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 U.S. DEPARTMENT OF ENERGY

 + + + + +

 ENERGY CONSERVATION STANDARDS FOR

 COMMERCIAL CLOTHES WASHERS 

 + + + + +

 PUBLIC MEETING

 + + + + +

 MONDAY

 APRIL 21, 2014

 + + + + +

 The Public Meeting met in Room 8E089, 1000 Independence Avenue, S.W.,

Washington, D.C., at 9:00 a.m., Doug Brookman, 

Meeting Facilitator, presiding.

PRESENT

DOUG BROOKMAN, Meeting Facilitator, Public 

 Solutions, Inc.

NICOLE BUCCITELLI, Navigant Consulting

JENNIFER CLEARY, Association of Home Appliance

Manufacturers

RACHEL CLUETT, American Council for an Energy

 Efficient Economy

JOHN CYMBALSKY, Department of Energy

AMANDA GONZALEZ, Energy Solutions

JOHANNA HARIHARAN, Department of Energy

MAITHILI IYER, Lawrence Berkeley National

 Laboratory 

JOANNA MAUER, Appliance Standard Awareness

 Project

CHUN CHUN NI, Lawrence Berkeley National

 Laboratory

EDWARD OSANN, National Resources Defense

 Counsel

TIMOTHY SUTHERLAND, Navigant Consulting
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 TABLE OF CONTENTS

Welcome, Introductions, Agenda Review . . 3

Opening Remarks . . . . . . . . . . . . .. 3

Regulatory History, Rulemaking Process

 Overview . . . . . . . . . . . . . . 11

Market and Technology Assessment, 

 Screening Analysis, Engineering 

 Analysis . . . . . . . . . . . . . . 18

Markups for Equipment Price

 Determination, Energy and Water

 Use Analysis . . . . . . . . . . . . 62

Life-Cycle Cost and Payback

 Period Analysis . . . . . . . . . . . 68 

Shipments Analysis, National

 Impact Analysis . . . . . . . . . . . 78

Manufacturer Impact Analysis . . . . . . . 102

Consumer Subgroup Analysis,

 Emissions Analysis, Utility 

 Impact Analysis, Employment 

 Impact Analysis, Regulatory 

 Impact Analysis . . . . . . . . . . .124

Next Steps and Closing Remarks . . . . . . 130

Adjournment . . . . . . . . . . . . . . . .134
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1 P-R-O-C-E-E-D-I-N-G-S

2 9:03 a.m.

3 MR. BROOKMAN: Okay. Let's begin. 

4 Good morning, everyone. Welcome. This is the

5 Energy Conservation Standards Notice of

6 Proposed Rulemaking for Commercial Clothes

7 Washers. Today is April 21st, 2014 here in

8 the Forrestal Building in Washington, D.C. 

9 My name is Doug Brookman. I'm

10 from Public Solutions in Baltimore. We're

11 going to start with a few welcoming remarks

12 from John Cymbalsky. 

13 MR. CYMBALSKY: Thanks, Doug. 

14 This is John Cymbalsky. I am a program

15 manager for appliance standards here at DOE. 

16 I want to apologize for picking

17 the Monday after a major religious holiday. 

18 I did not realize it when I did that. The

19 government calendar doesn't show those types

20 of holidays, and I apologize for those who

21 couldn't travel yesterday. I can understand

22 that. Hopefully, you've made it on the
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1 webinar and can participate fully in this

2 public meeting. And then welcome to the rest

3 of you who are in the room. Thank you. 

4 MR. BROOKMAN: Let's start by

5 doing introductions around the room. You can

6 get used to turning these on and off. Please

7 say your name and organizational affiliation.

8 MS. GONZALEZ: Hi. My name is

9 Amanda Gonzalez. I am here with Energy

10 Solutions on behalf of the California IOUs.

11 MS. CLUETT: Hi. My name is

12 Rachel Cluett, and I'm from the American

13 Council for an Energy Efficient Economy.

14 MS. IYER: I'm Maithili Iyer. I'm

15 with Lawrence Berkeley National Laboratories. 

16 MS. BUCCITELLI: Hi. I'm Nicole

17 Buccitelli, and I'm with Navigant Consulting. 

18 MS. NI: My name is Chun Chun Ni

19 with the National Laboratory. 

20 MS. CLEARY: Jen Cleary with the

21 Association of Home Appliance Manufacturers. 

22 MR. SUTHERLAND: Hi. I'm Timothy
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1 Sutherland with Navigant Consulting. 

2 MS. HARIHARAN: Hi. I'm Johanna

3 Hariharan with the general counsel here at 

4 Department of Energy. 

5 MR. BROOKMAN: John introduced

6 himself already. Okay. Well, welcome. Glad

7 to see you here this morning. All of you have

8 seen the packet of information as you came in

9 the door this morning. We do a very brief

10 agenda review here. 

11 Immediately following this agenda

12 review, there's an opportunity for anyone that

13 wishes to to make opening remarks, brief

14 summary remarks about issues that matter to

15 you or issues that you'd like to bring to the

16 floor. Following that, we'll have

17 presentation and comment opportunities for

18 regulatory history, rulemaking process

19 overview.

20 And then moving directly from

21 there, market and technology assessment,

22 screening analysis, and engineering analysis,
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1 and then, directly, markups for equipment

2 price determination, energy, and water use

3 analysis. We'll take a break mid-morning,

4 around about 10:45 or so.

5 Returning from break, life-cycle

6 cost and payback period analysis, shipments

7 analysis, national impact analysis,

8 manufacturing impact analysis. We'll take

9 lunch mid-day. Well, we'll see how that works

10 actually. We'll see how the schedule

11 progresses. If it looks as though we're going

12 to adjourn more like 1:00, as it's suggested

13 in this agenda, maybe we'll just press on

14 ahead and not take lunch. 

15 But you can see, