMAN: Let me mention we do have quite a few seats up here at the front table. Any of you that wish to join us up here would be welcome to do so, especially if you intend to talk a lot. Okay. Now the Department would provide an opportunity for anybody to make brief summary opening remarks, raise issues of concern to you, and we’ll just have you turn on the microphone and say your name and then speak. Who’d like to start us off? Debra. BRIEF OPENING REMARKS FROM INTERESTED PARTIES REMARKS BY DEBRA BRUNK ASSOCIATION OF HOME APPLIANCE MANUFACTURERS MS. BRUNK: Debra Brunk with AHAM. Just a couple of things to summarize. First of all, I want to say that we really appreciate DOE scheduling this pre– NOPR stage here. We really think it’s important for stakeholders and DOE to communicate at this stage when so much of the engineering analysis has been done. Again, we appreciate that with the way things have been**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reorganized with the ANOPR no longer really being a requirement. Again, we appreciate that. I think it’s very helpful. Second, I do want to recognize that this is a very complicated rulemaking. There’s a lot going on, and part of it we’re not even really talking about today, which is the whole test procedure. We’re talking about it in an indirect way but not directly in terms of what the specific changes are, but more how that test procedure actually affects the standard. This is making it a little bit difficult for us as an industry to do this now before we go through all the changes in the test procedure, but again, we recognize it’s complicated. There’s a lot going on here. There is substantial analysis completed. It looks very thorough. I think our concerns are around the impact to energy use with the proposed test procedure. We will be talking a little bit more about that in terms of some of the ice–making energy that I know is a new issue for comment in this presentation. We just want to make sure that – we support the proposed changes, but we want to make sure that all the analysis is completed in a thorough and full way. This is really just too important. This is a huge**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 change from 1979 to today. It’s too important to risk any shortcuts in the analysis or anything like that, of course recognizing the time frame we’re under. Finally, we do continue to have specific concerns about upcoming regulations and legislation on the phase–down of HFCs. We will get into just a little bit more detail on that, but do want to just reemphasize that that may have a substantial impact in terms of cost and efficiency on the industry. MR. BROOKMAN: Thank you. Can you simply state what the status of the test procedure is, Adin? No? You can’t state. I just thought, since she raised it, we’d figure out what it is. MR. ADIN: We’re focused on the standard. However – MR. BROOKMAN: Yeah. However. Adin, go ahead. MR. ADIN: I can’t comment specifically on what the status of the test procedure rulemaking is in itself because we’re really trying to stay focused on this particular rulemaking and the conservation standard. It’s in the notice of proposed rulemaking stage. That’s about as – MR. BROOKMAN: That’s what I wanted to know. Thank you. I couldn’t remember how they’re all**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aligned. Yes, Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. If it’s in the NOPR stage, has a NOPR been published for the test procedure? Again, I haven’t – MR. ADIN: The NOPR has not yet been published for the test procedure. MR. ROSENSTOCK: Okay. Thank you. MR. BROOKMAN: Other summary remarks here at the outset? (No response) MR. BROOKMAN: No additional remarks here at the outset? If we’re not careful, we’ll finish ahead of schedule today. Okay. Then, of course we do invite and expect that you’ll have plenty to say as we’re going through the analytic slides. Let’s, then, proceed with the market and technology assessment, screening analysis, and engineering analysis. Debra. MS. BRUNK: This is Debra Brunk. I noticed there is a number of folks that have joined us. I was wondering if we could just have introductions of those folks who have joined us. MR. BROOKMAN: Okay. A few people did. Please.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. AMANN: Jennifer Amann, American Council for an Energy Efficient Economy. MR. BURT: Lane Burt from the Natural Resources Defense Council. MR. DELASKI: Andrew DeLaski, Appliance Standards Awareness Project. MR. BROOKMAN: Christopher, you joined us, right? You introduced yourself already. MR. JOHNSON: Yeah. MR. BROOKMAN: Say your name for the record? MR. HALL: Yes. David Hall with Electrolux. MR. BROOKMAN: Thank you, David. Who else joined us? Tom, did you introduce yourself? MR. ECKMAN: Yeah. MR. BROOKMAN: And Dick, both. Yes. Please say your name? MR. DAVIES: Kert Davies, Greenpeace Research Department. MR. BROOKMAN: Thank you. Yes? Anybody else? Did we miss anybody? Yes. MR. HOROWITZ: Noah Horowitz with the Natural Resources Defense Council, NRDC. MR. BROOKMAN: Thank you. Yes? MR. PARKER: Graham Parker with Pacific Northwest National Laboratory.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Thank you. MARKET AND TECHNOLOGY ASSESSMENT, SCREENING ANALYSIS, AND ENGINEERING ANALYSIS DETLEF WESTPHALEN (PowerPoint presentation) MR. WESTPHALEN: Thanks, Doug. Again, my name is Detlef Westphalen. I’m with Navigant Consulting. I was very heavily involved with the MTI parts of the analysis, the market and technical assessment, the screening analysis, and the engineering analysis. I’ll start with this chevron here, the market and tech assessment and the screening analysis. I guess I’ll be talking for the better part of the morning. I’ll try to be quick. If I’m too quick, slow me down. Don’t slow me down too much because I want to make sure there’s enough time for all of you to be talking because this is intended to be an exchange. The market and technology assessment purpose is to characterize the market: who are the manufacturers, what are the products, what are the efficiency levels available, what are the shipments by product classes, and also a look at the technologies that are available to improve efficiency. We really only have one slide on the top–**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 level of market characteristics. This is broken out by the four key product categories that were carried through the analyses, separated by refrigerators and refrigerator–freezers on the one hand and freezers on the other, and also separated by standard size and compact. Compact products are those that are less than seven and three–quarter cubic feet with refrigerated volume and less than 36 inches in height. The total shipments of all these products were a little bit higher early in the decade. Now they’re a little bit less than 15 million per year. Most of that is standard size refrigerators and refrigerator–freezers. The compact refrigerators and standard size freezers represent currently roughly 2 million shipments each for those categories and about a half million for compact freezers. The markets for the standard size products are characterized by being heavily dominated by a small number of manufacturers. That’s particularly so for freezers, for which 85 percent of the market was held by two North American manufacturers. We saw news that one of these manufacturers was liquidated recently. The compact markets are much more diverse in terms of manufacturer representation and have a bit different issues as a result.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Moving on to test procedures, as mentioned, there is a concurrent test procedure rulemaking ongoing. It currently has not reached publication of the NOPR phase but is approaching. The current test procedures are found in the Code of Federal Regulations at 10 C.F.R. 430, Subpart B, Section 23, and also Appendix A1 for refrigerators and refrigerator– freezers, Appendix B1 for freezers. In the test procedure rulemaking, DOE expects to make a number of changes. Some of these changes we’ll have to talk about a little bit because they directly impact the analyses. These changes are intended to take effect in two phases, the first phase to take effect shortly after the final rule for the test procedure rulemaking, the second to take effect simultaneously with this energy conservation standard rulemaking. The preliminary analyses that we’ll be discussing are based on DOE’s expectation for the full set of events. The key test procedure amendments that are expected to affect the preliminary analyses are as listed below, the first being compartment temperature changes, which were discussed at the framework workshop and are part of the international standard that is also under development.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Temperatures for refrigerator–freezers and refrigerators in the compartments will be going down. As I say, this is expectation at this point, since we’re not even at a NOPR stage. Temperatures for all refrigerators would be going up. Just to clarify “all refrigerators,” that does not mean every refrigerator. That means refrigerator products that have a freezer compartment that’s either less than half a cubic foot in size or no freezer compartment. As a result of the temperature changes, the volume adjustment factors will also change. That also affects freezers, even though the compartment temperature for the freezers does not change. Other test procedure changes that affect the preliminary analyses. The variable anti–sweat heater control. This is a modified test procedure that has been the topic of several waivers of the test procedure. This plays into one of the analyses for one of the product classes. Modified volume calculation method. That’s another change that was discussed at the framework meeting. That takes us to ice–makers. Ice–making energy has not been incorporated into the analyses that**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 we’ll be presenting today. Currently, there is no measurement of ice–making energy in the test procedure. I think we have – MR. BROOKMAN: Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, Edison Electric Institute. Actually, this was about the previous slide. I’m sorry. I didn’t – MR. WESTPHALEN: Okay. Sorry. MR. ROSENSTOCK: A quick follow–up. It says in here about two–step timing about certain amendments shortly after the test procedure and then coincident with the standard. The final rule has to be done and published in December of next year. You’ve got one year before the final rule comes out. In terms of the test procedure, since – and again, there are significant changes that are definitely going to have an impact on the engineering test procedure and energy output of the different products and the annual energy usage. I think the timing of this is very critical just because it sounds like things are being done in parallel, but then the key pivot point, especially, I’ll say, just in terms of interior temperatures change in the second stage, that changes the lifecycle analysis, possibly considerably.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I guess I’m a little concerned that there’s this parallel path and then, all of a sudden, it’s like the test procedure changed in November of 2010 as a final rule and then all the other analysis has to change. I don’t know in terms of timing how it’s – I think, ideally, the test procedures would be finalized and finished early next year, all of the stages, and then everything else can proceed. I’m worried about a parallel processing where things kind of go back and forth. MR. WESTPHALEN: You’re right. We have schedule issues. The only other thing I’ll say is that our expectations are that energy use would not be affected by the first phase of test procedure changes. So, our expectations for the test procedure changes that will affect energy use have been outlined here, and they are part of the analyses, including the lifecycle analysis and the national impact analysis. MR. BROOKMAN: Andrew DeLaski. MR. DELASKI: My recollection is that the Department’s practice in the past has been to issue the final test procedure rule by the time the NOPR is published. It seems to me that’s still perfectly possible in this docket and that the approach being taken is reasonable.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Okay. Thank you. Yes, Tom Eckman. MR. ECKMAN: The statement that ice–maker requirements are not included, but the field utilization adjustment that’s made in the analysis to get from the test procedure to in situ performance incorporates ice–maker consumption. MR. WESTPHALEN: When I say ice–making is not included, I mean the energy used to produce the ice is not included in the analysis. MR. ECKMAN: Well, it certainly is in the lifecycle cost analysis. If ice–makers are included in that markup, it’s a field use. MR. WESTPHALEN: That is a good point, and Greg can talk about that a little bit more when he gets into the lifecycle cost analysis. The engineering – MR. ECKMAN: I know you’re not attempting to regulate that usage, but certainly, it’s being incorporated in that analysis. MR. WESTPHALEN: In the lifecycle cost analysis, yes. That’s a good point. It has not been incorporated into the engineering analysis. Greg will talk about how the engineering analysis results relate to field energy use. That’s part of every rulemaking. MR. BROOKMAN: Other comments on this point?**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (No response) MR. BROOKMAN: Okay. MR. WESTPHALEN: I guess we were in the middle of this slide here. As mentioned, the current test procedure has no measurement of ice–making energy. That is, energy required to produce the ice. At the framework workshop and the associated comment period, there were no comments explicitly calling for measurement of ice–making energy. AHAM began working on a test procedure for ice–making energy use last summer, and DOE will consider all these factors in the development of the rules for the test procedure and for the energy conservation standards. MR. BROOKMAN: Yes, Andrew. MR. DELASKI: I don’t want to slow you down, but I do want to set the record straight. In the joint comments filed by ASAP, ACEEE, NRDC, PG&E, and the Power and Conservation Council, as well as others, we wrote, “Where is the Department’s updated test procedure to explicitly address the energy consumption for ice–making functions and to address the associated heat losses?” So, your second bullet there is wrong. We did explicitly ask for that. MR. WESTPHALEN: Okay.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Thank you, thank you. MR. DELASKI: Doug, I hope at some point there can be some explanation because there’s no response to that. Since the document didn’t respond to our comment, if we could get some response today as to why you decided not to address ice–making energy consumption. We would appreciate the feedback on that. MR. BROOKMAN: Dick Topping. MR. TOPPING: Yeah. I’m actually the chair of the AHAM subcommittee looking at ice–making as well as test procedure issues. I’ll just make the point I think everyone should put a big star on this slide because this is a huge issue upcoming in the rulemaking in terms of scheduling. Everyone needs to be working with DOE on this in the very near future, and weeks, not months, to try to address this and to see where we go with this. It’s not an easy issue. MR. BROOKMAN: Dick, can you characterize briefly the progress that you’re making in your working group? MR. TOPPING: I think we’re making good progress. The measurements have shown wide variability in the results, and it’s not an easy thing to add to the test procedure without a lot of vetting and feedback from various parties. This has never been**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 done before. This isn’t the time to go into the details, but there are many details to discuss. MR. BROOKMAN: Okay. MR. WESTPHALEN: Dick, I guess you got one slide ahead of us here, but that’s okay. At this point, we request comment on ice– making energy use. We’ve broken this down, actually, into four points. There may be other points to address. Dick already spoke to the expected schedule for finalizing an accurate and repeatable test procedure. Another question is what kind of energy use metric should be developed for these products that incorporates the ice–making energy use. Third, what would be a fair way of establishing maximum ice–making energy use as a function of different product characteristics? Fourth, what technology options would exist to reduce energy use associated with ice–making. MR. BROOKMAN: Debra Brunk. MS. BRUNK: Debra Brunk from AHAM. I’ll just try to briefly address each one of those. The first one really is a reiteration of what Dick said. Obviously, we’ve been working the last six months on**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 developing this test procedure. It has been more difficult, I think, than we all expected when we first started. There are a lot of details in terms of how you have to deal with the cycles and all of this with the compressors that are little details like that that we need to work out. Again, as Dick noted, the variability right now is high. We have shared this information with DOE and had some discussions on that. We are keeping them updated on our progress. I think regarding timeline, as Dick stated, we need to work together to figure out something that will work on this. If we were to do this as a standard type of test procedure development, we’d be looking at probably a couple of years. I think we’re looking at trying to shrink this down into one year, and so we would be looking for sometime the middle of next year to feel like we might have something that is good, repeatable, and a strong test procedure. I think we can’t emphasize that enough. Anything that we add in here needs to be strong and reliable. We don’t want to add a lot of variability to this test procedure or to the numbers that we’re getting so that there are more questions than there are, actually, answers.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I think, regarding the second question, we would look at incorporating the ice–maker energy as a kilowatt–hour–per–year number. Right now, with the test procedure that we have, we have a means to do that, where we are basically converting the amount of ice that is made. We normalize it to an amount of pounds, and we can convert that into kilowatt–hours per year. Again, it would be basically additive with the current energy use. Then, third is a good question regarding how is a fair way to add this adjusted volume. I think we’ve – I’m sorry, not adjusted volume. This ice–maker energy. We’ve found that it doesn’t make sense to just add some number to all the products. That really doesn’t work. That’s something that we need to continue to do. This is an area, really, where we would be looking at significantly more data to understand the impact of volume and the ice–making energy use. Again, I should mention here automatic ice– maker energy use and ice–maker energy use are two different things which also need to be addressed. Then, finally, to just address the fourth, I think we’re working hard to look at incorporating this into the test procedure. The technology options that**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 exist, I think we think that question is a little bit premature. I think what we would like to see is to get the test procedure done and if it could be an add–on, perhaps, to the energy efficiency standard. We get some baseline data, we understand how the test procedure is doing, and then, in the next rulemaking, we could start to incorporate analysis on what might be some of the design options or different things that could be done to reduce automatic ice–making energy, again the key being automatic ice–maker energy. You cannot reduce ice–making energy in general, which is just the thermodynamic energy required to turn water into ice. Hopefully, I didn’t speak too long on that. MR. BROOKMAN: Thank you. You see four specific queries there. Additional comments? Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, Edison Electric Institute. First question, I guess I’m a little – the expected schedule for finalizing the test procedure. As a stakeholder, there’s no way for me to know what the expected schedule is. I’m sorry. DOE is responsible for the test procedure, so, again, as a stakeholder, I have no idea. I would**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hope sooner rather than later, but that’s as much as I would comment because I would hope that DOE and all the other stakeholders, especially AHAM, would be able to finalize something as soon as possible. We don’t know what the schedule is. On Question Number 3 on ice–making energy usage, isn’t it really a function of volume versus – again, I don’t have the data, but I would assume that it’s really more of a function of occupancy behavior and the number of occupants rather than adjusted volume, when you get right down to it. The more ice you use, the more ice that’s going to be made, especially for the manual ones. Probably automatic ones, too. Again, I don’t know how you do that in a test procedure. Just, maybe, typical number of occupants and amount of ice used per week or per month, maybe, somehow. I don’t think volume has as much to do with it as occupancy. MR. BROOKMAN: Thank you. Other comments on these four issues listed as 20? (No response) MR. BROOKMAN: No additional comments? Okay. MR. WESTPHALEN: This next topic is product classes. First, going back to some of the discussion**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that was had at the framework workshop, at that time new product classes were suggested: 19, for refrigerator–freezers with automatic defrost and bottom–mounted freezers with through–the–door ice service, and also Product Class 20, just freezers with automatic defrost. At this point, DOE proposes to redesignate those as Product Classes 5A and 10A, for consistency with Canadian standards. Convertible bottom–door refrigerator–freezers were discussed at the framework workshop. However, it is our understanding that the product that led to that discussion is no longer on the market. At this point, no proposed new product class is proposed. Wine coolers were discussed at the framework workshop, and DOE’s position is that these products are not refrigerators and hence there is no authority to regulate them. Built–in products were also discussed at the framework workshop and the associated comment period. DOE has conducted some preliminary analyses associated with built–ins, and we’ll be showing some of that information later. At this point, DOE has not made a firm decision on an approach with regard to built–ins. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk with AHAM. I just**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 want to make a comment on that third bullet point, the wine coolers. AHAM continues to support DOE coverage of wine coolers in this rulemaking. We think this is important. We disagree that DOE does not have jurisdiction over wine coolers and that these are not federally covered products. DOE can make a finding that these products contribute to U.S. energy use and that energy could be saved by implementing a federal standard. We believe that wine coolers do contribute to U.S. energy use and there are opportunities for energy savings in these products. We also think it’s very important that this product has federal jurisdiction so we don’t end up in a situation where there are multiple state requirements. MR. BROOKMAN: Thank you. Yes. Amanda. MS. STEVENS: Hi. This is Amanda Stevens, Energy Solutions. I just wanted to follow on that PG&E supports DOE not covering wine coolers at this time. It’s currently covered by California efficiency standards, and now we’re looking, actually, at potentially amending that standard. We’d be very eager to work with AHAM to discuss potential standard levels, if they’re interested.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Okay. Thank you. Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. In terms of the wine cooler issue, there are the residential versus commercial product classes for that. Again, this is just, I’ll say, for the residential product class or commercial that DOE said no authority, or both, basically. We’re not going to touch it. There was a separate rulemaking for commercial refrigeration projects over the last few years, so just to clarify. Whether residential or commercial, DOE is saying, we don’t have the authority to regulate them, basically? MR. WESTPHALEN: This addresses residential. MR. ROSENSTOCK: Okay. Not commercial? MR. WESTPHALEN: Because this is a rulemaking on residential refrigeration products. MR. ROSENSTOCK: Okay, okay. Thank you. MR. BROOKMAN: Thanks for that clarification. Other comments on these? I’m not quite sure you’re done with this slide. Maybe you are. Other comments on Slide 20? (No response) MR. WESTPHALEN: Current developments on product classes. The key issue that came up during the**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 course of the preliminary analysis has to do with all refrigerators. As mentioned, these are refrigerators that have either no freezer compartment or a small freezer compartment, less than a half a cubic foot in size. When we discussed the compartment temperature changes, you’ll recall that compartment temperatures during testing for refrigerators and refrigerator– freezers – when I use the term “refrigerators” without the “all,” what I mean there is what’s sometimes referred to as a basic refrigerator, a refrigerator that has a freezer compartment larger than half a cubic foot but that freezer compartment does not get down to temperatures such as eight Fahrenheit, which is the cutoff point for the refrigerator–freezer definition. Compartment temperatures for refrigerators and refrigerator–freezers will go down, so the energy use will go up, maybe in the range of 10 to 20 percent. The compartment temperature for all refrigerators will go up, so energy use goes down maybe 2 or 3 percent. It’s clear that in order to have meaningful standards for all refrigerators, they would have to come out of those product classes where there are currently both types of products. Another issue that came up in the thought**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 process on establishing these alternative product classes was the question of manual defrost. You’ll see why this is important in the next slide. The definition for manual defrost from HRF-1- 1979 is shown. This relates to all refrigerators that have no freezer compartment which typically can defrost with an off–cycle defrost requiring no manual intervention. Is that automatic or is that manual? Another of the current developments that is under consideration is the combination of some of the product classes that are not well represented and the combination of Product Class 12 with 11, 12 not being very well represented at this time. This table gives a list of the proposed new product classes. As mentioned, Product Class 1A, these are standard size products which, if they have a freezer compartment, most likely would not be less than half a cubic foot in size. One question is, do these products really exist, but these are the product classes that are proposed. There may be some recombination, as mentioned, with the 1 and 2 and the 11 and 12. MR. BROOKMAN: So, comments on these product classes? MR. WESTPHALEN: The next slide keys in**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 particular questions associated with the product classes. First of all, asking again about the designation for Product Classes 5A and 10A, the establishment of separate product classes for all refrigerators, some possible product class combinations, and also the issue for all refrigerators associated with the manual defrost and whether there really should be a Product Class 1A. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk with AHAM. AHAM supports DOE’s proposal to use the 5A and 10A designations, consistent with Canada. It’s important to continue to harmonize. Regarding Issue 2, AHAM supports the establishment of the separate product classes for all refrigerators. Again, with the test procedure changes, that makes the most sense. And Issue 3; AHAM supports the combination of Product Classes 1 and 2 and 11 and 12. Our analysis would suggest that that’s a reasonable thing to do. Finally, I believe it was Issue 15. AHAM agrees with DOE’s interpretation that off–cycle defrost is a form of automatic defrost for all refrigerators, and we are not aware of any of the all–refrigerator products on the market that use manual defrost.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Thank you. Andrew. MR. DELASKI: We’ll review these points and respond to them in our written comments, but I want to make a general point about product classes, which is that I think DOE should be very cautious in general about creating additional product classes. The trouble that we start running into, and I think it’s one that we’re familiar with from many dockets, is we want technologies to compete in as broad a range as possible to get to the highest levels of efficiency that are justified. The more that we are creating product classes that are designed to allow for designs that are inefficient to persist, that runs counter to the intent of the statute. So, as you go forward in this docket, I think it’s important that we’re keeping an eye on the product class issue as an area where streamlining the product classes tends to result in general in greater savings in the long run, as we keep an eye on avoiding a proliferation of additional product classes. MR. BROOKMAN: Okay. Yes, please. Steve. Steve, say your name. MR. CHURCH: This is Steve Church. Just a quick note about that all–refrigerator being separated out as a product class. That is something that, if**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you’re going to do the change to the test procedure, has to take place because, right now, a Type 3 is a top–mount, which will be changed to a 39 and zero, and an all–refrigerator is going to be changed from 38 to 39. It would need to be separated out. That’s my only comment. MR. BROOKMAN: Thank you. Okay. Additional comments? Several questions here. Detlef, you have not really laid out Issue 15, although Debra addressed it. Why don’t you do that now? MR. WESTPHALEN: Issue 15 here? This asks about the question of whether an off–cycle defrost, which would typically be used in an all–refrigerator without a freezer, whether that’s manual defrost or automatic defrost and, also, whether that then means that there would not be any standard size all– refrigerators that would have manual defrost, thereby potentially eliminating the proposed Product Class 1A. MR. BROOKMAN: So, I want it to be in sequence with the comments as much as possible here, for the record. Additional comments on Issue 15? (No response) MR. BROOKMAN: Okay. MR. WESTPHALEN: All right. Next topic is**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 technology assessment. We talked about this at the framework workshop and listed out all the technologies identified. These were identified for the products from a number of sources, both TSDs, literature view, product teardowns, and input from interested parties. The full list of technologies are identified and discussed in the TSD. We didn’t feel it was necessary to go through that again. The screening analysis then takes this list of technologies and screens out the technologies that are really inappropriate to be looking at as part of the engineering analysis. There is a list of four criteria that are used to do that screening: technology feasibility; practicability to manufacture, install, and service; adverse impacts on product utility; product availability or adverse impacts on health and safety. Again, Chapter 4 gets in–depth on discussions of reasons for screening out some of the technologies. I’m not going to go into the details of that. However, here we’re presenting the technologies that were screened in as part of the screening process. Now, I have these presented as a matrix of the design options. They’re called design options once**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they’ve been screened in. On the horizontal axis are the product classes that were analyzed in detail as part of the engineering analysis. This shows which of the technologies were considered for each of the product classes. There are two technologies or design options listed here that were not mentioned in the framework phase. Those are forced convection condenser. That one applies to upright freezers, which currently typically have hot wall condensers and have space for forced convection condensers. Also, variable anti– sweat heater control, which is applicable to one of the product classes. MR. BROOKMAN: Steve. MR. CHURCH: Why would that variable anti– sweat heater control only be limited to Type 5s? Why would it not also, for instance, to be able to be used on a Type 7 product? MR. WESTPHALEN: It would be possible to be used. The prototypical products that we looked at and examined that were Product Class 7 did not have a significant amount of anti–sweat heat control, so the energy savings – MR. CHURCH: There are still sweat heater controls around the dispenser area.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WESTPHALEN: Correct. MR. CHURCH: On a large number of products. MR. WESTPHALEN: That’s something that we may want to consider. MR. BROOKMAN: In that one class, in 7, or many classes? MR. CHURCH: Well, I know it is in 7. I would guess it would also be applicable to 6 as well. I don’t know that. We don’t have one of those products. MR. BROOKMAN: Thank you. Amanda. MS. STEVENS: I was wondering; did DOE consider the use of LEDs in lighting? I think, if I’m not mistaken, the current test procedure, the door isn’t open, so potentially that’s why I was hypothesizing that it was not looked at. MR. WESTPHALEN: DOE did not consider LEDs. Even if you consider door openings and the time that the lights are on, the amount of time involved is really very small. LEDs are great in commercial refrigeration, where there’s a lot of on time. MS. STEVENS: What about the heat load from – I don’t know; is it a 40–watt lamp in there? I just wasn’t sure if that would add to the load for the compressor. I didn’t know if that would be very**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 significant. MR. WESTPHALEN: Well, I guess there are two aspects of this question. One is, is it a significant load. The feeling would be that, most likely, it wouldn’t be. The other aspect is that the engineering analysis is generally conducted on the basis of the test procedure, which, as you say, does have a closed door. MR. BROOKMAN: Yes, Chris. Chris, you need to turn your mic on. MR. JOHNSON: I’m sorry. Is the technology assessment based on only that which is available in the U.S. domestically, or did you look at products and technology globally that are not necessarily available in the U.S.? MR. WESTPHALEN: Well, if there are technologies that are available globally, one might ask the question why wouldn’t they be available in the U.S. If they’re not available for U.S. products, then they wouldn’t be suitable for consideration. MR. BROOKMAN: Additional comments on these screened–in technologies before we proceed? (No response) MR. WESTPHALEN: Some comments on the screening analysis from the framework phase. The key**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 comment here had to do with consideration of alternative foam–blowing agents and refrigerants in the analysis. DOE’s interpretation of this comment was that DOE should consider the potential climate change legislation or regulations that might lead to reduced availability of HFCs rather than these alternative agents or refrigerants being efficiency–improving technologies as compared with current practice. There are issues both with foam–blowing agents and with alternative refrigerants. That was something that Debra already mentioned. We’ve done some preliminary investigation of what would happen to our engineering analysis if, for instance, foam–blowing agents that were less effective had to be used. We have not yet seriously addressed alternative refrigerants. There are further details in the TSD on this. MR. BROOKMAN: Kelly. MS. KLINE: Kelly Kline from GE. Just to note here that, from our perspective, we really think that climate change legislation is one piece of it but there’s also the administration position on including HFCs in the Montreal Protocol or regulation by EPA. The point is, I think there are a number of different drivers which will be pushing the industry to**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 move into alternative refrigerants and foam–blowing agents over the coming years. GE, in particular, we have compiled a SNAP petition on R600 to have that approved for use as a refrigerant in the U.S. We just think that this is a critical point for DOE to be considering for the purposes of this rulemaking because we do think this is going to be an important trend over the next few years. We would just urge you to really give it full consideration because we think that the administration and EPA are really looking at ways to push for a decrease in HFC usage over time. We think that this rulemaking should be taking that into account. MR. BROOKMAN: Thank you. Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. Just under that third bullet where you discuss current UL standards, I’m assuming Isobutane is considered one of those hydrocarbons where it’s quantities under 50 grams. Is that in any sort of a product that’s in the marketplace? Again, I’m sure it’s probably in the TSD, but if you could expand on that for clarification, that would help. MR. WESTPHALEN: Some of the manufacturers might have a better understanding of the UL regulations, but my understanding is that, for these**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 residential refrigeration products, 50 grams is the limit. That makes it very difficult, certainly, for a standard size refrigerator or refrigerator–freezer or freezer to meet all the design objectives. MR. ROSENSTOCK: Steve Rosenstock. It could not get the UL label if it used more than 50 grams in the refrigerator? MR. WESTPHALEN: Well, it’s a little bit more complicated than that. MR. BROOKMAN: I see we have some industry folks who wanted to comment. Debra. MS. BRUNK: Debra Brunk with AHAM. Just a couple of things around that. Yes, right now the current UL standard limits the hydrocarbon quantities to 50 grams. That is total. That suggests that you may not be able to use it as a refrigerant. It may be able to possibly be used as a blowing agent. Basically, what that means is, if you’re over that, you could not sell your products in the U.S. It could not meet the safety requirements. However, I would also mention, I think to Kelly’s point, as an additional thing that’s going on here, UL did just reopen their test procedure for refrigerator–freezers. I think they sent out a document last week where they are proposing a higher**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 level of R600a in their test procedure and are looking for comments on that. MR. BROOKMAN: Kelly. MS. KLINE: I would just add to that point. I do not think that we should look at the UL standard as preclusive of using R600 in the U.S. I think it makes it more difficult. I don’t think that’s an absolute bar. To Debra’s point, they are, I think, considering raising it currently. MR. BROOKMAN: Okay. Dick Topping. MR. TOPPING: I agree with Kelly. A further point: there’s obviously the efficiency issue. It also has a significant manufacturing impact in terms of the capital equipment or investment required to transition a plant in the U.S. into hydrocarbon refrigerants and blowing agents. That will have a big impact on the manufacturing impact analysis. MR. BROOKMAN: Thank you for those comments. Additional comments? Yes. Please say your name for the record. MS. PANATHANASOPOULOS: Claudette Panathanasopoulos from Greenpeace Research Department. I wanted to reiterate what Kelly said from GE. We feel that there are 400 million of these refrigerators that use hydrocarbons on the market worldwide. Almost**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 half of them produced worldwide use hydrocarbons. This is a direction that, clearly, industry is moving. There’s a lot of movement. UL, as was said, is reconsidering their standards. EPA is moving to give SNAP approval and has already signed at least one letter of intent to list a hydrocarbon blend as acceptable under SNAP rules. Clearly, it’s moving in this direction. We wanted to encourage DOE to reconsider this position to not include this and also to do a thorough analysis on the efficiency because, in our research, these hydrocarbon refrigerators are much more efficient. I think by not including it you almost run the risk of creating a standard that’s going to be outdated before it’s even implemented because these refrigerators are coming, and coming quickly. We’ve talked to many manufacturers on this. I also want to reiterate that HFC regulations are coming, not just in the U.S. but internationally. I think it’s important for companies to know that and to move ahead because it will be more complicated and more expensive to use HFCs in the future. MR. BROOKMAN: Thank you, thank you. Additional comments on this point? There are a series of points here. The Department would like to hear from**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you if you have anything additional to say. (No response) MR. BROOKMAN: Okay. MR. WESTPHALEN: That completes the market and technology assessment and screening analysis part of the discussion. I don’t know if we want to just keep on moving here or – MR. BROOKMAN: Yes. MR. WESTPHALEN: Okay. Good. The next part of the discussion is the engineering analysis. The purpose of the engineering analysis is to develop a relationship between manufacturing cost and efficiency of the product, the so–called cost–efficiency curves. These cost–efficiency curves are then used in all of the downstream analyses: the lifecycle cost, the national impacts, and the manufacturer impact analysis. This chart gives a flow map of how the engineering analysis was conducted, this part of this rulemaking, the preliminary analysis portion. At the bottom you see the cost–efficiency curves. That’s the endpoint. Coming into that, we have incremental costs associated with different design changes and differences in energy use associated with the different design changes. The cost estimate differences are determined**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 using manufacturing cost models. The approach used to develop the manufacturing cost models is as we have done in many other rulemakings. We’ll talk a little bit more about that. The energy models are based on an upgrade of the old EPA Refrigerator Analysis program, which was developed as part of this rulemaking. The upgrade was developed. Energy models were established for the baseline products and then for the different design configurations off those baselines. Input for these models are from a variety of sources: energy testing and reverse engineering of select, representative products, discussions with manufacturers, discussions with vendors, and investigation and other research that would provide pertinent information. At the top, we have select representative products. That’s the next topic of the discussion here. It’s all based on essentially what are these representative products that we did the detailed analysis for. This chart shows shipments of different product classes. DOE’s approach was to select initially the representative product classes. DOE chose seven product classes to focus on for this**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 analysis which represent more than 90 percent of overall shipments of the covered products. Within each representative product class, DOE selected three products for detailed analysis, and these three products represented two different sizes of refrigerator. For one of those sizes, DOE selected two models that were nearly identical except that one was an Energy Star and one was a baseline refrigerator. This table just shows the definition of those product classes for the product classes analyzed in detail and also how that breaks out into the four product categories that we talked about before. It also provides the refrigerated volume capacity of the products that were selected. During the framework workshop, we presented some of the products that we expected to consider as representative, and there were some comments, but overall the comments seemed to support our selection of the particular products. Now, having gone through the analysis, one question that arises, and obviously, with 18 product classes, seven studied in detail, one of the questions always arises of whether any variation in characteristics might be more significant than what the actual representative product is telling you. We’d**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 like to get some feedback from the stakeholders on this question. MR. BROOKMAN: I’m going to read this comment box. “DOE conducted detailed analysis on products considered typical for the representative product classes. This approach did not provide much information regarding variation in product design and the resulting variation in costs to achieve different efficiency levels. DOE requests comment on the variation of refrigeration product designs and distribution of incremental costs to achieve energy use reductions.” So, comments on that? Yes, Debra. MS. BRUNK: Debra Brunk from AHAM. Really, just a quick comment. We recognize that DOE had asked for information on this in the framework document. AHAM is unable to provide detailed design data for our manufacturers because it’s impossible to aggregate that. Our suggestion is that in the upcoming manufacturer interviews that DOE incorporate some questions to address these concerns and to try to understand this variation better. MR. BROOKMAN: Okay. I thought this was a complicated question. I thought it was. Can we get**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 additional comment on this? (Laughter) MR. JOHNSON: You could do research on the Web, right? MR. BROOKMAN: What, Chris? MR. JOHNSON: I was just going to say, you could do research on the Web and find all the different designs. MR. BROOKMAN: Okay. So, nothing additional that we’re going to hear right now? Okay. MR. WESTPHALEN: The next topic is baseline efficiency levels. In most rulemakings in which there is an existing energy conservation standard, this is very straightforward. The baseline is simply the existing standard. However, because of the test procedure changes discussed previously, the actual numbers associated with those baselines will have to change. The baseline products are considered to be those that meet the current energy efficiency standards with no additional savings. DOE then developed numerical definitions of what these baselines would mean under the expected new test procedure. AHAM provided data showing changes in energy use and also adjusted volume for some of the key**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 product classes under the current and new test procedures to guide some of this analysis. DOE also did some energy modeling using the ERA energy model in order to gain some additional understanding of the energy use differences associated with the test procedure change. New equations were derived describing the baseline product energy use based on the expected new test procedures. Here are a lot of equations. You can go through the detail in the TSD. But essentially, the energy standards for refrigerators are a linear function of adjusted volume. We now have a new adjusted volume. We have two coefficients, A and B, and they need to be modified based on the characteristics of these products in terms of what is the new energy use under the new test procedure and what would the new volume calculation be. The last bullet there shows the adjustment based on these factors that describe changes in the energy and volume. I wonder if there are any questions about this? (No response) MR. WESTPHALEN: The next slide illustrates this for Product Class 7. The AHAM data suggests a 14 percent increase in energy use with the new compartment**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 temperatures and a 1.6 percent increase in adjusted volume. The current energy standard is 10.1 adjusted volume plus 406, and this then converts to 11.33, new adjusted volume, plus 462.8. These are then the baseline equations under the new test procedures. This didn’t play – MR. CHURCH: Excuse me. You’re saying that a Type 7 with the new adjusted volumes has more volume that the old? The way they do the dispenser area provides more volume? I’m just asking for clarification. Is that true? MR. WESTPHALEN: DOE did not do detailed volume calculations to come up with their own determination of the differences in the volume calculation. DOE received information on that point from AHAM. These are the results that we received from AHAM. MR. BROOKMAN: Steve, follow on here. What do you think the DOE should be doing with this volume calculation? MR. CHURCH: Well, I was just trying to understand the analysis. If you’re talking about the Type 7, they’re going to have less volume under the new procedure than they would under the old procedure because of the way they were calculating volume**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 concerning the dispenser area. You no longer get credit for that hump and you no longer get credit for the caved–out portion in the front, which is the dispenser. So, you have really significantly less volume with the Type 7. MR. BROOKMAN: Ron Lewis. MR. LEWIS: Since this was based on data from AHAM, I wonder if Debra could perhaps give us a little clarification or help us out. MS. BRUNK: Debra Brunk from AHAM. We’ll take a look at this data and try to understand better what may have happened here. MR. WESTPHALEN: From my part, I’d like to say we welcome more data. (Laughter) MR. WESTPHALEN: The data that we received was good, but we’d like to see more. MR. BROOKMAN: Okay. Thank you. MR. WESTPHALEN: This slide basically prompts for comment on the approach used to develop the baselines. As I was about to say, this plays not so much into the engineering analysis so much as it does into setting the standard levels later on. MR. BROOKMAN: Christopher. MR. JOHNSON: Chris Johnson. I’m not an**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 engineer, but how do you develop a baseline energy standard without calculating ice–maker energy unless you’re doing it for products without ice–makers? Just a straight question. I don’t understand that. How does that work? If ice–maker energy is going to be included, how do you – and a test is going to be developed to calculate that ice–maker energy, how do you develop, before that process is completed, a baseline energy use, unless you’re specifically excluding ice–maker energy, for whatever reason, which I don’t know why you would do that. MR. WESTPHALEN: As I mentioned previously, these analyses do not consider the energy use for production of ice. MR. JOHNSON: But then the question is why? Why not? MR. WESTPHALEN: Because the test procedure currently does not have that and the process to develop that ice production energy use test is still in process. MR. JOHNSON: Right. So, that’s a problem, it would seem to me. If you’re developing a new energy efficiency standard, unless you’re specifically doing two separate standards, one for products with ice–maker**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 energy and one for products not counting ice–maker energy, then you would have to count it. You would have to develop a test to include it as part of the baseline energy use. MR. WESTPHALEN: Well, we’ll consider the comment. As I mentioned previously, the ice–making energy was not considered in the analyses and is not part of the existing test and is, at this point, not part of what is being considered to be proposed. MR. JOHNSON: I think that’s part of the timeline problem. MR. BROOKMAN: Okay. Thanks, Chris. MR. JOHNSON: Okay. MR. BROOKMAN: Yes, Debra. MS. BRUNK: Debra Brunk from AHAM regarding Issue 4. I just want to say that AHAM supports DOE’s approach for modifying the baseline energy use and the adjusted volume relationship under the proposed test procedure. We feel like this is a well summarized and sufficiently rigorous approach. Thank you. MR. BROOKMAN: Additional comments on Issue 4 as listed here on Slide 38? Yes, please. MR. HALL: Yes. David Hall. Throughout the executive summary and the Technical Support Document, there are some charts as it goes through, and it**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 references baseline energy. I just want to confirm or ask, when it’s comparing and referencing baseline, is that for current or for the new with these adjustments? MR. WESTPHALEN: Well, I would hope that would have been clear where it was referenced. There’s a part of the engineering analysis chapter which discusses this development of the baseline energy use. From that point forward, it could be interpreted, if not defined, to be according to these new equations. The understanding is that this would be the energy use associated with these prototypical products under this test procedure. MR. LEWIS: Ron Lewis, DOE. I’ll suggest that if you want to see an example of how that’s laid out in the TSD, perhaps when we’re taking a break, one of the team members may have a copy on their computer and we could walk you through that and point to where those distinctions are made or the pointers that may not have been as evident as we had thought they were. MR. HALL: When I’m reading through it, I’m thinking that it references current, but I wanted to confirm that because, as a result of the – there is one chart that actually has current versus new baseline where it includes these adjustments as noted on Page 37, for example. But I didn’t want to make a false**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assumption that these increments, as it’s showing for quads and net present value and LCC, LLC, that it – I’m just wanting to be certain that what I’m seeing is that it is really referencing what I’m thinking it’s referencing as the current baseline. That’s all. MR. LEWIS: We don’t want you making any false assumptions, either. As I say, we would be glad to call up a copy of the document and take a look at the specifics and try to clarify. MR. BROOKMAN: We’re going to take a break in about 10 or 15 minutes. Do you want to comment? Then I’ll go to you next, Dick. MR. HOPKINS: Asa Hopkins, LBL. We’ll go through a lot of this in more detail in the coming sections on energy use and it’ll be a little more clear there. That may help as well, but we can also talk with you on the break. MR. BROOKMAN: Who back here has got the TSD on your hard drive? Has anybody got a copy with them? Yes, you do? Okay. This gentleman. Dick? MR. TOPPING: Unfortunately, it’s not clear at all. In fact, a bunch of us were looking at it yesterday trying to figure it out. Particularly, just so we’re on the same page, on all the cost–efficiency curves that you have shown by product class, are those**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 based on improvements over the current baseline levels? We were assuming that these were improvements over the current baseline levels and then, ultimately, you would then correct that up to accommodate the new test procedure. Is that not true? MR. WESTPHALEN: That’s not true. Well, it is true and it’s not true. (Laughter) MR. TOPPING: That’s why it’s not clear. MR. BROOKMAN: It’s about as clear as mud. Go ahead, Detlef. MR. WESTPHALEN: The assumption made, and we haven’t been given enough data to refute this, that a product that is a 20 percent product under the old test procedure, would be a 20 percent product, on average, under the new test procedure. If we say 10 percent, if we say 20 percent, the assumption is that, under the current test procedure, that would be 25 percent; under the new test procedure, that would be 25 percent. We ask for data to try to discern is that really so or is it not. MR. TOPPING: Okay. That’s okay until you start talking about specific levels in terms of kilowatt–hours a year because, as you know, there’s a significant difference in the kilowatt–hours a year of**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the baseline product with the existing test procedure versus the old test procedure. I’m afraid there’s a little bit of apples and oranges here in terms of whether we’re talking about thermodynamic improvement levels or changes in kilowatt–hours a year from now to then. It’s a significant issue that we just need to be on the same page. MR. WESTPHALEN: We had this discussion at the framework workshop. We welcome information that would perhaps shed light on the issue. MR. TOPPING: I think you’re asking a different question. I think you’re asking would a design option suite that gives you 20 percent improvement in efficiency under the current test procedure also provide you 20 percent efficiency increase under the new test procedure. I think that’s what you’re asking. That’s not what we’re talking about. We’re looking – I guess it comes down to the fact that we’re to the point now of looking at improvements in terms of efficiency improvements over baseline. For example, Energy Star today. Energy Star is 20 percent improvement over current baseline. If you were to test that same unit that is Energy Star today under the new**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 test procedure, the kilowatt–hours a year would only be about 5 percent improvement over the current baseline because of the change in the test procedure. MR. WESTPHALEN: However, if you tested a baseline product – MR. TOPPING: That’s right. MR. WESTPHALEN: – and compared that with the Energy Star under the new test procedure – MR. TOPPING: I understand that. MR. WESTPHALEN: – would that be a 20 percent? What would it be? MR. TOPPING: I understand that. I hear where you’re coming from. I think we need to make sure we’re all on the same page as we go through and provide comments to you. MR. BROOKMAN: Dick, I don’t want to put you on the spot. Will you restate where you’re coming from here? MR. TOPPING: Point of clarification. We are interested in knowing precisely at what levels are we talking improvement under what test procedure. MR. BROOKMAN: Yes? You don’t need to respond. MR. TOPPING: No. I wouldn’t expect you to. MR. WESTPHALEN: I don’t fully understand the**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 question, but perhaps – MR. BROOKMAN: Maybe at the break you could talk that over as well. We’ll be going there before too long. Let’s proceed, Detlef. MR. WESTPHALEN: Another thing that was investigated as we looked at these baseline energy use curves was the slope of the curve. This data here is for the current standard under the current test procedure, but the same relationships and issues appear if you convert it to the new test procedure. You see that some of the product classes have a dramatically lower slope. We conducted some analysis using the energy model, and some of these questions were confirmed by the energy modeling as well. We’d like to raise this issue and try to get some more input on the topic in regard to some of these product classes for which the current slope of the maximum energy use curve might be lower than would really be representative for the type of product. MR. BROOKMAN: I’m going to read this one into the record as well. “DOE invites comment on whether an adjustment to the slopes of the baseline energy use relationships based on the proposed test procedures is warranted for any of the product classes**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and by how much. DOE requests information and supporting comments that indicate the need for such slope changes.” Debra. MS. BRUNK: Debra Brunk with AHAM. A couple of points here. First of all, I’d say, in general, AHAM supports DOE’s efforts to ensure that the slopes are consistent and realistic for each product class. We also recognize there are new technologies out there, so slopes may change over time. I think, first of all, we want to just pinpoint Product Class 5 in particular. Our historical information does show that, back in 1993, Product Class 5 had a slope of 16 and a half. Somehow, in 2001, that slope became 4.6. So, there’s always been some question there, and there is historical precedent that that slope for Product Class 5 was quite a bit higher. The second point I guess I’d like to make is DOE does show modeling data from ERA. I’m just wondering if there is any way that that data can somehow be validated somewhat with either units that are on the market or if there’s something there so we could understand a little bit better that those slopes are realistic. Second, DOE proposes a change to the slope for a number of product classes. The question is does**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the intercept remain the same or is it also changing? That is not clear from the Technical Support Document. MR. WESTPHALEN: That has not been decided. There hasn’t been a whole lot of thought put into that, either. We’re kind of asking for feedback. That’s something that does need to be established. MS. BRUNK: I had one more comment, which is how did DOE select the product classes for slope evaluation? You show eight, I believe, in the TSD. We noticed that Product Class 17 was not on there. There are some concerns there that that slope, which is for a compact freezer class, currently has minimum energy requirements that are very similar to a refrigerator– freezer. That seems to not make a lot of sense, either. Then, there’s a question also on all of the additional product classes that we added, the 3As, the 5As, the 10As, and the 11A. We’re just wondering if the slopes would be considered to be consistent with the proposed slope changes or how that might be addressed. MR. BROOKMAN: Do you want to try and address some of those? MR. WESTPHALEN: At this point, that looks to me like a comment that needs to be considered to**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 determine what will be done moving forward. Clearly, there are a lot of things to consider, as you say. MR. BROOKMAN: Since Debra raised this host of issues, let’s see if there’s any other comment from manufacturers, Steve, and then we’ll – any other comments about that range of – okay. Steve Rosenstock. MR. ROSENSTOCK: Steve Rosenstock, EEI. Looking at the table on the preceding slide, you’re showing calculated energy curve slopes, and then, 11A, you show a range, and it’s quite – it’s a significant range. It’s not plus or minus 10 percent, it’s almost a doubling and an order of magnitude. Is there something unique about that product class? You show just single values for all the other product classes, but then for 11A you show this range of 20 to 35. When you compare it to the baseline, it’s an order of magnitude. That just kind of came out at me as like what’s going on? Is there a range for other classes that are in the TSD and these are the midpoint values? Again, it just struck me just because, again, the order of magnitude difference. MR. WESTPHALEN: For Product Class 11, that’s probably the product class with the widest range of adjusted volume. It may be that for that product class a linear relationship is not quite appropriate. Not**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that we’re signing up to do a curve at this point, but I think that’s what technically is happening there. MR. BROOKMAN: I refer you again to Issue Number 5, Slide 41. Any additional comments on this issue box? (No response) MR. BROOKMAN: Okay. MR. WESTPHALEN: Next topic, incremental efficiency levels. I guess this speaks to some of the discussion already put forth. The incremental efficiency levels were defined by percentage energy use less than the baseline, whether that baseline is defined under the old test procedure or the new test procedure. The interpretation is that a 25 percent product would be a 25 percent product under either test procedure. We don’t have enough data to determine otherwise at this point. Looking at max available and max tech, max available efficiency levels were identified by looking at some of the databases that list product characteristics. They range from 1 percent below the standard for 13, to 51 percent below for Product Class2, which doesn’t include a Product Class 3 allrefrigerator, which was at 53 percent.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The max tech levels were determined using the energy modeling. This is a point that was discussed also at the framework meeting. In some cases, or in a lot of cases, the max tech wouldn’t necessarily be something that was available because the costs of achieving the max tech would likely be very high and would not be typically considered a marketable product in the current market. DOE conducted engineering analyses for the efficiency level up to 45 percent. Initially, the discussion was up to 35 percent. Some of this analysis suggested that raising that level would be appropriate in order to fully examine the potential ranges. It was felt that higher than 45 percent would not be cost effective. MR. TOPPING: Question. MR. BROOKMAN: Yes, Dick. MR. TOPPING: What’s the level of maturity assumed for the design options that go into max tech? MR. WESTPHALEN: Well, those are design options that pass through the screening analysis and hence would be considered appropriate for the engineering analysis. MR. TOPPING: So, for example, if a variable– speed compressor is not available in a size range for**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 one of these product classes of interest, would it still be included? A commercially available. MR. WESTPHALEN: There’s a possibility that it wouldn’t. In our analysis, it wasn’t clear to us that we’d run into that issue. MR. TOPPING: I guess what I mean is, are all these components expected to be available on the open market? MR. WESTPHALEN: That’s part of the criteria for the screening analysis, yes. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk from AHAM. I just have a question. In these simulations, was DOE able to address the cabinet size limitations that might be affected by combining a number of these design options? MR. WESTPHALEN: Can you point to specific groups of design options that might have an issue there? MR. TOPPING: Heat exchangers. Larger heat exchangers. MR. WESTPHALEN: For the larger heat exchangers, the analysis did not go into the specifics of each product and what are the details of the product changes that would be required. In many of these cases, there is ample space. That was the initial**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 observation. We didn’t go into a detailed engineering analysis. There may be some questions there, and we’d welcome additional data that might shed light on that. MR. BROOKMAN: Kelly. MS. KLINE: We can provide some more specifics in our written comments, but that was our concern as we looked at this, that not all of these technologies would really be additive or could necessarily be additive to reach the levels that you modeled here. MR. WESTPHALEN: Now, when you say “additive,” what exactly do you mean? Do you mean adding the savings? MS. KLINE: Based primarily on cabinet size, things like that, that you may not be able to just physically accomplish. MR. WESTPHALEN: That you couldn’t combine all of those product classes regardless of what the energy use would be. MS. KLINE: That’s right. MR. WESTPHALEN: Okay. MR. HALL: David Hall here. For example, Product Class 11. It’s showing a percentage there, and then there are five checkmarks. That’s a compact product.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WESTPHALEN: Correct. MR. HALL: So, getting back to a comment raised originally, if under the variable–speed compressor column and in that cell it is not technically available currently, is this assuming that, since it is available in some other categories, like particularly 7 or 5A, that it would be available by the time of rulemaking for 11? MR. WESTPHALEN: Well, we conducted the analyses for all the products using data for compressors that are commercially available. The results we get for Product Class 11 are based on existing compressors that are commercially available

now. MR. CHURCH: This is Steve Church. When he says size, I think he’s referring to the BTUs of the compressor. Did you check and make sure that you had the small BTU compressor available for a compact? MR. WESTPHALEN: For the smallest compact, the approach was to use a variable–speed compressor that you probably wouldn’t use at full speed, you’d use at low speed. MR. BROOKMAN: Go ahead, Dave. MR. HALL: That would reflect some knowledge of a capacity at EER for that component in order to**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 render a simulation. We’re just questioning the validity of that cell for that category, recognizing that it would be demonstrated at a lower energy consumption level at the lower RPM, as you’re mentioning. We’re not questioning that. But since it is significantly different in level than all the other classes listed, and that’s a specific cell of interest that is of question to us, as a result of that lack of information, for example. MR. BROOKMAN: Okay. Thanks. Additional comments on this slide referring to the engineering analysis max available and max tech and these design options listed? MR. HALL: I have one more question. The ERA used, has it been – it was already asked. I’m going to kind of repeat it. Has it been confirmed by other simulation or by products or by some kind of screening itself to confirm its accuracy? Because within each of these energy levels demonstrated, there’s an accuracy of sort, since it’s a simulation. There’s no rendering in this for what this accuracy and how it’s established since this is purely an energy consumption technical matter. Can that be made available? MR. WESTPHALEN: Well, the program is intended to be made available. I don’t know the status**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of that at this point. MR. ADIN: With respect to making the ERA program available, that is something that we’re definitely considering. I can’t tell you where exactly we are. Basically, we just want to put it together in a way that will be usable by all interested parties. We’re working on figuring out the best way to do that right now, so I can’t tell you when that will happen. MR. BROOKMAN: Thanks, Lucas. Kelly? MS. KLINE: Yeah, just one more question or observation. I’m wondering here; what seems to be missing is a description or an analysis of what is the max tech actually available on the market versus the more theoretical, what could be max available. I’m wondering about that. I’m wondering why there’s not specifically a focus on what’s the maximum available on the market and if there could be some modifications here to really focus on what is clearly already available. Just an observation. MR. BROOKMAN: Thank you. So, a host of issues here. Final comments on this slide? (No response) MR. BROOKMAN: I’m going to suggest we take a break at this point. It’s 10:45. Let’s resume at 11:00. Walking around in the Forrestal Building, you**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 need to have your visitor’s pass badge visible. (Brief recess) MR. BROOKMAN: We’ve covered a lot of ground already, and we’re going to resume. We’re on Slide 44. MR. WESTPHALEN: Okay. The next part of this engineering analysis chart that we’re looking at is the energy model. As mentioned, the EPA Refrigerator Analysis program was upgraded as part of the rulemaking effort. There were updated algorithms put in for heat exchanger modeling based on some of the work that has gone on since the ‘90s, upgraded to a Windows platform, internal iteration of heat exchanger performance. For anybody that’s familiar with the old program, the heat exchanger performance iteration was a nasty part of running it. We actually did that throughout most of the work because the Windows version wasn’t ready until later. As I mentioned before, the intent was that this would be available to all stakeholders to be able to check our results. We already talked about that, that we’re working on that. The flow and the modeling process. Information, as mentioned previously, was provided from reverse engineering, discussions with manufacturers, discussions with component vendors, and then also**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 laboratory energy tests on most of the representative products that were subsequently torn down as part of the reverse engineering. The first step in the modeling was to model the current products as is under current test procedures and calibrate in order to match those numbers. Then, make a model based on the new test procedure looking at potentially design changes in order to develop a model of a baseline product. The reason I mention that is, for instance, Product Class 5. We were not able to find any representative products that were baseline, so we had to model backwards in order to get a baseline and define that as our baseline model. The third step is to look at individual design options applied to the baseline models. Again, this is based on the new energy test procedure. And, determine which of those design options are the most cost effective. Then, finally, energy modeling of groups of design options to define the energy savings associated with each of those. Some adjustments were made, and these are described in detail in the TSD. I mentioned Product Class 5. We had to go backwards to less efficient**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 components in order to model what we felt was the baseline. Also, because of some of the products that we actually used as the basis for these models, we made some adjustments. One thing that was discussed at the framework workshop was that a product with French doors would be more representative than a single fresh–food door, and this is for Product Class 5. We’re not talking about Product Class 5A here. Some of the information obtained during the manufacturer interviews suggested that shipments for French doors, even for Product Class 5, are higher than single–door and hence we did base the analysis on French door design. So, the product that we initially purchased for examination did not have French doors, and we had to adjust the model for that design appropriately in order to have an appropriate baseline. A similar thing happened with Product Class 7, where the product that was obtained did not have the through–the–door feature, and we had to add that additional energy use into the model. Some supplemental spreadsheet calculations were made. Some of these things are associated with features that the ERA model did not have, in particular**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 air side thermal resistance for spine fin evaporators, since some of the products that we looked at had spine fin evaporators. Thermal resistance of composite vacuum panel foam walls. I’m not going to dwell too much on the third bullet. Some adjustment we needed to make because of other issues with the way ERA was configured for input and output. We also did spreadsheet summary calculations combining the outputs from the energy model and the outputs from the manufacturing cost model in order to develop, initially, cost efficiency curves based on design options. We resolved those into cost–efficiency curves based on efficiency levels so that it’s easier to have more consistent comparison between different information sources and across product classes. The next topic is manufacturing cost models. The process we used to determine incremental manufacturing costs has been well documented in many other rulemakings. It’s well documented in the TSD. It involves purchasing representative products; developing a detailed bill of materials; identifying the processes used to fabricate the fabricated materials; for the purchased parts, estimating the price based on discussions with the manufacturers and**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 also with the component vendors; and then to develop manufacturer production costs. The incremental cost estimates were then developed from the manufacturing cost models by adjusting the manufacturing cost models appropriately for the different design options and looking at the results. Typically, when looking at more efficient components, for instance the move to a higher efficiency compressor, the key cost increment there is associated with the higher price for the component. Some of the design options’ impact on overhead and depreciation was added in. Typical markup for overhead and depreciation was developed based on the manufacturing cost models. In some cases, this was applied to represent additional costs associated with implementing that particular design. The depreciation costs for insulation thickness increase. Based in part on discussions with manufacturers, DOE determined that the impact on the manufacturing plant would be significant enough when implementing an insulation thickness increase that for many months you really couldn’t be in production and so you really would have to set up a new plant or else go out of business temporarily. We included depreciation**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 costs for insulation thickness increase based on setting up a new plant. Again, those depreciation costs were calculated using the manufacturing cost model. In the results presented for the engineering analysis, we did include the manufacturer markup, including G&A and profit. We converted the manufacturing and production costs to manufacturer selling prices. In some cases, where we do some comparisons, we take that markup out in order to get apples–to–apples comparisons, but that should be clear in the TSD. Again, let me know if it wasn’t. Then, with all this input, we developed the cost efficiency curves. This slide essentially goes through the blow–by–blow again of most of the information that I’ve already related. The baseline energy use is based on proposed energy test procedures and the design options added from the baseline to the max tech as a pathway for improving energy efficiency. The costs for those design options were determined from the manufacturing cost model, which had various inputs. The cost effectiveness of those design options could be determined. Then, a design path representing successively increasing efficiency and successively increasing costs**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was developed based on design options, and that was converted to curves based on efficiency level. This illustrates some of that information for top–mount refrigerator–freezers, Product Class 3. As mentioned, we looked at two different sizes for each product class. The curves for the different sizes are shown in the red and blue. The design option points are shown with the purple dots, and you can see that that’s for the blue curve. Those purple dots were then resolved to the appropriate curve based on the actual efficiency levels in increments of 5 percent. In some cases, determining the cost to get to the next higher efficiency level required adding the full cost of the next design option. For instance, if you’re going to switch from a shaded–pole fan to a brushless DC fan, you can’t put in half of that. You have to put in the whole thing. In some cases, like in an insulation thickness increase, if you’ve already accounted for the capital costs associated with adding more, you could add half or a full inch or whatever. You could look at different gradations of that and interpolate between them. That was the approach used. Initially, the plan was to resolve variation associated with product volume by looking at the different sizes of product. It became clear when we**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 looked at the details of the designs that the differences in these cost–efficiency curves have much more to do with the specific design choices made than with their sizes. Instead of developing a variation associated with product size, we decided it would be more appropriate to average the two curves to develop the curve that would then be passed on to the downstream analyses. The next few slides – MR. BROOKMAN: Please, Marty. MR. SEVERANCE: Martin Severance, General Electric. I was curious, on the labeling of 7, 8, 9, and 10, if those are correct. Looking at the efficiency changes from each of those factors, if they’re labeled correctly or not. In other words, I’m questioning the percent gain of adding vacuum panels to the freezer versus the fresh food. Also, 9 and 10 I think are labeled the same. MR. WESTPHALEN: You’re right; they are labeled the same. I don’t recall at this point which is which. Appendix 5A gives the details of all of this for all of the products analyzed. At this point, I would probably venture to say that the labeling of 7 and 8 is correct. MR. SEVERANCE: I guess that’s where I was**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 having a difficulty understanding how adding vacuum panels to a fresh food was going to provide more energy improvement than adding vacuum panels to the freezer. Because adding vacuum panels to the fresh food is also going to have an effect on evaporator temperature, which is going to have a negative impact on energy. MR. WESTPHALEN: Well, as I said, the data is in Appendix 5A. We welcome any comment based on the details of what’s in there. Hopefully, we can resolve the issues with the ERA model so that you can take a look and see what exactly was misrepresented. MR. BROOKMAN: The logic is useful. Additional comments on this series of slides? (No response) MR. WESTPHALEN: The next series of slides basically show the results of the curves for each of the two products for each of the product classes and the average. I’m not going to dwell on these in particular. If you have any particular questions, feel free to ask. This is Product Class 5. Product Class 7. For Product Class 7, you notice one of the product classes, we didn’t feel that it would get past 40 percent efficiency level. Product Class 9, the upright freezers. Product Class 10, chest freezers.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Some of these sawtooth shapes in the curves are associated with – this is looking at the freezers – adding a large impact in cost associated with capital cost, initially at 20 percent for that one product in order to increase the wall thickness. Then, higher up, making the cost impact of a variable–speed compressor, which would then get you past two efficiency levels so that the cost didn’t increase from 35 to 40. Those are the types of things that affect the sawtooth shape there. Product Class 11, and then Product Class 18, compact chest freezers. Any other comments or questions on these curves? (No response) MR. WESTPHALEN: The detailed analysis is really what – as we explain the process, there’s a lot of information and analysis that goes into developing these. Obviously, we’d have to really pull it apart. We don’t have time for that right now, but certainly I encourage everybody to look at the detail in the TSD and look at some of the modeling. If there are particular issues, certainly we’d be open to listening to any of that. Next thing to talk about is comparison with**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the AHAM data. As is usually done for a rulemaking process, some of the data is collected by a trade organization, in this case AHAM, and aggregated and presented to DOE. This was done for Product Classes 3, 5, 7, 9, and 11. In order to make comparisons with the AHAM data, the AHAM data was based on the MPC, manufacturing product cost, rather than the selling price. We removed the manufacturer markup from our curves to make the comparison. The AHAM curves did include material, labor, overhead, depreciation, and one–time expenses to get what should be considered a true manufacturing production cost. This fourth bullet, I guess, is a little bit subjective: reasonable agreement between the AHAM and DOE curves, with a few caveats. Additional details, obviously, are in the TSD. The first curve here shows Product Class 3. I don’t know if we should get in this forum into the details of how the AHAM sampling and aggregation process worked, but what you see here to some extent is impacted by the way that process worked. The min/max curve for this product class, it doesn’t make sense that that’s lower than the average, but that has to do with the way that process worked.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 However, it does indicate that for at least some of these responses, that which is represented, our feeling is that curve is very close to the results DOE obtained. Product Class 5. Agreement except at 25 and 30 percent. MR. BROOKMAN: Do you have a question or comment? Yes, Debra. MS. BRUNK: Debra Brunk from AHAM. I just wanted to follow up on Detlef’s comments just regarding the aggregation. We do what we can in terms of pulling data from our members, and we have several requirements that we can maintain our manufacturers’ confidentiality, particularly when it gets into this kind of cost information. We can only report aggregated data if we have information from three manufacturers or more. In this kind of an exercise, what we may end up with is a certain number of manufacturers reporting for a certain number of, say, efficiency levels and then maybe manufacturers dropping out as you get to higher levels and not providing data. We also don’t get 100 percent response when it gets to the max/min information, which is why that often looks a little bit strange. I felt, when I put that together, it would be**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 better to provide as much information as we had to DOE as opposed to making assumptions. I wanted to make that point. I think the other point I would like to make here is, as we further reviewed these curves, we have some concerns. I’ve heard some concerns from members that they may not have actually used the correct baseline for calculating cost. We need to go back and look at that. We may try to do a little bit better job in terms of this max/min evaluation. MR. BROOKMAN: Thank you. Andrew. MR. DELASKI: If I could just follow up Debra. When we’re looking at this curve, for example, for Product Class 3, are you saying that it may be that for the max/min data we may have a different set of manufacturers who provided data to that input than data for what they call DOE average here? MS. BRUNK: This is Debra Brunk from AHAM. That’s correct. Basically, your subset of manufacturers’ reporting is different for the two. MR. DELASKI: So, we may have 10 manufacturers gave data here but only five gave you data for that. MS. BRUNK: You’re essentially comparing apples and oranges right here.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DELASKI: Then the other question I have is, how do you weight it? How do you weight the manufacturer data? MS. BRUNK: All weighting is done by shipments. It’s percentage of market share. MR. DELASKI: In this particular market, where one manufacturer has enormous market share – if a manufacturer has 70 percent market share, they’re 70 percent of what’s going on here. If they have 2 percent market share, they’re 2 percent of what’s going on here. MS. BRUNK: That’s correct. MR. BROOKMAN: Okay. Andrew? MR. DELASKI: Thanks. MR. WESTPHALEN: Moving on to the comparison for Product Class 5, there is discrepancy at 25 percent and 30 percent levels. Elsewhere it’s reasonable. Product Class 7. The DOE estimate is actually higher than the AHAM estimates. There may be some questions here about number of manufacturers responding above 25 percent because of the way that one curve flattens out. It doesn’t really look all that believable. Product Class 9. Some of the efficiency levels agreement is reasonable. For others, 20 percent**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is discrepancy. Product Class 11. There’s significant difference, and without understanding better what went into the AHAM data, it’s hard to say what the differences are. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk with AHAM. I just have one clarification question here. We’re going through this evaluation. In some areas, there’s agreement; in others, there’s not. I guess I’m just wondering, in terms of moving forward with the analysis, is the Department looking at going with the curves as simulated or are they looking at trying to get more information in terms of the true manufacturer incremental cost? How would DOE expect to move forward on this? MR. WESTPHALEN: Well, the information that was fed to the downstream analyses was the DOE analysis. You did go through the exercise, and certainly we don’t want to just push aside those numbers and say they’re meaningless, but we do have problems understanding what the differences are. Without more information, it’s hard to know where to go with it. You suggested maybe additional questioning**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 during the MIA visits, and that’s certainly something that we’ll follow up on. One thing that we felt was important to address in this public meeting and the comment period is the impact of vacuum insulation panels. The efficiency levels attainable using vacuum insulation panels are significantly beyond current Energy Star levels, but there is, according to our analysis, significant cost involved. The LCC analysis, which Greg and Asa will get into, shows that some portion of this high cost could be justified by the cost savings. Thus, new standard levels could require significant use of VIPs, much more so than has been done to date. As we mentioned before, vacuum panels were not screened out. They were not screened out in ’97. The analyses for ’97, obviously, were done before that. Maybe that’s 13 years ago. However, we felt that we should raise this issue as something for which we request comment and request additional information on. MR. BROOKMAN: Yes, Debra. MS. BRUNK: Debra Brunk with AHAM. I think we would like to note that DOE relies pretty heavily on VIPs in their analysis. If we go back to the cost versus efficiency chart for Product Class 3 with the**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 purple dots, there are four data points there that rely on VIPs. AHAM strongly cautions DOE that the availability of vacuum insulation panels would be an issue, certainly, for the near future if that is a technology that is required to meet the new efficiency levels. In addition to DOE’s interest in this, the new standards in Europe and India, which are quite stringent, will likely put pressure on the vacuum insulation panel market, also. It would not just be an increased U.S. demand but also worldwide demand for these products. I think AHAM also wants to note that the cost curves developed by DOE do not take scarcity of supply into account. We do recommend that DOE evaluate their cost–energy curves incorporating the higher costs of vacuum insulation panels, at least in the short term. Finally, just a few other issues regarding vacuum insulation panels that may not deal directly with the question on supply. One is that this technology incorporated into cabinets are more difficult to install than in doors. Has this additional cost been taken into account? Finally, what is the average life of a vacuum insulation panel? In terms of the newer ones, they**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have not been on the market a long time. How do those compare to the refrigerator–freezer’s life? I think there is the question of how stable they are or how sensitive they are to damage. Basically, if you do lose one of these panels in a product, you no longer have anything there to deal with the heat load. So, just a few extra comments on vacuum insulation panels. MR. BROOKMAN: Thank you. Additional comments on this issue? MR. DELASKI: This is Andrew DeLaski. Could you comment on what the European and Indian requirements are? MR. CHURCH: Well, they’re in process. India is going to be coming out with a new standard about the same time that we are, so that’s all in process right now. There’s not a firm standard out. MR. DELASKI: But they’re looking at levels that in Europe would require VIPs. MR. CHURCH: They’re going through a fairly stringent change to their standard, much like we are. MR. DELASKI: Same with the Europeans? MR. CHURCH: I don’t know what the new standard is in Europe. I haven’t seen those numbers. MR. BROOKMAN: Thanks, Steve and Andrew both. Yes, thank you.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DELASKI: If I could just quibble with your prior slide for a moment, I know it’s part of the process here in showing technical feasibility and economic justification to do this analysis. You used the phrase the levels “could require more widespread use of VIPs.” Just to quibble with the phrasing here, you’re trying to estimate what the most cost–effective way to comply with the standard would be. It wouldn’t require it in a legal sense. That is, these are performance standards, and our historical experience has been that once the standard is set, DOE’s predictions or DOE’s estimates are usually wrong because you’ve got a lot of engineering experience at the manufacturers who are very capable of finding new and better ways to comply with standards. I think just to caution the use of the notion of requiring. These are performance standards, and we’ve got to keep that in mind. MR. TOPPING: Doug? MR. BROOKMAN: Yes? Yes, Dick. MR. TOPPING: As Debra said, this is clearly a sea change in the vacuum panel business that’s being proposed here. At our company, we’ve been using vacuum panels in small quantities I think for about 10 years,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so they aren’t a new technology. But the levels or the numbers that we’re talking about here are gigantic. They’re huge. Someone has to do it, and I think it has to be DOE, has to do a very well done market availability study to look at what would happen with the need for millions, literally, of vacuum panels where now it’s nowhere close to that. This is major. This is an introduction into mass production of a technology that really is not mass–produced. MR. BROOKMAN: Thank you. Additional comments on vacuum–insulated panels? (No response) MR. WESTPHALEN: The next slide talks about low–volume products. As mentioned in the market and tech assessment – actually, that was the beginning of the engineering analysis section. The analysis was based on seven product classes, which represent most of the production. DOE proposes to extend the rulemaking to the other product classes after establishing standard levels for the analyzed classes. For example, the proposal might be to use the same required percent energy use reduction for Product Class 6 as was used**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for Product Class 3. The TSD describes possible methodology for each of the low–volume product classes for achieving this. I don’t want to go into all the details. It is available in the TSD. But I would like to open the floor for any comments at this stage on those proposals. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk with AHAM. Based on the data presented in the Technical Support Document, AHAM does believe that cost–efficiency curves should be developed for all product classes. Certainly, the analysis right now already is utilizing DOE’s simulations in terms of those curves. We think this is important because we’re talking about low–volume products here. The products that were evaluated are all high–volume. We’re talking about around 90 percent of the market, perhaps. When we start getting into cost efficiency curves for some of these lower volume products, you have potentially niche manufacturers and you have niche products. Essentially, because of their low–volume nature, the cost–efficiency curves are going to look different. We would expect that you would have a higher cost versus efficiency just to implement a**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 similar type of technology. Our preliminary proposal would be that DOE develop cost–efficiency curves keeping that low–volume component in mind. As we work on our comments, we’ll see if we might be able to suggest anything in addition. MR. WESTPHALEN: The next topic is, as promised, another look at built–in products. As mentioned, this was discussed in the framework meeting and in the framework comment period. The table on this slide presents a very initial look at what the potential cost differences might be between conventional products and built–in products. This is based on discussions with manufacturers during some of the visits made last year. A difference of $43 was estimated, typical back–of– the–envelope type of analysis based on the design option differences. We did receive some detailed data of designs for some built–in products and conducted more in–depth analysis. The next two slides compare some of those curves with the curves for the conventional products. You can see that, according to these analyses anyway, there are some differences in costs. Pretty close to the $43 at the 20 percent**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Energy Star level for this particular product class. A little bit more than the $43 for Product Class 7. MR. DELASKI: Excuse me. What’s the source on the data? MR. WESTPHALEN: This is data for three actual built–in products, very detailed design information. We can’t divulge any more than that. MR. DELASKI: But it was data based on – it wasn’t a tear–down analysis. It was data supplied to you by a manufacturer. MR. WESTPHALEN: That’s correct. MR. DELASKI: As opposed to data that you calculated yourself based on engineering or reverse engineering or any other approach. MR. WESTPHALEN: Correct. But it went into very detailed drawings showing insulation thicknesses, heat exchanger sizes, specification of components, et cetera. MR. DELASKI: Thank you. MR. WESTPHALEN: We have a request for comments on built–ins. Basically, we still need to resolve this issue. Any information that can be provided to shed more light on it certainly is welcome. MR. BROOKMAN: Yes, Dick. MR. TOPPING: Just a point of order, Doug.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 01 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Is there an opportunity for the various participants to make more formal comments later, or are we going to do this through this, or what? What I’m saying is I have comments on built–in products, a couple minutes’ worth. I’m just wondering what’s the best time. MR. BROOKMAN: I think what works best in terms of the flow of the conversation and also for the record is to make your comments at this point in the agenda. MR. TOPPING: Okay. All right. Well, I have a script, but this isn’t that kind of group, so I’ll try to paraphrase it. MR. BROOKMAN: Thank you. MR. TOPPING: All right. And it’ll be very brief. But this is comments from my company, Subzero Freezer Company, which makes almost exclusively built– in products. In earlier comments, we did provide information to DOE justifying the need for separate product classes for built–in refrigeration products. We subsequently provided detailed design and cost data to DOE in meetings conducted at our facilities. The cost–efficiency curves that you just saw, I think, confirm that the cost to meet each energy improvement level are significantly higher for built–**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 02 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ins than for freestanding products. Also, DOE’s estimate of the cost increment to meet Energy Star shows $43, as we just saw, three times the amount needed for a conventional unit, and that number actually could be a little low. The cost differences occur because built–ins use more energy than freestanding units due to inherent design differences, including restricted condenser air flow, longer door gasket length per unit of storage volume, limits to insulation thickness, and complicated door hinging that increases cabinet heat load. The overall difference in efficiency averages out to be about 15 percent. However, these products provide very important utility for a small segment of consumers. While built–ins comprise only about 1 and a half percent of annual shipments, the buyer segment strongly desires kitchens designed to accept built–in appliances. DOE’s criteria for separate product classes include in the statute, and I quote, “Capacity or other performance–related features such as those that provide utility to the consumer,” end quote. Built–ins offer unique utility to their buyers. Therefore, separate product classes are justified in accordance with these criteria.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 03 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Andrew, you mentioned later the proliferation of product classes, and I understand that. At the same time, the statute does protect the consumer utility, clearly. In this case, there’s a utility associated with built–ins that cannot be provided by freestanding units. Also, the number of design options available for built–ins to meet the 2014 standard is limited. Our company already uses in our products some combination, and I underlined this, of every one of the qualified design options that you saw up there earlier that are considered by DOE in the TSD. Not every one in every unit, but a combination of every one of those is already being used, including vacuum–insulated panels, variable–speed compressors, and DC fan motors. Because of inherent higher energy use, we’ve had to do more and incur more costs to meet every previous round of standards. Basically, the number of silver bullets in our holster is dwindling quickly. DOE’s data confirms this by showing that built–ins cannot achieve the same levels of max tech improvement by any practical means. Going forward, if built–ins are required to meet the same standards as freestanding units, achieving Energy Star levels becomes almost impossible,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 04 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 therefore eliminating that option as well for the segment of consumers who desire it. In these comments today, I have not even mentioned the challenges faced by Subzero, a small, privately owned company manufacturing solely in the United States. There are other companies like ours in the same situation. The difficulty is for companies such as ours to remain competitive in today’s world, which is changing rapidly. DOE’s decision on whether to establish separate product classes for built–ins will really be pivotal in our company’s ability to remain a viable competitor in the international refrigerator business in the future. We’ll certainly provide more detail in our written comments in some of these areas, but I did want – this is of particular interest and importance to us. Given that you are asking for information, we wanted to provide some more today. MR. BROOKMAN: Thanks, Dick. Thanks for that summary. That’s helpful. Other comments on this before moving on? Yes, Debra. MS. BRUNK: Debra Brunk with AHAM. I just want to provide an industry comment here. AHAM does support separate product classes for built–in products.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 05 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 As we mentioned before, these are low–volume products. As discussed before, they have substantially different cost requirements. That’s one reason. One thing we have done, I think, as we’ve worked to actually support built–ins as a separate product class is to develop a definition for these products. We will provide that in our formal comments because we recognize that that is an important piece of developing any new product class. MR. BROOKMAN: Thank you. Yes. Please say your name for the record. MR. HOROWITZ: Noah Horowitz with NRDC. If you could quickly talk about – I think I heard you say that you’re currently using vacuum insulation panels in your units. We heard from the trade association potential concerns. Are you able to procure those, and are they working well over time? MR. BROOKMAN: Dick Topping? MR. TOPPING: Yes, we are able to procure, but we’re only buying very, very small quantities. So far, the service record has been good, but you do have to realize that with vacuum panels, if there is a failure of the vacuum panel, then you’re not in a repair situation, you’re in a replace situation. Over time, regardless of how reliable the panels are, there**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 06 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will be some failures, even if a serviceman puts a screwdriver through one of them. In that situation, you have to basically replace the refrigerator. That impacts the maintenance cost aspect of this as well. Again, vacuum panels are a great energy– saving option. They come with some of their own baggage, including that and whether the world has the capability to make enough of them to meet the requirements that we’ve been talking about today. MR. BROOKMAN: Thank you. MR. WESTPHALEN: The next couple of slides I guess I don’t want to dwell on too much. We talked about the potential rules that would limit the availability of HFCs. DOE did some preliminary analysis looking at what would happen to an engineering analysis if we were forced to use blowing agents that would make less thermally resistive foam. This set of

– MR. BROOKMAN: Debra? MS. BRUNK: Debra Brunk with AHAM. I just wanted to take issue with the first bullet point here and just clarify for the record. Legislation is not looking at banning the use of HFCs. It’s looking at a phase–down, which is different. Also, it’s looking at a phase–down of HFCs in general, not just specifically**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 07 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 as foam–blowing agents. I just wanted to make sure that we get the record straight on that. MR. BROOKMAN: Thank you. MR. WESTPHALEN: This set of curves is associated with two different analyses that differ only in the thermal resistivity of the insulation. Here a 10 percent difference in resistivity was assumed. What you see is the curve shifts over to lower efficiency by roughly 5 percent. Clearly, this is something that certainly could be revisited for a number of the analyses. However, one of the important things is to make sure we get all the information correct. That leads to the request for comment, Issue 17, associated with technical data for alternative foam–blowing agents. In that preliminary look, we were using a 10 percent number. Is that the real number? Does anybody have data on resistivity of different foams that is credible that we could use in the analysis? Also, speaking to Debra’s point, it would be useful to have information on likely scenarios for alternative foam– blowing agents so that we better understand that it’s not cold turkey no HFCs but how that would really work and affect the industry.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 08 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Comments on these two issue boxes? Andrew? (No response) MR. BROOKMAN: Any additional comments in writing I think would be helpful to the Department. That ends this segment, yes? MR. WESTPHALEN: Yeah. MR. BROOKMAN: Okay. Before we move on, additional comments, final comments on this whole cluster? Because we’re moving on to a different section here, markups. (No response) MR. BROOKMAN: Okay. We’re moving on. Yes, Dick. MR. TOPPING: I just have one comment that goes way back on something that Amanda said a couple hours ago, I guess. That is regarding wine coolers. Our company also does produce wine coolers. The situation here I think that we’re dealing with is whether to have a national standard for wine coolers or a de facto national standard based on the California standard. I guess the point is, our feeling is that this process we’re going through here is the correct way to come up with national standards for products.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 09 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In California, they’re analyzed based on a state impact, which is what they need to do, but then that standard in fact becomes the standard for the rest of the country. That’s, again, the reason that, as Debra mentioned, AHAM and certainly my company would very much appreciate national standards for wine coolers. MR. BROOKMAN: Okay. Thank you. We’re going to hear from Asa Hopkins next. Markups to determine product price analysis, energy use characterization, lifecycle cost analysis. For those of you that are keeping track, we’re probably going to go at least another half an hour before we pause for lunch, round about 12:30. MARKUPS TO DETERMINE PRODUCT PRICE ANALYSIS, ENERGY USE CHARACTERIZATION, AND LIFECYCLE COST ANALYSIS ASA HOPKINS AND GREG ROSENQUIST (PowerPoint presentation) MR. HOPKINS: Thank you. As Doug said, my name is Asa Hopkins. I work at Lawrence Berkeley National Laboratory. Moving on to the energy use and markup analysis. A reminder of where we stand in going through this chevron chart. The markups and energy use are the critical inputs to the lifecycle cost analysis,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 which follows this presentation. The markups are applied to those cost–efficiency curves that Detlef just spoke about, and then the energy use plays into the operating costs. The purpose of the markup analysis is to determine customer prices under a standard scenario based on the manufacturing costs that Detlef just described. We need to characterize the product distribution channels and the market segments and describe the retailer direct cost expenses and profits. The inputs to the market analysis for the manufacturer markups, the results of which Detlef has already included, are SEC 10-K reports for four large appliance manufacturers from earlier this decade. We also examined population–weighted average sales tax rates for each census division and large state, a total of 13 regions, and examined the economics of the appliance retail market using the U.S. Census Bureau Business Expenses Survey for household appliance stores. The outputs of this markups analysis are both baseline and incremental markups. Based on data from AHAM, DOE used a single, simple distribution chain. Data from AHAM indicates that an overwhelming majority of refrigerators and freezers are sold following such a pattern. DOE is not**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aware of any other significant distribution channel and assumed that all customers purchased appliances in this manner. This accounts for the competitive nature of the appliance market that the costs that consumers face through some other channel would be comparable to the cost that they face through this channel. So, definitions of baseline and incremental markups. Markups relate the customer price to the retailer’s cost of goods sold. Baseline markups relate price to cost prior to any change in efficiency. They cover all of a retailer’s expenses, including the retailer’s profit, and they include direct labor costs such as salary, payroll, rental, et cetera. Incremental markups cover only incremental changes in the customer price that are related to incremental changes in the cost of goods sold. Some distribution costs remain constant as the cost of goods sold changes. For example, direct labor costs do not vary with efficiency–induced changes in cost of goods sold. DOE assumes that other operating costs and retailer profit will scale proportionally with the cost of goods sold. The output of this analysis. Again, the manufacturer markup was mentioned earlier, 26 percent. These are multipliers. You would take the cost and**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 multiply by each of these numbers as you move down the chart. The retailer baseline markup is 1.45. That’s 45 percent markup. The incremental markup is 15 percent. The national average sales tax value is a little under 7 percent. Resulting in an overall baseline markup of 1.95 and an overall incremental markup of 1.55. MR. TOPPING: Question. MR. BROOKMAN: Please, Dick. MR. HOPKINS: Before we go on to the other. MR. TOPPING: DOE has concluded that, for the retailer, a two–markup structure is appropriate: baseline and incremental. Why doesn’t that same rationale apply to the manufacturer? MR. HOPKINS: Perhaps Detlef can describe that more. I’m not sure about the manufacturer markup process of developing that number. MR. BROOKMAN: Detlef, yeah, please. Turn it

on. MR. WESTPHALEN: I have to be honest. I’m a little bit surprised by the question. It’s not clear to me that there’s a differential on the manufacturer side. MR. BROOKMAN: Dick, maybe you could say a**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 little more. Expand your question a little bit. MR. TOPPING: If you go back to the slide before that, basically, it says baseline markups relate to indicate – where is it? There was something there where it talked about labor costs and whatever being covered in the baseline markup. MR. BROOKMAN: That’s 84, middle of the page. MR. TOPPING: I guess what I’m saying is, the assumption is that as manufacturers improve efficiency, then all the costs associated with increasing that efficiency can be passed on to the next stage to the retailer. MR. HOPKINS: Right. I believe that that’s the assumption, that manufacturers are assumed to pass their costs along. MR. BROOKMAN: Do you want some additional comment in addition to what Asa has said? MR. TOPPING: Well, maybe we can talk about that. MR. BROOKMAN: Okay. Ron Lewis. MR. LEWIS: I may have just missed something because I was responding to something on the BlackBerry. My comment really was a couple minutes back, Dick, to your issue and your question. We’re yet to do the manufacturer interviews, and during that MIA**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stage in the development, that would be an excellent time to give any input. That’s exactly what it’s for. We’re starting out with premises, assumptions, history of how we’ve done things, and any precision you can give to that would be most helpful. MR. BROOKMAN: Thank you. MR. HOPKINS: DOE’s goal in this process is to most accurately characterize exactly what the prices that customers will face will be, so any data that anyone may have that is useful for that process would be welcome. Moving on to the energy use determination, which then plays into the operating cost. The purpose of the energy determination, of course, is to develop annual energy use data that can then be used in the lifecycle cost and payback period analyses to calculate their annual operating costs. DOE used two distinct methods, one for standard size products and a separate method for compact products. For standard size products, DOE used household samples from the Energy Information Administration’s 2005 Residential Energy Consumption Survey for the five standard size product classes that have been the subject of all of the discussion earlier this morning. Those classes are, again, Product**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Classes 3, 5, 7, 9, and 10. The Residential Energy Consumption Survey includes estimates of the energy use attributable to refrigerators and to freezers in each home within their household survey. DOE was able to use those end–use energy estimates to evaluate field energy use. For compact products, DOE used the engineering analysis data to develop the annual energy use for the two compact product classes analyzed in detail. That’s Product Classes 11 and 18. That is, DOE assumed – we can touch on this again in a moment – that the field in–use energy use of these compact products is equal to their performance under the test procedure. In more detail for standard size products, the fundamental question that DOE is addressing is the question of how energy use in the field in an individual household’s kitchen or garage, or wherever their refrigeration products may be, how that energy use may compare with the energy use under the official DOE test procedure. DOE carried out an energy use analysis on a per–household basis from RECS. RECS is a survey of approximately a little over 4,000 households across the United States. For each household that owns one or**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 more refrigerators, for each of those refrigerators, the survey includes both the age of the unit and the volume of the unit, as well as the field energy consumption of those units. Based on the unit age and its volume, DOE can estimate when that unit was produced and therefore what standard was in effect at the time of its production, use the volume of the product to calculate what the test energy consumption of that product was when it was new. That’s the second box, the yellow box, calculating the test energy consumption of the existing product in the year 2005 in that household’s kitchen. MR. TOPPING: Doug? MR. BROOKMAN: Yes? MR. TOPPING: Is that submeter data? MR. HOPKINS: It is developed using a statistical technique. RECS does not submeter the households that it is reporting the energy use for. MR. BROOKMAN: Tom Eckman. MR. ECKMAN: Do you know what the standard error on that measurement is? MR. HOPKINS: RECS doesn’t report it, so I can’t speak for the EIA. They report each number as their best estimate. MR. ECKMAN: When we get to the field**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 adjustment factors, I’ll be back to that question. But it would include ice–making data, though, if the product had an ice–maker. MR. HOPKINS: Right. Yeah. The technique includes data about the refrigerator, about its age, about whether it includes an ice–maker, et cetera. That’s input into their calculation process. MR. BROOKMAN: Previously, that was Dick. Okay. Proceed. MR. HOPKINS: DOE wants to take into account the test procedure that’s under development, and so for each of these households after DOE calculates the estimated test energy consumption of the product in that household, DOE then needs to adjust that to account for what that product likely would have tested – what its test energy consumption would have been under the new proposed test procedure. This follows the same – yeah. MR. JOHNSON: Chris Johnson. Did geographical location and socioeconomic level factor in? MR. HOPKINS: I believe RECS takes many different points of data that they collect from each of these households into account in developing those estimates, including those factors.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Let me just restate for the record. Your mic wasn’t on there, Chris. You asked about socioeconomic status and income factors as to how they relate to RECS. MR. HOPKINS: Geographic. MR. BROOKMAN: Geographic, thank you. MR. JOHNSON: Geographic locations, yeah. So, the south, the north, the east, the west, the weather, all that stuff. MR. BROOKMAN: He did say his name. Okay. MR. HOPKINS: DOE adjusts its estimate of the test energy consumption of the refrigerator in that household using the energy standards adjustment factor developed in the engineering analysis based on the data provided by AHAM. If you want to look back, those are the equations that Detlef mentioned that are on Slides 36 and 37. The output of that first line of this process is the test energy consumption under the test procedure under development that would correspond to the – the test procedure under development as analyzed in the engineering analysis, disregarding any ice–making changes, et cetera. That provides a measure of what the test energy consumption of such a product would be. Then, DOE could look at the field energy**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 consumption of that product as reported by RECS in that household and look at the ratio between those two values. That’s what we call a usage adjustment factor, or a UAF. It’s simply field energy consumption divided by the test energy consumption. MR. BROOKMAN: Debra. MS. BRUNK: This is Debra Brunk from AHAM. I just have a very basic question here as I’ve worked through the TSD on this and everything. I guess I’m confused, and I’ll get into more of this later when you have the specific questions, but what is the purpose of this analysis and how does it get used later on in the evaluation? I guess I’m concerned because I just see there’s a lot of apples–and–oranges comparisons going on here. We’re bringing stuff back using a test procedure but we’re using field data. I guess I don’t quite understand the purpose of the comparison in this case. I’m just trying to understand how it actually feeds into the rest of the evaluation. Maybe you’ll cover that, but a little clarification would be really helpful. MR. HOPKINS: I’m happy to go through that now. In determining the operating cost for an appliance in a household, the relevant number is the**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 field energy use for that product. But in order to adjust that field energy consumption to reflect new products that would meet the standard that might come into effect in 2014, products that have not yet been manufactured, DOE needs to understand how factors within a home might impact that energy use. The goal of this analysis is to determine what the field energy consumption of a new product in 2014 or whenever might actually be in the home so that DOE can then calculate the lifecycle cost of that product. So, the final output here is this TEC–new. It’s the test energy consumption for a product that might be sold in 2014 or 2015. The output that matters for the downstream analysis is what the energy consumption in the home of that product would be. MR. BROOKMAN: Let’s see if Debra wants to follow on. MS. BRUNK: Yes. Debra Brunk. Thank you for that explanation. I now understand how that’s wrapped into the analysis. I guess I just have a question, though. We’re looking at, I think, a lot of variability. You’re pulling products that may be 10, 15, whatever, years old back into a 2014 scenario. I think there’s a lot of error in that evaluation. I guess I’d be interested in some sort of**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 analysis or evaluation on what is that error compared to what you would actually measure with the test procedure. Is there an advantage to actually doing it this way as opposed to knowing roughly what the error on the test procedure is? I guess I’m just wondering if by – actually, again, I’m, I guess, maybe getting ahead of myself here, but you look at the field use factor. Is the error on that so large that you could actually do this analysis with just using the test procedure data, which would then be much more consistent with the engineering analysis? MR. BROOKMAN: Dick? MR. TOPPING: Well, yeah. The FEC–new, is that the number that goes into the lifecycle cost analysis? MR. HOPKINS: Yes. MR. TOPPING: Has that ever been done before? MR. HOPKINS: No. This is a new process. MR. TOPPING: Yeah. So, in the past, the energy use that went into the lifecycle cost was from the test procedure. MR. HOPKINS: I believe that’s true, yes. MR. TOPPING: Okay. And so then you are adding ice–maker energy in this number already.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HOPKINS: This number includes any number of factors that apply to products in people’s homes, which would include the use of ice–makers. MR. TOPPING: So you can see why this number is so much larger than the test procedure number. It’s apples and oranges. You’re adding something that’s not being tested in the test procedure. MR. HOPKINS: The assumption that DOE carries forward is that, say, a 10 percent improvement relative to the current product under the test procedure would also carry forward as a 10 percent improvement in the field energy use. That scaling can be carried forward. MR. TOPPING: But we don’t know what that number is. I think this is a big change. What DOE is basically doing here is substituting energy consumption that it’s done by established test procedures with data gotten from the field with a lot of variability and then using that number to come up with lifecycle costs, which make the lifecycle costs look good from the standpoint of energy–saving efficiencies because what you’re basically saying is units are using a lot more energy than the test procedure says they are. I guess the point is, is it true? You’re using data for refrigerators that’s not submeter data, it’s statistical. It is units that are in all kinds of**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 applications of all sorts of ages in different geographic locations. We don’t understand any of that. Some of them have ice–makers; some of them don’t. MR. HOPKINS: Just a quick point on that last point. MR. TOPPING: Yeah. MR. HOPKINS: RECS allows us to distinguish by product class which have ice–makers and which don’t. MR. TOPPING: Okay. But you’re taking a big, huge number and dividing it and saying, well, this is what energy consumption is. All I’m saying is in terms of precision, this is a far less precise process than it used to be. MR. HOPKINS: One of the goals of DOE’s analysis is to understand and characterize the distribution in energy use across different end uses. This survey is one way that DOE can get a handle on that. If DOE were to use only the test procedure energy use, it would not characterize energy use variability by, say, socioeconomic status or region of the country. I just want to give a preview that during the actual lifecycle cost discussion my colleague Greg Rosenquist will show an example of the impact of the fact that the mean values of this usage adjustment**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 factor are greater than one on what those lifecycle cost outputs are. MR. BROOKMAN: Andrew, let me hear from Steve first. MR. CHURCH: Just a quick question. Just a clarification. You said you can tell by product class which ones have ice–makers and which ones don’t? MR. HOPKINS: Sorry. RECS asks the households that are surveyed whether their appliance containers an ice–maker, or particularly whether it’s a through–the–door ice–maker, which allows DOE to develop household samples, which I will show on the next slide – or maybe the following slide; I’m not sure – be able to say this household in a particular region with a particular field energy use has a side–by–side format refrigerator with through–the–door ice and therefore we can use that household as an example for Product Class 7, et cetera, for each household. MR. CHURCH: I understand that. But if I have a Type 3 or a Type 4, they may well have an ice– maker. They don’t have a dispenser, but they may well have an ice–maker, so the product is still making ice. MR. HOPKINS: Greg, do you know exactly what the question in RECS is? MR. ROSENQUIST: This is Greg Rosenquist,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lawrence Berkeley National Laboratory. It just asks the question whether it has through–the–door ice service. No, it doesn’t ask specifically if there’s an ice–maker in the refrigerator–freezer. MR. HOPKINS: That allows us to distinguish as best as DOE can which class is represented in that household. MR. CHURCH: Yeah, I understand. I just don’t want it to be represented as the Type 7 has an ice–maker, the Type 4 does not, because that’s not an accurate statement. MR. HOPKINS: Thank you for that. MR. BROOKMAN: Andrew, do you wish to comment? MR. DELASKI: Yeah. Just a couple comments. One is that it may not have been done before for refrigerators, but I think in other dockets DOE has taken a similar approach, and I think the approach makes sense. The attempt here is to show what happens to consumers, and the government ultimately has to estimate impacts on consumers. Sure, RECS is imperfect. The test method is imperfect. I think that the challenge here is to find a way forward that helps to address issues that have been described here in terms of variability and in**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 terms of impacts on consumers. I think the general approach that you’ve outlined is an appropriate approach to get that overall impact on consumers. MR. BROOKMAN: Thank you. Yes, Amanda. That’s not on. Thank you. MS. STEVENS: Thank you. I just want to say I support what Andrew just said. Just to add to that, I think that this complexity here with this analysis really underscores the importance of moving to a test procedure that really is truly representative of the average energy use in the field. Keeping that in mind as the test procedure revisions are considered is an important thing as well. MR. BROOKMAN: Thank you. Debra. MS. BRUNK: This is Debra Brunk from AHAM. In response to that comment, I want to caution DOE and others against looking – obviously, there are differences in the test procedure and field use. I think one of the reasons the test procedure is how it is – it’s already a complicated test procedure, but there are a lot of issues that happen in a household that are very difficult to test or to model. You have the whole issue of door openings, ambient temperatures, ice–maker use, and all these different things. The test procedure is done essentially to provide an**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 apples–to–apples comparison. Again, I would caution looking too closely at all of those variables because, first of all, you make the procedure even more complex, which means it’s more difficult to follow. Japan actually did this. They had issues with the test procedure and what happened in the field, and they basically were mandated by their government to go back and create a test procedure that was representative of consumer use. They did that, and the results were a mess. Now they actually are working back through IEC to try to come up with something that is more like what we’re doing here. All I would say is it’s important and, certainly, we recognize that the consumer is important. They’re our customer. But I think it’s just a question of what becomes a representative use of energy and that we have to just find the balance between a test procedure that gives a good representation of the energy use versus one that is so detailed that the burden and even just the results that you obtain from that test are questionable when applied to different geographic areas, et cetera. MR. BROOKMAN: Is it Martin? MR. SEVERANCE: Yes. This is Martin Severance. I was curious if the UAF was looked at at**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 2 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the age of the product. In other words, did that have a slope that followed up with the age and used the average value? How was that achieved? MR. HOPKINS: The UAF for each household is simply a constant over time. DOE did take the age of the product in the consumer’s household into account when calculating the UAF so that a product that was produced, say, in the mid 1990s, its energy use was compared to the energy use in the test procedure – the tested energy consumption for the standard that was in effect at that time. But for a given household in the lifecycle cost analysis, the UAF is simply constant. DOE would welcome any information regarding how – MR. SEVERANCE: I guess I was curious if you looked at – for example, foam changes insulation factor as it ages. Was the UAF graphed like this group of products is eight years old, this group of products are two years old, and look at that value, if it changes with time? Also, there are other things that – products back, for example, in the ‘80s had switches that turned heaters off and on. When we tested back then, the standard was you tested it on and off, and then we averaged and did a 50 percent. Where were these**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 switches set on these units? Were they actually in an energy consumption for sweat? There are a lot of factors that could change this differential that you’re estimating. MR. HOPKINS: DOE looked at the UAF as a function of age and was not able to determine that there was any significant slope to take into account. The economic literature and studies have indicated some different measures of what that level of change might be over time, but there is no consistent answer that DOE felt confident applying. In effect, if one of the things – I’m just going to go on here to this slide, if that’s all right. If product degradation, as foam ages or other factors – there’s a study that ice–making energy may change as an ice–maker ages. If those are occurring, perhaps DOE is – well, DOE has chosen not to include such a slope because DOE didn’t have a value that it could use. The value for a given household is an average over the age of the lifetime of the product. MR. BROOKMAN: Tom, are you on this point? Because Dave is. MR. ECKMAN: Yeah, I have several issues on this, but – MR. BROOKMAN: Go ahead, Dave.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HALL: David Hall. With the field energy factor being considered in the calculation procedure here, that is describing to me that it’s part of this rulemaking process. My reason for saying that is it’s also either basing or assuming the energy consumed on those products and those classes by the current test procedure. The point there is, knowing that there’s a test procedure rulemaking going on, this could serve as an overlap or an overstatement of energy consumption if a test procedure includes all these other attributes as Debra has mentioned to better reflect energy consumption and a field factor is applied to it. Somehow, that will have to be reconciled between the level and the test procedure. MR. ECKMAN: Tom Eckman. I think that he’s got the same point that I have. I think there’s a methodological problem here. If you were using the new test procedure to directly correct to get the field energy consumption, I think you’re double–counting some of the effects because, generally speaking, the new test procedure will create higher consumption for these same units. You’re going to double–count that unless you’re using the field energy consumption multiplier. The UAF is getting created using the new test procedure**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 based on what those vintages were. Is that what was done? MR. HOPKINS: That’s correct. That’s this teal–ish box. It’s an adjustment for the energy standards adjustment factor. ESAF is an adjustment for the new test procedure. MR. ECKMAN: Before you went to RECS to find out the match. MR. HOPKINS: Before going to RECS. So, the test energy consumption is higher than it would have been under the old test – MR. ECKMAN: Under the prior test procedure. MR. HOPKINS: – under the prior test procedure by 15 or so percent, which means that the UAF is lower than it would have been by 15 or so percent. MR. ECKMAN: I think, if that’s a clean path, the second issue is that when you make a percent improvement which includes degradation, that’s probably reasonable. But if it includes these other features that we’re not regulating at least to date with the ice–maker, it assumes that you’re getting a 10 percent improvement, whatever ice–maker consumption there is. So, there’s an overlap to the extent that that field energy consumption represents ice–maker consumption. We’re not touching that in this**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rulemaking, but you’re basically saying as a percentage of the total lifecycle cost analysis, assuming you’re getting that. Because it’s 10 percent of the absolute number. MR. HOPKINS: That’s correct. We welcome comment on how to adjust for that. MR. BROOKMAN: Dick. MR. TOPPING: Just one more maybe philosophical point. I understand what you’re saying about national impact. I understand that. But this is what I think we’re doing; correct me if I’m wrong. Navigant and DOE are doing this very good work looking at the minutia of fans, condensers, compressors, vacuum panels, and all this sort of stuff, and teardown analyses and everything else, to try to figure out how much efficiency you’re going to get with this improvement or that improvement. We come up with a number, and then we multiply it by just some incredibly fuzzy number. An incredibly fuzzy number. It kind of defies logic to

me. MR. BROOKMAN: Thank you. Jeff. Please say your name for the record. Use the microphone, Jeff. MR. HARRIS: Jeff Harris. I had a question which I don’t see in the slides here. Pardon me if**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you’ve discussed it earlier, before I came in. We’re talking about a single size refrigerator. One of the things I’m curious about and I think might even be possible to tease out of RECS data is differences in this adjustment factor as a function of refrigerator box size proxy by capacity. The underlying thought is this, that if you think about kitchens, there are standard openings, 30– inch, 36–inch. The more you’re trying to squeeze into that opening, the larger the box is – it extrudes into the kitchen, you push it back – the less you can get air circulation. I think there may be a factor that one could tease out of large numbers like this that would correlate with refrigerator size in suggesting a different adjustment factor for larger boxes. I think there would be direct implications for how we look at the standard for large boxes compared to modest size boxes. I wonder if that’s something you’ve thought about. MR. HOPKINS: DOE did look briefly at the variation in the usage adjustment factor by volume and did not find a strong and significant correlation that DOE could rely upon to carry forward in the analysis. That doesn’t mean it’s not there, only that DOE’s analysis didn’t find it.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We thank you for your comment and can reexamine it. MR. HARRIS: There might be something that could be done as a side study just looking at a few boxes and putting them in cabinets of different dimensions for short–term measurements. MR. BROOKMAN: Thanks, Jeff. Debra, do you want to comment here? No. Okay. MR. HOPKINS: Do you want to try to finish energy use before lunch? MR. BROOKMAN: Yeah, let’s do that. MR. HOPKINS: So, just some details of the things that DOE took into account in the calculation of the UAF. Some households contain more than one refrigerator, where RECS reports only the total energy consumption for all refrigerators. DOE has assumed that a given household would have the same usage adjustment factor for both refrigerators, with the caveat that the UAF was adjusted down by a factor of 0.7 for second refrigerators in cold climates which were assumed to reside in a basement or some other, more favorable operating environment. DOE also adjusted the UAF to account for the presence of Energy Star refrigerators whose test energy**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 consumption is thereby lower than the test energy consumption for the standard that was in effect at the time that the product was new. DOE used engineering data and modeling to define minimum and maximum plausible unit usage adjustment factors for each household and used these to remove outliers from the data. It should be noted, as you are all clearly aware, that the average usage adjustment factor for each product class analyzed is greater than one, indicating that, on average, field energy use exceeds energy use under the test procedure. As you also have noted, there are factors on field energy use that are not reflected in the test procedure, such as energy use for ice–making and the potential that refrigerators’ energy consumption may increase over time for a given product. Here are the final mean, minimum, and maximum usage adjustment factors for each of the five standard size product classes. The sample size on the far right is the number of households in RECS that are used for each. It should be noted that, the way the RECS survey is asked, it cannot distinguish between bottom–mount and top–mount products. It simply asks whether the freezer is above or below the fresh food cabinet. It**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is our hope that the 2009 survey will ask a more precise question. That explains how the Product Class 5 sample size is as large as it is. I gave an example of the variability in this usage adjustment factor. This is a histogram of the usage adjustment factor for Product Class 3. MR. CHURCH: This is Steve Church. Just a quick note. You said you couldn’t distinguish bottom– mounts because they simply asked if the freezer was above or below? MR. HOPKINS: Correct. MR. CHURCH: Did you actually mean side–by– sides? Because if my freezer is above or my freezer is below, you’ve just distinguished tops and bottoms. MR. HOPKINS: Oh, no. Sorry. RECS presents the householder with a couple of pictures and says which of these looks like your refrigerator? One of the pictures is a side–by–side and one of them has the freezer above or below the fresh food compartment. So, RECS cannot distinguish whether it is above or below. It simply, in effect, asks is it above or below, or to the side. Those are the distinguishing characteristics. Sorry for the unclarity. An example of the variability of this usage adjustment factor for Product Class 3. It’s clearly a**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very wide distribution and a somewhat different shape for Product Class 7. It’s a somewhat flatter distribution but still quite broad. Just to be clear, in the lifecycle cost analysis to come, each of these households is sampled individually in a Monte Carlo calculation. Some households have quite low energy use corresponding to their refrigerator and some have quite high. Each of those households is analyzed individually, which allows DOE to more accurately characterize the variability in the impacts of proposed standards. This slide presents the average energy use in each of the five standard size product classes that DOE analyzed in detail, taking into account the range of volumes, et cetera. MR. ECKMAN: Given the histogram, was the data check for normality, and is it normal? MR. HOPKINS: This data did not fall in a Gaussian distribution. It’s not a normal distribution. MR. ECKMAN: So, is using the average a good way of looking at the data? MR. HOPKINS: The averages are presented here only for informational purposes. As I said, in the Monte Carlo analysis, each household is sampled individually based on the weights assigned by RECS. In**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the lifecycle cost analysis, DOE does not use the average value of the usage adjustment factor at all. It’s presented only to tell you a little bit about this distribution in a single parameter. MR. BROOKMAN: Jeff Harris. MR. HARRIS: Jeff Harris, Alliance to Save Energy. As I recall, there aren’t any actual measurements of end uses in the RECS data set. It’s all statistically inferred, right? MR. HOPKINS: That’s correct. MR. HARRIS: And one of the problems, it seems to me, with refrigerators is they’re pretty much everywhere. The only question is do you have one, two, or three, to help you get the coefficients. I’m wondering whether it might be worth it at some point to see how much you can rely on these as actual end use values to make this adjustment factor, perhaps by doing the same kind of statistical inference that was done with RECS to get those end use values with an end use measure data set like the California residential data set. I don’t know if you’ve thought about that as a way of just getting a little more reliability on these numbers. MR. HOPKINS: I’m personally not aware of that California data set that you described. I’d love**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to ask you about that. Sorry. I lost the earlier part of your question. Could you repeat it? Sorry. MR. HARRIS: I just was confirming that the end use values in RECS are really based at this point on statistical inference rather than measurements. I know that there has been discussion on and off for quite a while about spot measurements. One of the problems with statistically inferring something that’s in every house is you can’t see its absence. All you can see is one, two, or multiples. MR. HOPKINS: Right. That is correct that it’s a statistical method. DOE welcomes any and all data regarding what energy refrigerators or freezers use in the field. One of the challenges that DOE faced in developing this method and this analysis was the lack of recent studies of refrigerator energy use in the field. Most of the literature is quite old. As folks in the room have discussed, refrigerators and freezers have changed over time. The technologies used, the prevalence of ice–making, et cetera, have changed. DOE would welcome any and all recent data, studies, et cetera, on what these products use in the field so that we can take that into account.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Debra, then Chris. MS. BRUNK: Debra Brunk from AHAM. I just had a couple of questions, actually, on your table on Slide 92. The first is just clarification for me. When you say “proposed test,” is that using your calculations where you’ve calculated back to what the value would be using the proposed test, or are those actual test values on, say, the products that you do teardown on? MR. HOPKINS: In effect, what these numbers are is that the second column is the third column divided by the average usage adjustment factor. MS. BRUNK: But that’s kind of obvious, isn’t it? Wouldn’t you be really comparing a proposed test like something that was done on these product classes that were actually evaluated either by – aren’t we comparing the test procedure? So, wouldn’t you be looking at the actual test procedure numbers which DOE actually already collected? MR. HOPKINS: These numbers take into account all of the variability in the sample of the volume of refrigerators, et cetera. MS. BRUNK: Right. But I guess what I’m struggling with here is you’re basically just – you’ve taken the field and you’ve divided it by the UAF.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Where is the comparison to what DOE did in the engineering analysis, which is we developed all of this data in terms of energy use with the new test procedure? I guess I’m just wondering about that comparison. MR. HOPKINS: An equivalent way of generating the second column, because they’re all derived as a piece, is for each household to take the volume of refrigerator with a particular product class in that household and to calculate what the energy use under the current test procedure and the current standard would be for that product and adjust based on the analysis in the engineering analysis, to carry to what we’re calling the proposed test here, which is, obviously, not actually a formally, legally proposed test but is the general test procedure not including ice–making that was analyzed in the engineering analysis. MS. BRUNK: This is Debra Brunk again. I think we’re not communicating on exactly what I’m asking here, so we’ll try to make it a little bit more clear in our comments. MR. HOPKINS: Yes, please. MS. BRUNK: Basically, all I’m saying is it would be interesting to have either another column in**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there or something that is actually what would the proposed test do with this actual product. Forget what RECS is saying, forget anything else, but how do these actually compare. The second comment I just want to make is, you had mentioned earlier that RECS cannot distinguish between a top–mount and a bottom–mount. So, how are you actually getting the numbers that are up there? Wouldn’t that just be shown as a single class? MR. HOPKINS: For a given volume, the standards are different between a top–mount and a bottom–mount. Therefore, the energy use assumed for that product is different. That results in the difference between the first two lines. MS. BRUNK: I’m sorry. One more question. How does the consumer provide a volume to you? Or, I’m sorry, to the RECS survey. How is that volume determined? MR. HOPKINS: The respondent is asked to say which of a set of volume bins does their product fit into. I’m not sure of the exact bins, but, for example, it might be is this a 16– to 18–cubic foot product or is this an 18– to 20–cubic foot product. MS. BRUNK: How would they know? Is this making them look back at their use and care manual?**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 How would they know this? A standard consumer who doesn’t even know half the time what – I mean, I’ve heard a number of people asking questions in showrooms and stuff. I’m just curious. I’m just trying to get at, if you’re using the volume distinction to separate these two product classes, I’m trying to get an idea of how the consumer actually knows what that is, since we’re using that data to put these numbers together. MR. HOPKINS: Just to clarify, the volume distinction was not used to determine which product class a given household owns, only what energy use might have been expected for that product when it was

new. On how the survey respondent knows, the only assumption we can make is that the survey respondent is correct. MS. BRUNK: Of course. I’m sorry; I keep asking questions as this dialogue continues. This is assuming that all the refrigerators are baseline models? If you’re doing, again, that assumption in terms of this is what the energy is, what if it’s an Energy Star product that was bought 20 years ago? Might that not fall into a different class? MR. HOPKINS: One of the questions that RECS asks is whether the product is an Energy Star product,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so the analysis can take that into account, including, with the age, what the Energy Star requirement was relative to the standard at the time the product was

new. MR. BROOKMAN: Tom Eckman. Oh, pardon me. I dropped Chris out of the queue. Chris, you’re next. Sorry, Tom. MR. JOHNSON: Chris Johnson. One of the real difficulties in something like this is, and one of the major factors, is human behavior and family size. That is incorporated in socioeconomic and geographic. For instance, somebody with a side–by–side refrigerator, let’s say a family of three that lives in Phoenix, and you compare that with a family of eight with four teenagers that live in Chicago. There’s so much variability. Other than, similar to the census, knocking on somebody’s door and spending a half an hour watching their behavior, how could you even statistically infer energy use without an actual – it just seems like there’s so much variability that you could drive a truck through some of these assumptions. I think, actually, at some point AHAM – we talked about manufacturers doing this. When we asked our marketing people, it’s so difficult to do, even from your own customers, to know whether or not they**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 even know what you’re talking about, whether they’re correct or not correct, of how do you verify. The other thing I would say about this is how do you know this is accurate? If this is accurate now, how do you know this is going to be accurate in one year? Is there repeatability? Is there verification capability of this data? Those issues. It’s just a very difficult process to do, based on human behavior and family size and all that stuff. MR. BROOKMAN: Tom. MR. ECKMAN: Well, first of all, I would support metering. Any time you get an idea, that’d be a great idea. Just find some money to do that. It’d be wonderful. We could solve a lot of these problems. My question is how you distinguish between the top–mount and the bottom–mount if RECS doesn’t differentiate, if the picture is an “or.” MR. HOPKINS: Right. The initial household sample for both top–mount and bottom–mount is the same set of households. The household sample – MR. ECKMAN: Overlaps. MR. HOPKINS: The household sample almost completely overlaps. MR. ECKMAN: You’re assigning them 100 percent probability that they’re one or the other, but**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you’re just splitting the shipments; is that right? MR. HOPKINS: For a given analysis, say it’s the top–mount refrigerator analysis, DOE used a household sample that uses the entire universe of households with – MR. ECKMAN: Top–mount. MR. HOPKINS: – with top–mount refrigerators and, for bottom–mount, the entire sample that may have bottom–mount refrigerators, so as to have a sample for both sets. MR. ECKMAN: So, the distribution is the

same. MR. HOPKINS: The final distributions and usage adjustment factors end up slightly different because the standards that those products would have had to comply with historically have been different. The exact number of households in the sample ends up somewhat different because of the cutoffs that remove outliers that depend on modeling of those products. MR. ECKMAN: Debra had this question of why you couldn’t compare the old test with the new test. Didn’t you use the new test to generate the UAF? MR. HOPKINS: Correct. MR. ECKMAN: So, you have the new test for**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 each of the RECS houses. MR. HOPKINS: Correct. Right. With the assumption from the engineering analysis – MR. ECKMAN: You could back out what the old test – MR. HOPKINS: Then divide by or multiply, depending on which direction you’re going – MR. ECKMAN: So, you could create that second column – MR. HOPKINS: You could create the – MR. ECKMAN: The current test. MR. HOPKINS: – the current test with using the ESAF, efficiency standards adjustment factor. The full table of those values is in the TSD. MR. BROOKMAN: Kelly. MS. KLINE: No, I’m sorry. I think we’re all kind of still having a collective problem understanding how you segregated the top– and bottom–mount here. What did you base the differentiation between – MR. HOPKINS: There are households – in fact, roughly probably 2,200 households – that were in both samples. MS. KLINE: But then I thought they were not able – they could just tell you they had either/or, right? They said they had either/or.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HOPKINS: They said they had either a top freezer or a bottom freezer. MS. KLINE: Right. Okay. So, now – MR. HOPKINS: But with no way for us to distinguish which one they may have. MS. KLINE: So, help me with the next step, then. How did you distinguish – MR. HOPKINS: Any household that might have either a top freezer or a bottom freezer is included in both samples. MS. KLINE: Okay. MR. BROOKMAN: Then, how did you end up splitting them the way you did? MS. KLINE: Yeah. MR. HOPKINS: They’re not split so much as separate calculations. The first calculation is calculated with a sample of 2,231 households that may have a top–mount product. The second – MS. KLINE: So, you’re assuming they all had top–mounts or they all had bottom–mounts? MR. HOPKINS: One calculation is every household that said they had either a top– or bottom– mount, had a top–mount, and one calculation is every household that said they had either a top– or bottom– mount, had a bottom–mount.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. KLINE: Is it 100 percent divided by two, or is it just 100 percent in each one? MR. HOPKINS: It’s 100 percent in each. MR. BROOKMAN: Let’s let this gentleman, please. Say your name. MR. GREENBLATT: Jeffrey Greenblatt from LBNL. If I can just clarify. What I think these comments are asking, Asa, is why the sample size isn’t exactly the same for the two categories. MR. HOPKINS: The sample sizes are very similar but are slightly different because of the process of removing outliers. Engineering modeling was used to – if RECS reported a refrigerator that used, for example, 10 kilowatt–hours per year, far less than a product in use could possibly use, the analysis removed that household. Similarly, if it was reported as using thousands and thousands of kilowatt–hours per year, that data point is clearly an outlier and was removed. The process of removing those outliers results in slightly different sample sizes. MR. BROOKMAN: I want you to finish the slides in this segment, and then we can think about this over lunch and return to it if we need to. So, finish out the slides. MR. HOPKINS: All right. I’m going to assume**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that it’s safe that we pass this slide for now. MR. BROOKMAN: We’ll see. MR. HOPKINS: Again, after lunch, we welcome any comment on – MR. BROOKMAN: Maybe we can have a brief discussion before we go to lunch off the record here. MR. HOPKINS: Just for compact refrigerators, lacking any household sample or any information on field energy use, DOE simply assumed field energy consumption was identically equal to the test energy consumption and developed the average value simply using the distribution of volumes of models sold in the California Energy Commission database. We welcome any comment on the field energy use of compact products. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk with AHAM. I think I’ll just make the obvious comment here that we support the approach on compacts. We really think the same approach should be used for standard size products. Keep things consistent. Again, I think it’s just – this discussion clarifies, I think, some of the confusion around how the data is used and the variability of it. So, again, we would support this approach for all products in this**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rulemaking. MR. BROOKMAN: Additional comments on these last two segments here? Andrew. MR. DELASKI: We like consistency in the other direction. We think that the modeling should show what consumers experience in the field and that the data for the other product classes shows that the test method underestimates energy use. Most likely, the estimation you’re using for compacts is underestimating energy use. I don’t have any data to supply to you, but we’ll certainly look into that. I think right now those compact numbers are probably overly conservative given what we know about all of the other product classes and that their field performance exceeds their test performance. MR. BROOKMAN: Steve. MR. CHURCH: Whirlpool would just like to say that we feel that the quality of the data that we’re utilizing for field data has too many holes in it. I would agree with Tom’s statement that if this was metered products, that would be one thing. That’s real information on real products. But the type of information we’ve got here is too diluted. MR. BROOKMAN: Thanks. Martin, please. MR. SEVERANCE: I was going to say, my**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 understanding from the data, it’s estimated data. It’s not metered or measured data from the field. That’s correct, right? MR. HOPKINS: That is correct. DOE did conduct a literature review of field energy use for products. Again, unfortunately, older metered data, which generally showed that the field energy use was not equal to the test energy use, and in some cases higher and in some cases lower. MR. BROOKMAN: Yes, Jennifer. MS. AMANN: Hi. Jennifer Amann, ACEEE. I just wanted to point out; Jeff Harris had mentioned the California data set, the California Residential Appliance Saturation Survey, which is available data. I believe it’s a statistically significant sample of California households. I believe they do metering associated with that. It may not be the case, but it’s definitely worth exploring. MR. BROOKMAN: Thank you. So, final comments before we go to lunch? (No response) MR. BROOKMAN: I want to provide an opportunity to return to this if we need to. If you can distill your questions even further over lunch – you’ll have nothing else to discuss, I’m sure, at lunch**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 53 1 2 3 4 5 6 7 8 9 – we can do that. But let’s pause for lunch now. It’s almost 1:00. They’re going to lock this room. Please make sure to wear your visitor badge while you’re in the building. (Whereupon, at 12:54 p.m., the proceedings were adjourned for lunch, to reconvene at 2:05 p.m., the same day.)**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A F T E R N O O N S E S S I O N 2:05 p.m. MR. BROOKMAN: Let’s resume. If you could take your seats. We’re going to move into lifecycle cost analysis. MR. ROSENQUIST: I assume you don’t have any other questions about energy use. MR. BROOKMAN: Yes. Steve. MR. CHURCH: I just want to make one more statement. Just before we went on break, I said that we needed metered data. Also, we need adjustments for energy–consuming items on products in the field that we don’t account for in the energy test. For instance, ice–making energy. If we come up with a test procedure for ice–making energy, and you’ve already used or, in a sense, captured ice–making energy with this field test data, we’ll get smacked for it twice. MR. BROOKMAN: Gotcha. I think that’s a point that Tom made a moment ago. I was going to ask Amanda. Amanda, do you know; does the California data that you referred to, is it metered data? MS. STEVENS: We think that’s metered data, but I can’t be 100 percent positive. MR. BROOKMAN: Well, maybe there’s one good source there. Do you know about that?**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENQUIST: No. To my knowledge, I didn’t think it was, but I’ll double–check. MR. BROOKMAN: Okay. Final comments before we move on? (No response) MR. BROOKMAN: Okay. We’re moving on. MR. ROSENQUIST: I’m here to present the lifecycle cost and payback period analysis. This slide is to reorient you in terms of the way the lifecycle cost and payback period analysis works into the preliminary analysis flow diagram. You see that the outputs from the markups and the energy use analysis feed into the lifecycle cost. The lifecycle cost outputs in turn feed into the national impact analysis as well as with the shipments analysis. The purpose of this analysis is pretty straightforward. It’s to determine the LCC savings, the lifecycle cost savings, and the payback periods for all the standard levels that are being analyzed for refrigerators and freezers. The method relies on calculating the lifecycle cost, which is equal to the first cost, or the retail price, of the equipment plus its lifetime operating costs. Since those operating costs are occurring over the life of the product, discount rates**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are used to bring that back to a present value. Once that’s done, it’s of course added to the first cost to come up with the total lifecycle cost. To make the analysis as transparent as possible, it’s put into a Microsoft Excel spreadsheet. Also, what’s added to it is a software package called Crystal Ball, which allows DOE to conduct the analysis using a Monte Carlo simulation. With that, many of the inputs to the analysis, they have uncertainty and variability, and probability distributions are used to characterize that. That’s what Crystal Ball allows DOE to do. Also, as Asa mentioned earlier about the energy use analysis, a household sample is utilized for the standard size refrigerator–freezers and freezer products. Those household samples are used as part of this Monte Carlo simulation. Those characterize the energy use of the product as well as the energy pricing that those households are under. I saw a question there. MR. SEVERANCE: A curious question on the Crystal Ball simulations. All the data that’s used in the simulation is normal data? MR. ROSENQUIST: You mean it has a normal probability distribution?**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SEVERANCE: Yeah. MR. ROSENQUIST: No, they aren’t. Most of them are actually custom distributions. For example, in the case of the discount rates, it’s actually based upon the share each type of discount rate has. MR. BROOKMAN: Thank you, Martin. MR. ROSENQUIST: I’m going to move on to show you the flow diagram for all the inputs that go into the calculation of the lifecycle cost and the payback period. Starting up in the upper left–hand corner, you have the manufacturing costs that come from the engineering analysis. Those are coupled with the manufacturer markups, the retailer markups, and the sales taxes to arrive at an equipment price. That, in turn, is coupled with an installation cost to give you the total installed cost of the product. The bottom set of inputs have to do with the operating costs. There, you start with the energy use, which Asa described earlier this morning. That’s used, again, to develop the energy use of the product. That’s coupled with energy prices to come up with the annual energy expense of the product. That’s coupled with repair costs and maintenance costs to give you annual operating expenses. Then, lifetime discount**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rate and energy price trends are used to take those annual operating expenses and convert them into lifetime operating expenses. The lifetime operating costs are combined with the total installed cost to give you the lifecycle cost, and the change in the total installed cost divided by the change in the first year’s operating costs give you the payback period. Now I’m going to start marching through all the inputs that go into the lifecycle cost analysis, unless there are any questions about what I just went

over. First are the total installed costs. It’s relatively straightforward. It’s simply the equipment price or the retail price plus the installation cost. You’ve heard before how the manufacturing costs were developed and how the markups were developed. Again, what DOE is doing here is taking the incremental change in manufacturing cost developed by the engineering analysis and multiplying them by the markups and sales taxes to come up with the change in equipment price to the consumer from the standard level. Installation costs represent the labor and materials associated with installing the equipment at the site. DOE did not consider any installation costs,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 though, for this analysis. DOE also assumed that there was no change in those installation costs due to increased efficiency. Now, as I just said, the engineering analysis developed incremental manufacturing cost changes due to these various standard levels, so DOE had to go to a different source to come up with the baseline equipment price, the baseline retail price, of these various refrigerators and freezers. DOE used sales data from a group called the NPD Group, which collects data from various retailer outlets throughout the country. The data also defines whether that equipment meets Energy Star or doesn’t meet Energy Star. For the baseline retail price, we used only the non–Energy Star–compliant equipment. We did this for all the product classes that were analyzed. Those are these seven product classes that you saw in the engineering analysis. This figure shows you the distribution in retail prices for side– by–side refrigerators, Product Class 7. You can see that the distribution is quite wide, but it’s mostly centered around the $800 range. This next slide shows the relationship between consumer retail price and efficiency and how they relate for a couple of the product classes that**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were analyzed. The two classes are upright freezers and side–by–side refrigerators. Of course, the Y–axis is the retail price. The X–axis is the efficiency. It’s been converted into this dimensionless value which represents the standard level energy consumption divided by the baseline energy consumption. You can see in both cases that price– efficiency relationship is relatively flat through about 0.85 or 0.8, and then it takes off quickly after that. Again, this is directly a function of the manufacturing cost estimates, and those markups are used to convert them into retail prices. Next, I’m going to go on to the electricity prices. DOE used data from the Energy Information Administration’s Form 861. It provides, for all the utilities serving customers in the country for both residential and commercial, both the sales and revenues by utility. DOE can then derive an average electricity price by utility by just taking their revenue and dividing it by their sales. This data also provides the number of customers served – okay. Yes. MR. JOHNSON: Chris Johnson. Just a question on the prices. I’m sorry; is this – oh, I probably misunderstood. Is this consumer prices or utility**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 prices? MR. ROSENQUIST: Yeah, this is consumer prices. This is what consumers pay for electricity. MR. JOHNSON: Does that include all of the various programs of peak and off–peak and all that? The way you just described the average price, it didn’t sound like it took into account some of the other – MR. ROSENQUIST: Right. We’re just deriving it from the sales and revenues from these utilities and using this average price throughout the analysis. We didn’t, for example, look at tariffs. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk, AHAM. Just a quick question back on Slide 103. Can you just remind me what you said in terms of how the normalized efficiency was calculated? MR. ROSENQUIST: Oh, oh. You know refrigerators are rated with annual energy use, right? MS. BRUNK: Right, right. MR. ROSENQUIST: Each one of these efficiency levels, the number 0.8, for example, stands for a 20 percent reduction in annual energy use, which is the annual energy use at that level divided by the baseline energy use. That is the energy use that’s for the minimally complying product.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Jeff Harris. MR. HARRIS: Greg, if I recall, the tendency has been to assume that refrigerators are kind of a constant load device. I wonder if there is or could be any data to see whether there’s either a day–to–night, a diurnal difference, or a seasonal difference because of average temperatures in the surrounding space that might in fact correlate with utility rates and be worth considering. In other words, refrigerator use in fact is noticeably higher when rates are also noticeably higher. I do recall that DOE has the data on tariffs from the air conditioning analysis, and so that part may not be too hard to bring into this analysis. MR. ROSENQUIST: I guess the more difficult part would be to get that load data for refrigerators. As Jeff just said, for other products, specifically air conditioners, DOE has collected actual tariff data to come up with a marginal electricity price. Those marginal electricity prices are derived not only from the tariff but from the type of hourly load that that air conditioning has. That same sort of process could be used for refrigerators. DOE chose not to do it here based upon the fact that refrigerators are basically a relatively**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 constant load throughout the day. Therefore, peak pricing that would occur, for example, in the summer at a hot period during the day wouldn’t be a big contributor to the overall energy consumption or operating cost of the refrigerator. MR. BROOKMAN: Tom. MR. ECKMAN: There is load data for relatively old machines, but I suspect the shape hasn’t changed all that much. You have L-cap data on, I don’t know, 500 homes, probably, in the Northwest. That’s – information. What’s been weather–normalized and all kinds of other stuff. But you could see whether the temperature impacts the compressor operation, which it clearly does, and the losses. You could look at it to see whether it makes that much difference. I think it doesn’t, but you can. MR. BROOKMAN: Thank you. MR. ROSENQUIST: To continue, these average electricity prices were developed for 13 regions that DOE looked at. These 13 regions correspond to the level of regional disaggregation that’s in the RECS data and that was used to analyze the energy use of standard size refrigerator–freezers and freezers. There are both residential prices here and commercial prices. DOE developed commercial prices**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 because compacts are believed to be used in commercial applications. DOE developed commercial prices as a result of that. Generally, the prices are the lowest in the southern part of the United States and are basically the highest in the northeast and California. For purposes of calculating lifecycle cost, DOE has to project these prices out into the future. To do that, DOE used the Energy Price Forecast out of the Annual Energy Outlook. This is a publication put out annually by DOE. The analysis used is in the most recent version of the AEO, which is the one that takes into account the American Recovery and Reinvestment Act. DOE also incorporates into its LCC spreadsheets high and low growth cases, in addition to the reference case. The high and low growth are incorporated in order to be able to do sensitivities to see how different price trends affect electricity prices and operating costs. Finally – MR. BROOKMAN: Chris, go ahead. MR. JOHNSON: Chris Johnson. My question about the Electricity Price Forecast is we’re going to have a smart grid at some point. Pursuant to**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 applications and smart–enabled products and appliances, consumers are going to have dynamic pricing in place. Since there’s no dynamic pricing tariffs around or it is way too early to tell if there’s some type of national dynamic pricing model that you could look at, how would that factor into this? This would be subject to change, I would think, when NIST, DOE, all the standards development bodies, and the public utilities commissions start looking at dynamic pricing based on real–time use and peak/off–peak and all that. That’s radically different than what’s in place now. If you use what’s in place now for 2030, that’s not going to be true because there is going to be dynamic pricing in place. MR. ROSENQUIST: Right. If that sort of situation happens in the form of legislation, for example, then what DOE does is it actually tries to incorporate that within the forecast of the Annual Energy Outlook. I guess there’s a question of whether or not AEO can really forecast to reflect that level of detail, but until that legislation is actually on the books, the AEO won’t try to incorporate it. That’s a valid point. This is a forecast, right? It’s trying to forecast on what is known and**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 not what may happen in the future. MR. BROOKMAN: Ron Lewis. MR. LEWIS: Just augmenting that is DOE was directed through legislation to revisit the rulemakings and update the standards on a cycle every six years and the test procedures every seven years. Even though this would be putting a standard into place with the analysis that’s based on the best information that we have available that’s factual, we can’t be projecting for something that doesn’t even exist yet. We will have opportunities between now and 2030 to absorb new information and accommodate that. MR. BROOKMAN: Thank you. MR. ROSENQUIST: What I was going to say is that DOE also forecasts the price beyond 2030. The AEO only forecasts it out to 2030. What DOE does is extrapolation based upon the trend between 2020 and 2030 because DOE needs to do this for the purposes of doing calculations in the national impact analysis. The next topic is product lifetimes. I’m going to turn it over to my colleague Asa Hopkins to talk about that. MR. HOPKINS: Thanks, Greg. I’m going to present now a new technique which DOE has developed for calculating product lifetime. DOE hopes this method**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will provide accurate lifetimes for use in this rulemaking and potentially in other rulemakings, should it be appropriate. One of the pieces of data that RECS collects from each household about their appliance is its age. How many years ago was the appliance purchased. DOE can compare the existing stock of appliances of a particular age with the shipments of appliances that occurred in the year that those products were manufactured. Rather than characterizing the lifetime necessarily as one number and using a single number or a very simple distribution for characterizing product lifetime, what DOE really needs in a lifecycle cost is a survival function that says, of the products shipped in a particular year, how many will still be in operation 10 years after, how many 15 years after, 20 years after, et cetera, so that those can all be taken into account in results and impacts on the lifecycle cost as well as on shipments projections. Rather than trying to get a single number, DOE fit the relationship between the historical shipments and the stock as reported by RECS to the distribution called a Weibulldistribution, which is a standard distribution used to characterize lifetime.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DOE was able to combine data from the previous five RECS surveys, 1990, 1993, 1997, 2001, and 2005, to have enough data of the stock in different age bins to make a reliable fit. I apologize for the confusion of the figure on the bottom. That’s a figure that we used in evaluating the analysis, but it’s somewhat confusing for those who are just coming to the technique. The red curve there is the best fit refrigerator lifetime

curve. Here are the Weibull distributions that characterize the mean lifetime for refrigerators and for freezers. DOE didn’t develop independent lifetime distributions for – this is all just for standard size products where RECS accurately characterizes what’s available and what’s in use and in stock. Rather than disaggregate this further into product class in the manner that DOE did in the energy use, DOE assumed that different product classes of refrigerators and freezers have comparable lifetime distributions. MR. BROOKMAN: Tom. MR. ECKMAN: How did you deal with the second refrigerator? You just asked them what the age of their primary refrigerator was, and that’s the fit through primary?**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HOPKINS: I think all of these RECS surveys that we’ve used ask the age of each and every refrigerator that’s present in the household, including the second. MR. ECKMAN: This is representative of the stock, the one plus saturation of the stocks. MR. HOPKINS: This is representative of the stock as a whole. Right. There are more refrigerators in American households than there are households. The average saturation is greater than one. Thank you for mentioning second refrigerators. We’ll get there in a moment. Before I move on from this, are there questions about this method, since it’s new and may be somewhat unfamiliar? MR. SEVERANCE: Martin Severance. Do you know what the beta value was for your Weibull distribution? MR. HOPKINS: I don’t know the number off the top of my head. The numbers are in the Technical Support Document. It’s a Weibull distribution with a delay, so it’s the three–parameter Weibull distribution. DOE also characterized the behavior of households converting their first refrigerator to a**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 second refrigerator and buying a new first refrigerator. DOE needed to take this into account to build an accurate shipments model. DOE undertook a similar fitting process with RECS to look at the stock of refrigerators of a certain age and evaluate what fraction are in use as first refrigerators and what fraction as second refrigerators and, again, modeled that conversion process with a Weibull distribution. The best fit curve is shown here in red. There’s a small offset at zero, which is actually statistically present in the data, which implies that some number of second refrigerators are bought new to act as second refrigerators. They are converted to use as a second refrigerator immediately upon purchase. The fraction of surviving refrigerators that are second refrigerators grows over time, as expected. The second refrigerator stock is, on average, older than the primary refrigerator stock. For compact products, RECS and the Commercial Buildings Energy Consumption Survey do not provide enough data on the stock of products at different ages to apply that same method. DOE calibrated its lifetime Weibull distribution to best match the total stock that’s represented by those two surveys.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DOE first examined a lifetime of 10 years, which is the lifetime that was estimated by Appliance Magazine. If you apply that lifetime to the historical shipments, the stock would be much, much greater than the stock that’s actually reported in surveys. The lifetime with the best fit to the existing measured stock from the surveys is a compact lifetime of 5.62 years. For compact freezers, DOE has even less data. Compact freezers are not surveyed well by either RECS or CBECS. Even getting a total stock is a challenge. What DOE did for this stage of the analysis was simply assume that since standard size freezers live to be somewhat older than standard size refrigerator– freezers, the compact freezers likely are in use longer than compact refrigerators by an equivalent factor. Simply multiplying that 5.62 by that factor that standard size freezers are observed to live longer results in a compact freezer lifetime of 7.46 years. Particularly because DOE has virtually no data to draw upon for that compact freezer lifetime, we’ve highlighted this in particular as an issue for comment and would welcome any data or information that anyone might provide that would allow us to build a more accurate and precise lifetime estimate for compact**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 freezers. MR. BROOKMAN: Do we have data? Do we have even anecdotal information on this? MR. HOPKINS: Compact freezers are less than seven and three–quarters cubic feet in size and less than 36 inches tall. MR. BROOKMAN: So, in your written comments, Debra, if there’s a way to – yes. Thank you. Chris, we can’t hear you. MR. JOHNSON: Chris Johnson. Maybe coach and bus operators that have custom coaches, and RV vehicles, and all that kind of stuff. If that’s what you mean by compact refrigerators. MR. HOPKINS: We’ll get into this in a little bit, but compact refrigerators are used both in homes and commonly in places like dorm rooms or hotel rooms. We have very little data about even what the usage – who’s even using compact freezers. It’s a small enough product that it’s hard to ascertain. MR. von WENTZEL: Constantin von Wentzel. One manufacturer mentioned that funeral homes do use them. MR. HOPKINS: Greg is going to continue the rest of the LCC. MR. ROSENQUIST: I’m going to continue with**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the inputs, moving on to the discount rates. The discount rates are used to – what they’re used for is to convert those future operating costs into a present value. DOE bases the discount rate on the finance cost of purchasing the product. There are basically two ways that DOE determines the discount rate from, which is the finance cost of using any debt to purchase that product or the interest rates associated with any opportunity cost from equity that’s used to purchase the product. For residential discount rate, DOE looks at the different interest rates associated with these debt and equity vehicles. To do that, they use what’s called the Survey of Consumer Finances. DOE looked at years extending back to 1989 to come up not only with the interest rates associated with these debt and equity vehicles but also the share in terms of dollars of each one of those debt and equity vehicles of a consumer’s household. Mashing all that data together, you get a weighted average value of 4.8 percent real. What’s used in the analysis is an actual distribution of discount rates that extend from almost 0 percent all the way up to around 20 percent of an interest rate. Yes.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HALL: Dave Hall here. I have a question going back briefly, just quickly. The compacts as spoken in the previous for freezers, is that front door or chest or all–inclusive? MR. BROOKMAN: Asa, can you address that? MR. HALL: It doesn’t say. MR. BROOKMAN: Microphone, Asa. MR. HOPKINS: I’ll just say that the compact definition isn’t based upon whether the doors open from the front or from the top. Or, actually, it is. There’s a chest freezer category. MR. HALL: Yes, yes. MR. HOPKINS: Yeah. We’re talking about all chest freezers – I mean all compact freezers when we’re talking about the compact lifetime, yes. MR. BROOKMAN: Thank you. MR. HOPKINS: Sorry about that confusion. MR. ROSENQUIST: Getting back to discount rates to talk about the commercial rates, for those purchases that are made from commercial customers specifically for compact units, DOE used a weighted average cost of capital routine or technique. Again, what this does is it looks at the equity and debt financing of firms that are purchasing compact units. The weighted average value of that calculation was 6.2**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 75 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 percent. Never mind the word “check” there. That was something for us to do to make sure that that value was correct. (Laughter) MR. BROOKMAN: Did it turn out okay? MR. ROSENQUIST: Yeah. MR. BROOKMAN: It turned out okay. Good. Put a check next to that. Okay. MR. ROSENQUIST: The next input are the repair and maintenance costs. The repair cost is the cost associated with actually replacing a component that’s failed in the product, while the maintenance costs are associated with just doing that regular sort of maintenance that’s needed to keep the equipment running efficiently. DOE did not assume any changes in the repair and maintenance costs due to increased efficiency. That leads to this next issue for public comment: DOE’s assumptions regarding repair and maintenance costs. That is, again, DOE assumed that there would be no change in repair and maintenance costs due to the increased efficiency of the refrigerator or freezer. MR. BROOKMAN: Debra Brunk.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 76 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. BRUNK: Debra Brunk, AHAM. I just wanted to respond to that. We disagree with DOE’s assumption that higher efficiency products would have similar repair and maintenance costs than lower efficiency products. It does depend on the technical approach that’s used to gain the higher efficiency, but typically, your higher efficiency products are going to contain more components. They’re more sophisticated components. For instance, we’ve talked about higher EER compressors, vacuum panels, those kinds of things. They also tend to incorporate more electronics, which actually helps them to be more energy efficient. You combine those all together, and if you have any kind of repair or replacement costs, those costs certainly go up. We believe DOE does have the data in your analysis, similar to what you did for the built–in evaluation, where you have the cost of different components that could be used in these different products to evaluate what that cost difference would be for replacement. Also, there are issues in terms of repair and maintenance regarding the expertise of the repair folks that need to deal with those products. We are working to see if we can find some additional information on**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that also to provide to DOE. MR. BROOKMAN: Thank you. Other comments on repair and maintenance costs? Are you separating there repair from maintenance, Debra? MS. BRUNK: Yes. MR. BROOKMAN: That’s what I thought. Okay. Let’s proceed then. MR. ROSENQUIST: I’m finally getting to the last input that goes into the lifecycle cost and payback period analysis. This is the efficiency distributions that are used in the base case. The base case means the case without any new efficiency standards. What DOE tries to do here is to accurately characterize how consumers are purchasing products without standards, in recognition of the fact that programs like Energy Star are already out there promoting the use and adoption of more efficient products. DOE does this in order to accurately do its LCC and payback period analysis so it doesn’t overstate the percentage of consumers that may benefit from an efficiency standard. Basically, it would show a consumer that’s already purchasing a product at a particular standard level as being not impacted so it**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 doesn’t factor into the actual distribution of winners and losers. DOE developed base case efficiency distributions for the seven product classes that were analyzed in the engineering analysis there and then being analyzed in the lifecycle cost and payback period analysis. These are the distributions. These are the distributions for standard size refrigerator–freezers and standard size freezers. The basis of the distributions are data provided by AHAM for the year 2007. Now, because the standard doesn’t become effective until 2014, DOE has to make some estimates or assumptions about how those distributions may change. In the case of standard size refrigerator– freezers, DOE assumes that current market share of Energy Star products, or that market share in 2007, would be maintained in 2014 even though the Energy Star level in 2007 was 15 percent below the baseline efficiency level and has now since moved to 20 percent lower than the baseline efficiency level. That’s the estimate that DOE did for standard size refrigerator– freezers. As an example, you can see that the Energy Star level being 20 percent lower than the baseline**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 level, the 0.8 value represents 32 percent of the market for side–by–sides. That was the distribution that was assumed in 2014. For standard size freezers, the Energy Star level has not changed since 2007. DOE assumed that this efficiency distribution was maintained from 2007 out to 2014. MR. BROOKMAN: Andrew. MR. DELASKI: I want to make sure I understand this right. In Line 3, or Baseline Level 3, 80 percent, the current Energy Star – Energy Star was 15 percent better than the basic standard. Now it’s 20 percent, correct? MR. ROSENQUIST: That’s correct. MR. DELASKI: So, the market share in 2007 – I’m just restating what you said to make sure I’ve got it right – was the numbers that we see here in that line: 13 percent, 88 percent, 32 percent? MR. ROSENQUIST: That’s correct. MR. DELASKI: So, the assumption is that all those products that were efficient – that same market share, then, meets that new Energy Star level in 2014. MR. ROSENQUIST: That’s correct. MR. DELASKI: That strikes me as maybe plausible for the top–mount, but for the bottom–mount,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 88 percent is an awful lot. That seems to me an ambitious assumption. A full third is Energy Star as a program, of course, is targeting to influence a quarter of the market. That’s one of the organizing principles of the program. So, it strikes me that those 88 and 32 percent numbers need some more thorough consideration. MR. ROSENQUIST: Would you suggest limiting, then, that value to 25 percent because that’s the target of the Energy Star program? MR. DELASKI: We’ll comment on that in our written comments. MR. BROOKMAN: Steve. MR. CHURCH: I find it odd that you would make the assumption that 2007 for some magical reason is going to be the same as 2014. There are certain market incentives that are in place that cause manufacturers to have products at certain levels. Are we going to make the assumption, then, that Energy Star, when we put the 2014 standard in place, right away it’s going to be at 20 percent? What market incentive is going to cause a manufacturer to have products 20 percent below the 2014 standard? MR. ROSENQUIST: Just to be clear, this is supposed to represent the case without standards. This is the base case. This is under the assumption that no**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 new standards would take effect. We’re trying to create this base case from a point of reference to evaluate the standard level that does take place in 2014. Does that answer your question? MR. CHURCH: Yeah, I think so. MR. ROSENQUIST: Okay. I’ll move on. This shows the distributions for compact units. This is similar to standard size freezers in that the Energy Star level is currently 10 percent better than the baseline level. Again, because that level hasn’t changed from 2007 until now, DOE went ahead and assumed that this distribution that you see here would remain constant until 2014. Now let’s look at some results from one product class. This is side–by–sides, Product Class 7. What you’re seeing here is a distribution of the range of LCC savings for the various efficiency levels that were analyzed for side–by–sides. The hash marks represent the 95 th and 5 th percentile of that distribution. The top and bottom edges of the box represent the 75 th and 25 th percentiles of this distribution. The red is the mean value, and the blue dash is the median value. As you can see, focusing on the mean values,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there are lifecycle cost savings for every single efficiency level that were analyzed for side–by–sides. The lifecycle cost minimum point is either at Efficiency Level 5 or 6. Then, these are the type of results that were generated for the simple payback periods. Again, similar plot. Everything is the same in terms of interpreting the hash marks and the edges of the boxes. This just shows that, as you increase efficiency or go up in efficiency level, the payback period increases, which you would expect because the first cost increases. Now, this gets back to our discussion from before lunch about the usage adjustment factor. There were a lot of questions about the ability of using RECS to establish a factor that converts test energy consumption into field energy consumption. DOE was already thinking along the same lines and wanted to see what the sensitivity of the lifecycle cost results were to having a UAF that had, on average, a value of one. That is, keeping the variability that you saw from those distributions that Asa had presented this morning but having the mean value exactly at 1.0. Again, on average, the test consumption equals the field consumption.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DOE did this for upright freezers and for side–by–sides. For upright freezers, the blue dots are the lifecycle cost as a function of efficiency level with the usage adjustment factor of 1.37. Those maroon squares show it with a value of one, normalized UAF. You can see in this case that it doesn’t really have an effect on where the minimum lifecycle cost occurs, and it doesn’t have an effect on the fact that all of the efficiency levels provide lifecycle cost savings. That’s not the case with side–by–sides. In side–by–sides, again looking at the value with the UAF of 1.43, you get all the standard levels giving you lifecycle cost savings, and the minimum lifecycle cost is at a level, I believe, of 0.65, which is 35 percent lower than the baseline level. When you use that normalized UAF, what happens here is that the last two efficiency levels no longer give you LCC savings and the minimum lifecycle cost point moves back to 20 percent lower than the baseline level. In one case in one product class, normalizing the UAF makes no significant difference, but in another product class it does. So, questions. MR. BROOKMAN: Debra first. MS. BRUNK: This is Debra Brunk with AHAM.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 84 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 All I would note is I think a 5 percent change in energy efficiency could be considered a significant change for a lot of our manufacturers. MR. BROOKMAN: Thank you. Andrew. MR. DELASKI: I just want to make sure I understand the charts properly. What’s on the Y–axis? MR. ROSENQUIST: The Y–axis is lifecycle cost. MR. DELASKI: It’s LCC as calculated by the LCC model. MR. ROSENQUIST: Yes. MR. DELASKI: So, the squares are with a UAF of one and the diamonds – I’m colorblind, so I go with the shapes. The diamonds are the UAF as shown in the superscript. MR. ROSENQUIST: Right. That’s correct. MR. BROOKMAN: So, say again what this shows? MR. ROSENQUIST: It shows that it depends on the product class, right? Going to a situation where the assumption is that the test energy consumption equals the field energy consumption, it may not have any effect on the lifecycle cost results, as in the case of upright freezers, but it could have a relatively significant impact for a product class like side–by–sides. That’s what it comes down to.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For example, if DOE was basing their policy decision on the next standard level on minimum lifecycle cost, with a UAF for side–by–sides you’d choose something along the lines of 35 percent lower than the baseline level. Well, with a UAF of equal to one, you’d get something at around 20 percent lower than the baseline level. Again, I have to qualify that. That’s if DOE were only to base its policy decision on minimum lifecycle cost. MR. BROOKMAN: You’re just illustrating how that analytic would work. MR. ROSENQUIST: Yes. MR. BROOKMAN: Thank you. That’s all. MR. ROSENQUIST: Don’t want to get in trouble for saying something like that. MR. BROOKMAN: Thank you. Other questions or comments surrounding this? Why don’t you go to the comment box? Invites comments and recommendations from interested parties on any other aspects related to lifecycle cost analysis. Most of you are familiar with the Department’s approach to this. (No response) MR. BROOKMAN: Nothing additional? Okay. So, we’re going to move on to national impact analysis.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 86 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENQUIST: I’ll be turning it back over to Asa Hopkins to talk about the national impact analysis. SHIPMENTS ANALYSIS AND NATIONAL IMPACT ANALYSIS ASA HOPKINS (PowerPoint presentation) MR. HOPKINS: Just a quick reminder of where we are on working our way through this diagram. Greg has just finished with the lifecycle cost payback analysis, which is one of the inputs to the national impact analysis, the other input being a shipments analysis, whose purpose is to forecast refrigerator and freezer shipments over the course of the analysis period. The analysis period for all of these analyses is from 2014 to 2044. The shipments analysis also includes a disaggregation of shipments into product classes and an evaluation of how that disaggregation may change over time. National impact analysis. The primary outputs of that analysis are an estimate of the national energy savings and a national economic input expressed as the national net present value. In order to do that, the Department also needs to estimate the change in efficiency distributions over time.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 This just recapitulates how the analyses flow into each other and highlights the primary outputs, the national energy savings and the national net present value. To make it clear, national energy savings is calculated strictly for the period from 2014 to 2044, whereas the national net present value is calculated for products shipped during that period. This flow diagram shows how the Department’s shipments model is structured. The primary drivers of shipments are replacements of existing appliances and appliances going into new construction and new homes. The shipments from these two drivers combined are then compared with the historical shipments. For each category of appliance, different calibration factors are used to adjust. The four categories for which shipment models are derived and where national impact analyses are conducted are standard size refrigerator–freezers, standard size freezers, compact refrigerators, and compact freezers. The shipments calibrations are somewhat different for each. For compact refrigerators, the calibration factor is what share of the shipments are going into residential applications versus going into lodging or**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 other commercial applications. For standard size and compact freezers, the calibration is essentially growth in saturation: the homes that have not previously owned a standalone freezer that are purchasing a freezer. For standard size refrigerators, the calibration variable is the conversion to a second refrigerator and therefore increasing saturation. Once these are calibrated, that gives an estimate of the total shipments, and then those total shipments are disaggregated by product class market share to arrive at total shipment forecast by product class. One issue of particular analytical interest for the Department was forecasting the market shares within standard size refrigerator–freezers between top– mount products and side–by–side and bottom–mount products. DOE developed a model that was based upon the historical growing share for side–by–side and bottom–mount products among homeowners, taking into account household income. The model approaches a limit at the end of the analysis period of approximately 46.5 percent share for side–by–side plus bottom–mount. The data on the slide shows that the data that the Department used in developing this model. The**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 model is not simply a fit to this data. There is more explanation in the TSD following through that you may read at your leisure, but just to see how the model fits with the data provided both by RECS and by market share data provided by AHAM. We are particularly interested in comment on these forecast market shares, and you can read the full comment, if you’d like. MR. BROOKMAN: Debra. MS. BRUNK: Debra Brunk with AHAM. Preliminary evaluation would suggest that DOE’s forecasted shares look realistic. However, we do suggest that DOE actually split out shipments of side– by–sides and bottom–mounts because those two are expected to grow at different rates here in the future. AHAM has recently split those out as well. MR. HOPKINS: What the Department did for the preliminary analysis was to keep the relative proportion of side–by–side and bottom–mount equal to the most recent data from AHAM and unchanging over the analysis period. MR. BROOKMAN: You can see the comment box there. What do you think? Other comments? (No response) MR. HOPKINS: Shall I continue?**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Just to recap where the input data came from for the shipments model, the lifetime function used to determine replacements was the same as the lifetime function we described just a little bit ago. For new construction, the data comes from the forecast from the 2009 AEO, the same most recent stimulus case. The new housing completions saturations in housing come from those five RECS surveys. In the commercial case, the new construction comes from forecast of new lodging and other commercial completions, and the saturations come from the Commercial Buildings Energy Consumption Survey as well as a survey that the American Lodging Association undertook of their membership. Historical shipments come from AHAM, from the AHAM Fact Book, and from Appliance Magazine. The shipments by product class come from AHAM as well as looking at the changing distributions over time in the Residential Energy Consumption Survey. Just one example category for standard size refrigerator–freezers. The shipments forecast is the blue dots, the red area are the shipments due to replacements, the brown is the shipments due to new construction, and the yellow is the shipments due to houses going from one refrigerator to two**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 refrigerators. MR. BROOKMAN: Jeff Harris. MR. HARRIS: Pardon me if you’re going to get to this. I didn’t see it looking ahead a couple slides, though. Has there been any noticeable trend, or are you anticipating any, in the average size of primary refrigerators? MR. HOPKINS: DOE did not take into account any trend in size. The sizes were assumed to be drawn from the same size bins as from the RECS 2005 survey. MR. HARRIS: I believe that there is data – certainly, there is a lot of experiential data, I think, among us – that over the last 20 years we’ve had a noticeable upward shift. Whether that’s somehow topping out I don’t know, but it might be something to look at. MR. HOPKINS: One of the things that DOE took into account in making this particular choice was the space in a countertop in a kitchen that limits the practicable size of many refrigerators, and the growing fraction over time of households with second refrigerators perhaps speaks to that trend. DOE also took into account in its shipments analysis in the standards case the impact of purchase price and operating cost through a relative price**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 9 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 elasticity. The relative price is this fraction shown here, which is the purchase price plus the present value of the operating cost divided by the household income. DOE has developed a model that it has used in other rulemakings as well for home appliances that is based on historical shipments, retail price, efficiency, and income data that implies relative price elasticity of minus–0.34, which means graphically that a 10 percent increase in relative price would result in a 3.4 percent drop in shipments. Published data also indicates that consumers become less sensitive to initial price changes over time and that relative price elasticity drops by 65 percent over 10 years. These show the impacts in those four cases on shipments due to the increased price at different efficiency levels. Not all the levels are shown because there would be far too many lines to discern. But in each case, the lowest line is the most expensive, most efficient product. You can see that there are effects and that the significance of the effects varies somewhat by product. MR. BROOKMAN: Tom Eckman. MR. ECKMAN: Tom Eckman. So, is this effect**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on shipments on the total or only on replacements? MR. HOPKINS: This is on the total. MR. ECKMAN: It seems to me in new construction the choice is to buy a standard compliant unit or not. MR. HOPKINS: Right. Yeah. MR. ECKMAN: So, it seems to me you overestimate the effect if you apply this elasticity to new construction. MR. HOPKINS: Okay. Yeah. I did not personally conduct this particular analysis. That may be taken into account. Greg may know or – MR. ROSENQUIST: I’m sorry. I didn’t hear the question. MR. ECKMAN: The question is whether the elasticity was applied to replacement units alone or to new construction. MR. ROSENQUIST: It was applied to both. MR. ECKMAN: I think that’s an overestimate because people are going to have to have a refrigerator, so price isn’t a question. MR. DELASKI: Doug, just a follow–on question on that. Again, what was the source of elasticity, the inputs for that calculation? MR. HOPKINS: DOE has conducted analysis for**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 94 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 home appliances in general, an in–house analysis on using the inputs listed here, looking at the impacts of previous price changes on shipments. Historically, as prices have changed, what has happened to shipments. MR. DELASKI: Looking at home appliances, by home appliances do you mean white goods? MR. HOPKINS: Home appliances in particular. White goods. MR. ROSENQUIST: The specifics on that, they looked at historical price, retail price, efficiency, and shipments data, as well as household income, going back on the order of, I believe, 20 years for clothes washers, refrigerators, and dishwashers. Again, we only had eight price points even though it spanned 20 years. To build up the data set from which to regress on, the decision was made to include all those appliances, just not restrict it to refrigerators. MR. DELASKI: Thank you. MR. BROOKMAN: Questions on this before we move on? (No response) MR. HOPKINS: Moving on to discuss the national impact analysis, I’ll just recap a lot of what the inputs are to this analysis, which covers most of**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 95 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the ground we’ve covered today. The first input is the total customer cost, which is the average per–unit values as a function of efficiency taken from the lifecycle cost analysis; the repair and maintenance costs, also carried forward from the lifecycle cost; the average energy use, also the average values from the LCC. I’m going to come back and discuss in more detail in a moment the efficiency forecasts. They’re summarized here, but I’ll give a much more detailed discussion in a moment. The average energy prices were taken from the lifecycle cost analysis, which gives a weighted average price over the country. The forecasts come from the AEO. The Department develops electric site–to–source conversion factors that convert kilowatt–hours at the home to Btus of primary energy going into generation. It calculates marginal heat rates using the same model that the AEO uses. The source factor is not constant over time. It changes based on the AEO forecast of different generation sources. The discount rate used was both 7 and 3 percent real, which is following guidance from the Office of Management and Budget. All net present values are discounted to a present year, the year 2009.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 96 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Are there any questions on any of the inputs before I – MS. STEVENS: Amanda Stevens. I had a question. I’ve seen for a couple of different rulemakings there’s been the site–to–source conversion factors. It drops pretty dramatically in the next century, like on the order of 10,000 to 6,500. I don’t know the units. I looked briefly at the AEO and I didn’t see a description. I know it’s due to the changes in generation and what kind of electricity, but I’m just wondering if you had any further comment on what was behind that trend or what the AEO attributes that. MR. HOPKINS: I personally do not know. Generally, natural gas is a bit more efficient than coal. Renewables have different factors, et cetera. MS. STEVENS: Right. It just seemed like a dramatic – MR. HOPKINS: The marginals are going to be different than the average. It’s complicated, and I didn’t conduct that, so I can’t personally say exactly what’s going on. MR. BROOKMAN: Would the AEO reflect those in their forecasts? MR. HOPKINS: Our team at DOE is the same**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 97 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 modeling software that the AEO uses, but the AEO does not calculate the marginals. Our program uses the same tool to go a little bit above and beyond where AEO does in order to get the appropriate value for use in our analysis. MR. BROOKMAN: Amanda, if you think that’s relevant, you ought to see if you can find that and include it in your comments because there’s a long time between now and 2030. MR. HOPKINS: I’d like to go – yeah. Sorry. MR. DELASKI: If I could take you back to the elasticity slide for a second. I’ve been able to think more about that. I think a 3.4 percent decline or a 10 percent decline or increase in price, as I understand that now, it’s based on data from washers, refrigerators, and dishwashers. It strikes me that it likely overstates the impact for refrigerators because while consumers have other ways to wash their clothes, like go to a laundromat, and other ways to wash dishes, like hand– wash them, there’s no other way to keep your food cold but to put it in the fridge. So, it does strike me that there’s some elasticity but that by bundling in washers and dishwashers we’ve likely overestimated the price elasticity of demand for refrigerators. Thanks.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 98 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Thank you. MR. HOPKINS: We’ll spend a few moments here on the forecasted efficiency distributions. As Greg described in the lifecycle cost for the base case, DOE assumed that the Energy Star market share would remain constant regardless of – well, as Energy Star may become more strict. There was a definition of Energy Star in effect from 2001, when the current standard became active, until 2008. The Energy Star market share grew over that period. A similar seven–year period, roughly, is the period between 2007 or ’08 and 2014, when the new standard would come into effect. DOE assumed that the Energy Star market share would follow that level to the 20 percent level for refrigerator–freezers in 2014. In the absence of new standards taking effect in 2014, DOE forecasted that the Energy Star program would likely increase the stringency of its criteria again in 2014 and then it would take another seven years for the market share again to catch that new level. That’s shown here in this table of 2007 data from AHAM; 2014, the forecast we saw before with LCC; and 2021, where that same 32 percent Energy Star market share moves up another 5 percent in efficiency.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 99 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Again, this is for the case where there are no new standards coming into effect in 2014. So, in the standards case, DOE used what we termed a roll–up plus market shift model. At the introduction of new standards in 2014, DOE forecasts that the market share will roll up to the standard level. That is, any market share that was at the standard level or below would, in 2014, be at that level. Then, DOE, I think, forecasts that the Energy Star program will continue to exist and continue to promote more efficient products. DOE forecasts then that the market share in some new Energy Star level would grow between 2014 and 2021 again to levels comparable to the 2007 Energy Star market share. This slide is slightly inaccurate in that rather than Energy Star level being set at 20 percent across the board, it did vary by product class. The details are in the TSD. Then, similar to the base case, DOE forecasts that the efficiency distributions in 2021 are then fixed throughout the rest of the analysis period. It’s a little bit far out forecast the behavior of the Energy Star program more than 12 years from now. Just to take you through an example for Product Class 7, you can see the first column is the**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 base case, which we’ve seen before, of 2014 and 2021. I urge you to pick a particular level, say Level 2, from the standards case, see that the 25 and 43 percent market share that’s currently in the first two levels rolls up to Level 2 in 2014. Then, between 2014 and 2021, that 32 percent Energy Star market share shifts out a level towards our estimate of where a new Energy Star level would be. That same behavior occurs in each standards case. In this way we are acknowledging the existence of the Energy Star program but not attempting to claim that energy savings that results from the Energy Star program is somehow a result of the standards. We welcome your comment on this forecast for efficiency distributions. MR. BROOKMAN: A specific request for comment here, should there be any. MR. HOPKINS: Of course, written comment is also valuable. (No response) MR. HOPKINS: Just one example of the annual savings and cost results for a particular product class in this NIA. For Product Class 3 at Efficiency Level 3, which is 20 percent, or the current Energy Star**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 01 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 level, you could see that the incremental product cost is shown negative, in purple, showing incremental negative costs growing over time as shipments grow. The maroon bars show the operating cost savings, which starts at zero because these are shipments starting in 2014. It grows steeply and then more gradually as the stock saturates with products that meet the 2014 standard. Then, in 2044, the analysis period ends and the operating cost savings continue because products purchased near the end of the analysis period are still in operation. Here are some examples of the output of the national energy savings and national net present value for a couple of product classes. The full tables are in the TSD. You can see the national energy savings for top–mount standard size refrigerator–freezers grow with efficiency, as expected. The net present value grows and then falls but does not go negative as the standard would become more stringent. For standard size upright freezers, the stock is smaller so that the total numbers are smaller. Of course, the costs are different that affect the NPV. MR. BROOKMAN: Yes, Amanda. MS. STEVENS: Just a point of clarification.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 02 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 From the last graph, if I’m not mistaken, the energy and cost savings are over that entire period. They don’t get chopped off at 2042? MR. HOPKINS: The national energy savings is calculated only for the period from 2014 to 2044. It does not include energy savings from products after that point. However, the national net present value does include the operating cost savings for those products. MS. STEVENS: Okay. Thank you. MR. BROOKMAN: The Department invites additional comments. Any other comments related to national impact analysis? Andrew, yes. Thank you. MR. DELASKI: Thank you. As the Department goes from the 2014 case to the 2021 case and the numbers shift up as the Energy Star program has an effect in moving the market, it isn’t that suddenly everything goes all at once in 2021 but you have a progression. MR. HOPKINS: It’s a linear transition from 2014 to 2021. MR. DELASKI: A linear transition. Okay. Great. Thank you very much. MR. HALL: David Hall. On 137, the quads for each of these two classes or products, one, it’s**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 03 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 referenced to current standard as baseline. MR. HOPKINS: It’s referenced to the base case that I described, which includes the impact of Energy Star and the impact of Energy Star taking an additional action in 2014, et cetera. It’s not just a world in which everyone only has a baseline product. It’s relative to a base case that reflects the distributions of the market. MR. HALL: Over time. Does this include the field use? MR. HOPKINS: Yeah. This is based on the annual energy use outputs from the lifecycle cost analysis, which use the RECS–derived energy use. MR. HALL: Thank you. MR. BROOKMAN: Okay. A lot of data. Any other comments on this before we move on? (No response) MR. HOPKINS: I’m going to turn it over to colleagues from Navigant Consulting, who are going to take you through the preliminary manufacturer impact. PRELIMINARY MANUFACTURER IMPACT ANALYSIS STEVEN STODDARD (PowerPoint presentation) MR. STODDARD: Thank you, Asa. Just to reiterate, my name is Steve Stoddard. I’m with**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 04 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Navigant Consulting, and I’ve been participating in most of the analyses, especially the engineering analyses and some of the preliminary manufacturer interviews that have taken place already. Starting with this page, as you can see, it’s sort of a step outside of the rest of the process. During this preliminary analysis stage, DOE has conducted the manufacturing impact analysis. It’s sort of a condensed version of the full manufacturing impact analysis. There are essentially three different phases. The first phase is really to get an industry profile both to characterize the industry and to identify important issues for consideration. DOE went about this by conducting on–site and telephone interviews with manufacturers of these products. The second and third phases are going to be pursued a bit more deeply during the NOPR stage of this analysis. That includes an industrial cash flow model and a more full, complete interview questionnaire, as well as the complete manufacturer interviews, in order to get both qualitative and quantitative impact assessments. Some of the topics that were discussed through these initial interviews are shown here. The**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 05 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 interviews conducted by DOE represented manufacturers for most of the U.S. market. Over 90 percent of the market was represented for standard size product classes by the manufacturers that were interviewed. These manufacturers represented over 80 percent of the market overall, as well. Again, here in the chevrons you can see the six key topics that were discussed. Just to cover some of the key issues that were identified by the manufacturers, the first one was increase in conversion costs. Manufacturers stated that conversion costs will be high if new standards require platform changes. These would be changes such as increased wall thicknesses for insulation or the use of vacuum insulation panels. The costs will vary by manufacturer, but low– volume manufacturers probably would see increased costs on the order of a few million to tens of millions of dollars, whereas high–volume manufacturers could see costs increase on the order of hundreds of millions of dollars for these conversion costs. The impact that that would have on U.S. jobs could be significant in certain situations. Significant cost increases could result in the construction of new plants, which manufacturers stated would be likely to be constructed in places like**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 06 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mexico, where they could take advantage of lower labor costs. Two of the other key issues that were identified were cumulative regulatory burden and the impact on product utility. In regards to the cumulative regulatory burden, manufacturers stated they expect a climate change bill to be passed sometime in the near future. There is a variety of pending legislation in Congress that could likely impact greenhouse gases. Recent findings by the Environmental Protection Agency suggest that there could be other ways in which these GHGs could be regulated and may even be more likely to push the pending legislation through Congress faster and could be more broad– reaching. The current proposals in Congress would essentially cap emissions from manufacturers and would then go through a sliding scale over a period of time, which would require the substitution of alternatives in place of the GHGs. For instance, HFCs used for refrigeration as the refrigerant and as foam–blowing agents would have to be switched over to alternatives. As identified earlier in this discussion today, hydrocarbons are one of the most viable**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 07 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 alternatives, but there are some issues with these, as we discussed earlier, both safety issues as well as cost. Manufacturers identified that the cost to meet the safety requirements within their plants would be fairly significant in order to make hydrocarbons available as refrigerants. Additionally, changing energy efficient standards in Canada and consumer safety regulations in Europe present additional regulatory burdens for manufacturers as well. Finally, manufacturers mentioned that there could be a significant impact to product utility. Significantly increased standards could result in, as mentioned, increased wall thicknesses, which would most likely have to reduce the available storage volume internally for the units. This is because, increasingly, refrigeration products are being boxed into specific dimensions and the only way to increase the thicknesses would be to go into the unit. This presents a decrease in product utility for many

consumers. Manufacturers also mentioned other features would have to be removed or potentially, depending on the levels at which the standards were set, such as ice and water dispensers, soda can dispensers, glass doors,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 08 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and anti–sweat features. All these things that have been covered are just key issues that were identified. We recognize there are some other specific areas that were not covered here in the presentation, but these are discussed further in the TSD. DOE welcomes at this time any additional concerns that are not expressed either here or in the TSD that manufacturers may have. MR. BROOKMAN: Jeff Harris. MR. HARRIS: I’m happy to do some offline homework, but I wonder if you could comment, or some of the manufacturers might give us a couple of words about what the effect is on total consumption of differential temperature zones. It’s not obvious to me, the first order. Second, the relationship between safety requirements in Europe and the U.S. market. MR. STODDARD: My understanding, just in regards to the second point, is cumulative regulatory burden is in regards to any regulation that would be taking place that manufacturers would face, whether it’s in the U.S. or abroad. Meeting a variety of standards could make it more difficult to meet increased efficiency standards within the U.S. MR. BROOKMAN: Andrew. Let’s let Jennifer**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 09 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 speak first. MS. AMANN: The pending legislation on energy and climate also includes significant tax breaks for manufacturers to upgrade their manufacturing lines for higher efficiency products. I’d like to ask if that’s been a part of the analysis or if it will be going forward. MR. STODDARD: That’s a good point. Thank you. That has not been taken into account, but that is certainly something that could be in future. MR. BROOKMAN: Andrew. MR. DELASKI: This is more of a general question for the next phase of the MIA and how it’s conducted and what the approach is, which is that the last refrigerator standard was negotiated. I think it was a negotiated standard. In 1997 it was completed, and the final rule went into effect in 2001. When this next one goes into effect, it will have been 13 years between standards’ effective dates. I believe I read somewhere the production capacity that would have been put in place for that 2001 standard will be fully amortized or at least close to fully amortized by the time 2014 rolls around. It strikes me that manufacturers are going to be having to replace plants and equipment to make**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 refrigerators whether there’s a new standard in 2014 or not. How is that sort of business cycle or plant life taken into account in the MIA, the fact that some of these lines, some of these plants, are going to have to be refurbished and rebuilt in this time frame anyway? MR. STODDARD: Constantin, would you like to address that? MR. von WENTZEL: Constantin von Wentzel here. I think you have to distinguish between investments that were made to meet the 2001 standard and ongoing investments required to keep a plant in operation. Just because a plant made an investment 13 years ago doesn’t mean that it didn’t need to make investments in the meantime. The kinds of investments that we’re talking about when you start looking at changing wall thicknesses, for instance, really go to the heart of the entire manufacturing operation. You’re talking about very large, very specialized foam machines and a great deal of fixtures and other pieces of equipment that would have to be modified or changed out altogether. You combine that with other things like trying to address flammable refrigerants or foaming agents, and you may have to start over completely. For**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 instance, for a flammable foaming agent, you have to have buffered layers of security around that station to ensure that if there was an explosion – to prevent an explosion, in other words. You may actually be looking at redoing plants entirely from the ground up and just building a new plant next to the old plant because it’s probably not practicable to upgrade the old facility because of all the things that are around the foaming stations at the present time. MR. DELASKI: Yeah. I understand that. I anticipate that this standard would result in significant requirements on manufacturers to make new investments. My point is more that we have to be careful in doing the MIA. I urge the Department to be careful in disaggregating incremental impacts due to the standards. MR. von WENTZEL: That’s an excellent point. MR. DELASKI: Because there is a lot of investment that’s going to happen in the base case for just the reasons that investments have happened since 2001. I know it hasn’t been a static environment since then. In fact, I keep a folder of manufacturer announcements of plants being changed and moved, which have happened quite a bit since 2001. So, there have**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 been changes and investments since then along the lines of what you describe here, generally moving plants from U.S. facilities to Mexico. That’s been happening. These investments have been happening, and they will continue to happen with or without standards. I think part of the challenge for DOE is to disaggregate the base case from what would happen with the standards and not attribute to the standards things that would happen anyway. MR. von WENTZEL: Correct. Constantin von Wentzel again here. I completely agree with you, and it’s a very good point. If you could share that data with us, I think it would certainly make our questions to interview manufacturers a little bit more pointed. If you could supply that data of plant closings and movings and so on and so forth. I think it is a very, very good concern. But to disaggregate it I think would be very, very difficult because one could make the argument, and I’m not saying this is the case, that this manufacturer may make a decision to close a plant and use the standard as a convenient reason to do so. There’s really no way for us to disaggregate that. MR. BROOKMAN: Ron Lewis. MR. LEWIS: I’d be interested, Andrew.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 You’ve got a collection now over the last few years of announcements of factories relocating or rebuilding or something; is that what I understood? MR. DELASKI: Sure. MR. LEWIS: How we connect in a disaggregation exercise the prior statement you made about it had been 13 years since the last standard if in all these recent investments they’ve just removed, retooled, got new major investments into a new factory, they’ve relocated, tying together those two seeming opposing issues, one of the total depreciation because of 13 years versus the recent changes. MR. DELASKI: I think part of it has been consolidation of production, particularly in the last couple years as sales have declined. MR. LEWIS: Yeah. I think there has been a fair number of complete relocations and moves as well. Any input you’ve got in that area would be helpful because it seems like there are two different dynamics here that are counter–opposed in how we weigh those and give consideration to both. Any insights you have would be helpful. MR. BROOKMAN: You can see the comment box still up there on the screen. Any other comments related to preliminary manufacturer impact analysis**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 before we move on? (No response) MR. STODDARD: This time I’ll turn it over to my colleague Greg Rosenquist. NOPR ANALYSES GREG ROSENQUIST AND JEFF KINGMAN (PowerPoint presentation) MR. ROSENQUIST: We’re in the homestretch here. We’re going to go over briefly the analyses that are going to be required for the NOPR, the notice of proposed rulemaking. This is about what DOE is going to be doing in the future. It’s no longer about what DOE had done for the preliminary analyses. As you can see here, there are several steps to conducting all the analyses for the NOPR. The first is revising the preliminary analyses based upon stakeholder comment. Next is to conduct a lifecycle cost subgroup analysis, then to do the manufacturer impact, utility impact, employment impact, the environmental assessment, and the regulatory impact analyses. The next slide you’re going to see is on revisions to the preliminary analyses. Again, the revisions are conducted on the engineering and lifecycle cost, the national impacts analysis, and all**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the related analyses that you’ve all heard discussed here, including the energy use markups, and also elements of the manufacturer impact. The basic step here is to review all the comments that come in, summarize them, identify all the issues, and then determine which ones have to be addressed analytically. After that determination is made, the necessary revisions are made to the engineering, lifecycle cost, payback, and national impacts analysis. The next step in the NOPR phase is to conduct the lifecycle cost subgroup. Its purpose is to determine whether or not there are any subgroups or subpopulations that may be disproportionately impacted by the standards. The method that’s utilized is to use the same tools that are being used to conduct the lifecycle cost and payback period analyses, with the exception that many of the inputs are honed down to the type of subgroups that DOE has determined that they want to analyze. Possible subgroups for this analysis for refrigerators and freezers include low–income households and not small businesses but senior citizens.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The output is the same as the lifecycle cost and payback period analysis. It’s a distribution of lifecycle cost savings, distribution of paybacks, and again, it’s for each standard level that’s being analyzed. From that, again, DOE can determine, in the particular subgroups that have been identified, whether those impacts are any different than the general population. This slide highlights the fact that DOE is especially sensitive to increases in purchase price that may affect particular subgroups, particularly the ones I just identified, seniors and low–income. DOE takes those price impacts that occur from a standard and make sure to evaluate them properly when looking at consumers who may not be able to afford a more efficient product. MR. BROOKMAN: Jeff Harris. MR. HARRIS: Greg, you might be getting to this, but it seems to me another subgroup worth considering might be the nonresidential uses. You mentioned subcompact fridges. There’s also some number – I don’t know what the actual number is. You may have looked at this – of standard size refrigerators in office kitchenettes and so forth. A fair number of those are around.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 My gut feeling is that the purchase price on average may be lower than the customer purchase price because you have buying power and volume and so forth, especially, for example, DOD buying many fridges for shipping overseas and barracks and so forth. I’m not sure of this, but I suspect that the retail price on average may be higher because it’s commercial rates, not residential rates. So, you might find a very different kind of economics for that subset of residential products that’s not in fact in homes. MR. ROSENQUIST: Again, as we discussed earlier, DOE has addressed the use of compacts in commercial buildings but hasn’t done that for the standard size equipment. On that note, DOE is really looking for any data that would indicate the prevalence of standard size equipment in commercial applications. MR. HARRIS: There is, as I’ve just heard recently, a study of miscellaneous electric loads that the Buildings Office in the Commercial Unit has commissioned, I think at LBNL, but I’m not sure about that, to look at not just refrigerators but other kinds of loads in commercial buildings. There might be data within the time frame of interest. MR. BROOKMAN: Thank you. Ron Lewis. MR. LEWIS: If I understand the question that**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jeff posed, or the suggestion, we already have the shipment data that would include all those products, correct? The shipments that we got from the factories regardless of where they end up in application. We’ve already got some of the information. It’s just in the economics on this subgroup, then parsing the shipment data to what’s actually going into residences versus others. Is that, Jeff, what you were asking for? MR. HARRIS: Yeah. I guess what I’m suggesting is it might be worth looking at the nonresidential applications as another subgroup of interest because I think the economics may be different on both sides, both on the purchase price and on the energy costs, non–res versus res. MR. BROOKMAN: Thank you. MR. ROSENQUIST: Okay. I’m going to move on and talk about the next step. Before conducting all the other analyses, what DOE has to do is establish trial standard levels. The reason why DOE selects trial standard levels is to produce a set of more limited standard levels which can then be analyzed in all the downstream analyses, including the manufacturer impact, the employment impact, and so on. Each trial standard level consists of a candidate standard level from each product class. In**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 our case, in the case of refrigerators, freezers, and compacts, there are numerous product classes, and a trial standard level would consist of a unique standard level from each one of those product classes. The basis of the type of standard levels that are assigned to a trial standard level are based upon a set of criteria. That set of criteria could be, for example, the standard level with a minimum lifecycle cost or a standard level with a payback period of three years or a standard level that has a unique type of technology. Again, what DOE does in setting up these trial standard levels is, first, establish the criteria in which to draw candidate standard levels from to produce that trial standard level. In general, DOE analyzes for each product class around eight candidate standard levels. When it goes to do the manufacturer impact analysis and the other downstream analyses, there are a limited set of trial standard levels that consist, again, of the candidate standard levels from each one of the product classes. Does anyone have any questions about that? Okay. MR. BROOKMAN: Chris.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. JOHNSON: So, what you’ve just described to me, as a layman that’s not really familiar with all this, is that you have a set of trial standard levels and you try and figure out which ones are realistic and which ones are not; is that right? For each product class? Which ones are attainable and which ones are not attainable based on all the criteria that you have to meet. MR. ROSENQUIST: Well, yeah. Again, DOE sets up a criteria for establishing what the trial standard level is comprised of, what candidate standard levels from each one of the product classes a trial standard level is comprised of. First, it sets the criteria. For example, minimum lifecycle cost is one. That trial standard level then would consist of each candidate standard level from each one of the product classes that had the minimum lifecycle cost. Then there are other types of criteria. For example, let’s create – MR. JOHNSON: How are the criteria evaluated? Equally? MR. ROSENQUIST: After the trial standard levels are developed, they’re then analyzed. At that point, DOE looks at those trial standard levels and then makes a decision on which one to propose.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Ron Lewis. MR. LEWIS: There are seven statutory criteria we have to consider. It comes down to basically, we start at the top and we work our way down from the – it has to be technologically feasible and economically justifiable, so we’re coming down through those trial standard levels with that criteria also with the seven criteria in the statutes that we have to consider. We actually have a mapping of the statutory criteria to the actual analysis that we do to fulfill them. I think what Greg was addressing was how we build that portfolio and populate it with the individual TSLs, and then the actual decision point is later on, after we’ve populated it on the basis that he’s describing. We start at the top and work our way down to stop at that point where it meets the required criteria, which is set by Congress, not by us. MR. BROOKMAN: Just for your reference, on Page 11 in these slides those seven EPCA factors are listed. MR. JOHNSON: I guess I would argue that you need a test procedure to do that, but that’s another story. MR. BROOKMAN: Thank you.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROSENQUIST: This slide is just to solicit comment on this issue of selecting the appropriate criteria to establish trial standard levels. Does anyone have any additional comments on the selection criteria? MR. BROOKMAN: Andrew. MR. DELASKI: You’re looking for suggestions on selection – yeah. I was a little surprised to see that, on your prior slide, you did not have the maximum cost effective level. MR. ROSENQUIST: Oh, yeah. The max tech level is always – MR. DELASKI: Not the max tech level but the maximum cost effective level. MR. ROSENQUIST: Oh, the maximum cost effective – MR. DELASKI: That is the level that would generate the maximum energy savings and also be cost effective to the consumer, which max tech likely doesn’t fulfill in some instances. The law now says the maximum level of energy savings. That is whatever Ron just said. MR. BROOKMAN: Cost effective and technologically feasible.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. DELASKI: I think that you would certainly want to evaluate that level that met the high level description in 325(o). Then, the minimum LCC I think certainly makes sense. That’s one that typically is analyzed. I suspect that you’ll need a gap–fill between those two, between minimum LCC and maximum cost effective. I don’t know that you need to go much lower than Energy Star. That would be my guidance. MR. BROOKMAN: Kelly? MS. KLINE: This feeds off a comment I made earlier, I guess, about the difference in the most energy efficient level max tech. I’m assuming that’s based on the earlier numbers that were really based on kind of theoretical max tech rather than max tech that are actually observed in the market. I guess that would be my suggestion here. I don’t see anything that reflects the max tech as actually observed. MR. BROOKMAN: David. MR. HALL: David Hall. With the trial levels, is it to be conducted or carried out over those same seven representative classes as has been carried out through this? MR. ROSENQUIST: Again, I’m trying to make this distinction. There’s the candidate standard**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 levels that are considered for each product class. Some of those candidate standard levels, though, go into comprising the trial standard level. Let’s say, for example, that we want to use minimum lifecycle cost as a criteria to establish a trial standard level. Then, DOE would choose that candidate standard level from each one of the product classes that met that criteria. It could be Candidate Standard Level 3 from one product class, Candidate Standard Level 2 from another class, Candidate Standard Level 6 from another class. All those candidate standard levels are assembled into the trial standard level. MR. HALL: Thank you. MR. ROSENQUIST: Now it’s up to Jeff Kingman here to talk about the manufacturer impact analysis. MR. KINGMAN: Earlier, you heard from my colleague that took you through some of the preliminary findings that took place that we found from our previous interviews. I’m just going to take you briefly through the steps DOE takes to conduct the NOPR phase of the rulemaking or the manufacturer impact analysis during the NOPR phase. The main purpose of the manufacturer impact analysis, or MIA as we abbreviate it, is to conduct an**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 analysis to figure out the impact of the standards on manufacturers of the products. During this rulemaking, we also choose to identify some subgroups that could be more affected than the overall industry. The most important part of the manufacturer impact analysis is the industry net present value, or INPV. That’s a representation of the impacts on the industry caused by a standard. The main output is obviously, like I just said, the INPV. We also use the manufacturer impact analysis to report some of the qualitative impacts that could occur. This slide just shows that there are three main phases during the NOPR phase to conducting the MIA, and I’m going to go through those in detail now. The overall impression now, and you might have gotten already, is that the manufacturer impact analysis is conducted in conjunction with the other rulemaking or the other analyses. For instance, on this slide, you can see that the shipments from the national impact analysis feed into our cash flow model. Also, the costs from the engineering are obviously an important part of the cash flow for the industry. The first phase we already briefly touched on this morning, or this afternoon, but we go through and**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 look at all the publicly available information. We look at such things like 10-Ks of companies that make the covered products, things like that. Some of this was already also reported in the market and technology assessment, but we also go through and look at any new information that has become available. In the second phase, we use the inputs we have from public information and put it into our actual cash flow model to get a general idea of what we think the impacts might be. As I said, down at the bottom you can see the main output from our cash flow model is something called industry net present value, or INPV. In the second phase, we also create an interview guide that we will use to conduct interviews with manufacturers. Down here are some of the topics that we usually include. I just also want to add that we also plan on updating some of these topics to include things that have come up during today’s meeting and that you’ll be submitting in your written comments, too. Importantly, we are looking to conduct these interviews as soon as we can. The comment period closes in a few weeks. Like I said, once that does close, we’re going to look at the information that has been submitted and that we’ve learned here today to put**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 together an interview guide that we are going to send to manufacturers. We do really appreciate any information you do share with us, and we offer up the nondisclosure agreements to all manufacturers that we do interview because we want to give you an opportunity to disclose information that you might not be comfortable sharing in public. That kind of information is really helpful for some of the inputs to the cash flow model. Finally, the final way that we finish up the NOPR analyses is, besides just the industry–wide impacts, we also go back and look at the impacts on some of the manufacturer subgroups that might be more impacted. One of the things we’re required to look at by law is the impact on small businesses, so that’s one of the things we usually do look at. After that, we write up all the findings that we do and do a final run on the cash flow model and put it together for the documentation for the notice. If anyone has any questions on what we typically do for that? (No response) MR. ROSENQUIST: Let’s resume the NOPR analysis steps with the utility impact analysis. Its purpose is to determine the effect of standards on**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 electric utilities, basically their sales and the peak demand that they have to serve. The basic methodology is to take the national energy savings that comes from the national impact analysis for each standard level and then feed it into what’s called the National Energy Modeling System, or NEMS. This is the federal government’s official energy economic model. This is also used to product the Annual Energy Outlook. NEMS produces what’s called a reference case. What DOE runs then by implementing these national energy savings from the various standard levels is a standards case. That standards case shows DOE the change in electricity and sales by region, how these standards affect the mix of generation and also the installed generation capacity. Are there any questions on that? I flew right through it. MR. BROOKMAN: Jeff. MR. HALL: Pardon my ignorance on this, Greg, but does that analysis also show the dollar capital cost for new construction? Does it include T&D as well as generation? MR. ROSENQUIST: No, it does not. It doesn’t look at the financial impacts to the utility sector.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 It doesn’t look at how transmission distribution may be affected. MR. BROOKMAN: Tom. MR. ECKMAN: This is Tom Eckman. Is that a statutory constraint or just a scope constraint? MR. ROSENQUIST: It’s a NEMS constraint. That’s what NEMS output provides. It doesn’t actually show how – basically, NEMS is an equilibrium model. If there is demand, there will be supply. In that sense, then, there’s no real analysis of how transmission and distribution would be affected. That’s how I understand it. MR. ECKMAN: Both T&D as well as generation. So, you get an output from NEMS that’s – MR. ROSENQUIST: On installed generation capacity. MR. ECKMAN: And how much that’s offset by the standard. MR. ROSENQUIST: The standard, right. MR. ECKMAN: The question that Jeff raised is, is that priced or you just know magnitude? MR. ROSENQUIST: Just magnitude. In giga watts, for example. MR. ECKMAN: It seems to me there’s a lot of net present value hanging on that particular analysis.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We spend a lot of money on new generation. One of the purposes of doing these standards is not to spend a lot of money on new generation. If we’re not capturing that, we’ve missed a considerable amount of the benefit. Is that a scope or is that a statute constraint? MR. ROSENQUIST: I don’t really know. I’d have to get back to you on that. MR. ECKMAN: If it’s not a statute constraint, it certainly ought to be in the analysis. MR. BROOKMAN: Thanks, Tom. MR. ROSENQUIST: In reply to that, I would say that in some degree the electricity pricing should try to account for the – MR. ECKMAN: You’re only seeing the benefits of the participants here, not the nonparticipants. Part of that cost is being borne by non–refrigerator owners, so we’re missing a bunch of the cost. MR. BROOKMAN: Are you in this same spectrum? I’ve got other people who want to follow on here. MS. STEVENS: Well, I had two points. MR. BROOKMAN: Hang on, then. Chris and then Jeff Harris. Jeff first. MR. JOHNSON: Oh, I’m sorry. MR. BROOKMAN: Jeff, go ahead.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HARRIS: I think that NEMS can give you, of course, some differential in average prices based on growth rates. They have a high growth, low growth, and a base case, and a lot of other excursions. You can get total cost, I think, capacity cost, out of NEMS. You may have to do some interpolation without doing special runs. But I’m kind of on the same wavelength as Tom, I guess. It seems like it’s worth looking at. MR. BROOKMAN: Chris. MR. JOHNSON: Chris Johnson. My comment would be that, with that limitation, NEMS is going to have to be radically redone within five or six years due to smart grid and demand response. That completely changes the whole shape and size of electric utilities in consumption and peak load demand, which would also reflect price both for them and for consumers. Anything that doesn’t account for that, I would say, by 2014, it’s hard to really get a real solid number or any type of accuracy. MR. BROOKMAN: Thank you. Amanda. MS. STEVENS: I just wanted to follow up and just echo Tom’s point that that was a really good observation. Then, the second thing I was wondering is, I**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know DOE usually presents energy savings in terms of quads over the 30 years of the analysis. I was wondering if it would be possible to also show that in terms of the annual energy savings that are accruing across the country. That’s usually something that’s not real explicit in the write–up. MR. ROSENQUIST: That’s correct. The last TSD for refrigerators showed just the cumulative savings. MS. STEVENS: Yeah. It would be great for us to be able to see that over time. MR. BROOKMAN: Is that easy to do? MR. ROSENQUIST: Yes. It can be generated, it just typically hasn’t been. MR. BROOKMAN: Other comments on this segment? (No response) MR. ROSENQUIST: On to the next analysis phase, which is the employment impact analysis. Its purpose is to estimate the effect of standards on national employment. What’s used here is a spreadsheet model called EMSIt. You can see what the semi–acronym stands for. This is a model that was developed by the Pacific Northwest National Laboratory. Again, it’s meant to analyze the indirect**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 effects from changes in consumer expenditures and changes to revenues, for example, from utilities as a result of standards. It tries to propagate those changes throughout this energy economy to see what sort of effect it finally has on jobs throughout the country. We do want to make the point that the direct employment impact to manufacturers is analyzed in the manufacturer impact analysis. Again, the output is this change in jobs or national employment due to these changes in consumer expenditures and, for example, changes in revenues to utilities. MR. BROOKMAN: Comments on employment impact analysis? (No response) MR. ROSENQUIST: Next is the environmental assessment. Its purpose is to determine the impact on power plant emissions, airborne emissions, from these various standards that are being analyzed. The same tool is used here as for the utility impact analysis, and that’s NEMS. Again, the same process is used. DOE takes the national energy savings corresponding to these various standard levels and puts them into NEMS to see how the emissions from power**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 plants are affected. The output from that are the emission reductions due to the standards on sulphur dioxide, nitrogen oxides, carbon dioxide, and mercury. The other thing that’s been done recently in the environmental assessment is to value these emissions. This is what the next issue for public comment is. Again, as I just noted, very recent rulemakings have put a dollar value on the emission reductions. Specifically for CO 2 , for example, a range of $5 to $55 per ton has been used to value these emissions. DOE is looking for any comment on the specific topic of monetizing these emission reductions. MR. BROOKMAN: Andrew. MR. DELASKI: I’ll just briefly comment. We’ll comment more in detail in the written comments. I think the Department has made enormous progress in this area in the past year. We’ll comment on the specifics in the written comments. MR. BROOKMAN: Do you wish to offer now what should guide their pricing? MR. DELASKI: No, we’ll do it in the written comments.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BROOKMAN: Okay. Thank you. Additional comments? Yes? I see none. Okay. Oh, yes. Debra. MS. BRUNK: This is Debra Brunk. This is not specifically a comment on monetizing the value of CO 2 , but I can’t find any other place to insert this. This makes as much sense as any. Chris Johnson has alluded to this several times as well, but we’re looking at a reduction in CO 2 emissions, reduction in energy. We’ve talked all day a lot about the standards and the impact those could have on energy use. Something that we also want to bring up here, and I think the time is right, is really looking at what DOE may be doing in terms of evaluating the impact that smart appliances can actually have on holistic energy savings. Not maybe with the site type energy that we’ve been talking about, which is a single appliance, but the number of power plants that could be reduced, the CO 2 emissions that could be reduced through the implementation of this type of technology, which certainly has had a tremendous push from this administration and in which, of course, DOE is also involved heavily. We just want to put that out there. It’s something we’re very interested in as an industry. We’re spending a lot of our time and resources to put**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 forward what needs to happen for us and what we need to do to make sure that this works. We certainly see something happening by 2014. We would like to just put on the table, if there is some way that if we actually start looking at the impact of CO 2 emissions and reductions in power plants and if that ends up actually being incorporated into the analysis, is there something also that could be looked at in terms of a standards credit or some other incentive that would help to move this along, again, just recognizing the tremendous impact that we see potentially from the addition of this technology into home appliances. MR. BROOKMAN: Thank you, Debra. Additional comments in this vein? Let me remind all of you that there is an opportunity for brief summary remarks at the end of the day as well. We’re almost there, also, by the way. Back to Greg. MR. ROSENQUIST: Finally, the last step is the regulatory impact analysis. Its purpose is to determine the national impacts from alternatives to mandatory efficiency standards. What DOE has typically looked at in the past are such things as rebate programs, consumer and manufacturer tax credits,**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 voluntary efficiency targets like Energy Star, government procurement programs, for example, that are administered by FEMP. These are all looked at as means in which to save energy and provide economic benefit. Again, DOE wants to see whether or not that provides the same level of benefit as mandatory standards. The method that’s used is to use the spreadsheet model that’s used in the national impact analysis again, modifying key inputs to determine what the effect of the particular non–regulatory measure is on things like purchase price, energy use, operating cost, and things along that line. What you get out of this analysis is the same thing that you get out of our national impact analysis, which is national energy savings and net present value due to these various non–regulatory measures. Again, those are directly compared to the mandatory efficiency standards to determine whether or not that vehicle is a better way to accomplish these national impacts of the mandatory standards. MR. BROOKMAN: Comments on this, on regulatory impact analysis? (No response) MR. ROSENQUIST: I think I’m going to turn**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this back over to Lucas to close out. MR. BROOKMAN: Do you want to do this at the very end or do you want to do this now? Okay. As reflected in the agenda, now is an opportunity for anybody to raise any additional issues that you may not have covered sufficiently, things that you think deserve or you desire to have additional emphasis on. Briefly, Dave. MR. HALL: No, mine is retro. As we were whipping through it – MR. BROOKMAN: Let’s return to it. What slide is it? MR. HALL: Page 110. Basically, I’m questioning, since chest freezers are included with the grouping of all compact freezers, from our experience, compact chest freezers’ design and construction is consistent with full size chest freezers’ design and construction. Their life is on that similar magnitude, not necessarily by this equivalency. MR. BROOKMAN: By this extrapolation here. MR. HALL: Thank you. MR. BROOKMAN: Yes. Okay. Thank you. I’m certain the Department would welcome data on that point. That would be helpful to them. Or even anecdotal information.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So, an opportunity now for anybody to make closing remarks, points of emphasis, that sort of thing. Debra. DISCUSSION OF OTHER ISSUES AND FINAL REMARKS FROM INTERESTED PARTIES REMARKS BY DEBRA BRUNK ASSOCIATION OF HOME APPLIANCE MANUFACTURERS MS. BRUNK: Debra Brunk with AHAM. I guess I just wanted to make a comment here around, again, this being a helpful stage to go through an awful lot of this information. I think we’ve identified some holes here, some issues, some potential areas we need to work

on. Something, I guess, I was just wondering about. Again, we’re changing the procedure already a little bit by having this pre–NOPR. I think it’s certainly valuable that we provide comments and all of that, but again, hearing the discussion today, I’m just wondering if there is some advantage in the future. I think, ideally, this rulemaking is perfectly suited for it because it’s so complicated. But if there’s any way to have this meeting or another type of meeting become more of a working meeting where we could actually hash out some of this stuff as opposed to the more formal approach, where we**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 could actually, perhaps, walk away with action items for various parties to try to get specific information. I don’t know. I just wonder if it would help to move the process along a little bit better and make sure that everyone is aware of what is happening. MR. BROOKMAN: Okay. Thank you for that. Any response to that? Okay. MR. LEWIS: We appreciate the thought and the input. We’ll certainly consider it. We’re looking for any suggestions that would streamline and make this more effective as an end result. We’ll certainly be thinking about that and see what we can do moving forward. MR. BROOKMAN: Other comments here, or summary remarks? (No response) MR. BROOKMAN: Okay. Then I’m going to turn it back to Lucas for a final comment or two. My final comment is to thank all of you. We’ve had a very productive day. Appreciate the spirit of disclosure. Wish all of you well in the holiday

season. Please fill out the evaluation form. The Department is always looking for ways to improve these meetings. It’s at the back of your packet. Lucas.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NEXT STEPS AND CLOSING REMARKS LUCAS ADIN (PowerPoint presentation) MR. ADIN: I’ll be really brief here. Just a couple quick administrative items. We accept written comments all the way up until January 15, 2010. That’s the deadline for that. I believe that’s at midnight on January 15, 2010, too, which some folks do take advantage of. We understand that, which is fine. The e–mail address and regular mail addresses are up there. They’re also in the Federal Register notice. If you need that information, it’s there. That’s also on the website. We look forward to seeing your written comments very much. It’s been, as Doug said, a very productive meeting. MR. BROOKMAN: We didn’t do that slide. MR. ADIN: Oh, I’m sorry. This was just a – was it this one or the one above it? MR. BROOKMAN: One more slide. That one. No, down. MR. ADIN: This one? MR. BROOKMAN: Yeah. I thought I had referenced that.**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ADIN: Okay. All right. I’ll be perfectly honest. I really hadn’t been prepared to speak on this particular slide, but – MR. BROOKMAN: Ron Lewis. MR. LEWIS: Should, as Debra suggested, people get together and work through things and come to us with solutions while we’re working through how we’re going to streamline the process, we certainly wouldn’t be disappointed if somebody delivered in our lap and said here are all the answers. (Laughter) MR. LEWIS: We have always encouraged those agreements. If anybody wanted to stay around a little bit later this afternoon to work on that – (Laughter) MR. LEWIS: – we highly encourage that. MR. BROOKMAN: It has always been the case that, as a result of these meetings and others, there has been a spirit of cooperation just permeating these different constituencies. Thank you for that, Ron. Back to you. MR. ADIN: Yes. Thank you, Doug, for bringing up that slide. Thanks, Ron, for elaborating on that particular point. I did skip this slide, too. This is just a**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reiteration of the seven points of analysis that we touch on and the analyses that we do corresponding with those things. We talked about them in pretty exhaustive detail today. That brings us back to the end here. I just want to close by thanking everyone who came today. We really appreciate your input very much. It’s an integral part of doing this analysis, and it really helps us quite a bit. We look forward to anything else that you have to say in your written comments. One thing about this I would point out. Those numbers, the docket number and the RIN number will stay the same all the way through this rulemaking, all the way up until the final rule, so those will always be the reference numbers. MR. LEWIS: One last thing. I don’t know if you’ve noticed in recent rulemakings, but we’ve put these electronic mailboxes there for the rulemakings that have really helped us to distribute the comments to the people that need to know them internally that are in the decision–making path. That is very helpful. If you e–mail them to that address, that would be very helpful. MR. DELASKI: In the spirit of electronic**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 comments, I would again urge the Department to make the comments to the docket available to the public online. Something that’s maybe been on your plate for a while now, but I think it would be great if that was something that could move forward. MR. BROOKMAN: Thank you, Andrew. Thank you. Okay. Thanks to all of you. Safe travels. (Whereupon, at 4:08 p.m., the meeting was concluded.)**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 45 **REPORTER'S CERTIFICATE** 1 2 3 4 5 6

7 8 9 10 11 12 13 14 15 16 This is to certify that the attached proceedings before: **U.S. DEPARTMENT OF ENERGY** In the Matter of: **PUBLIC MEETING ON THE PRELIMINARY ANALYSES FOR RESIDENTIAL REFRIGERATORS, REFRIGERATOR–FREEZERS, AND**  **FREEZERS** Were held as herein appears and that this is the original transcript thereof for the file of the Department, Commission, Board, Administrative Law Judge or the Agency. Further, I am neither counsel for or related to any party to the above proceedings.



### Wendy Greene 17 18 19 20 Official Reporter

Dated: December 28, 2009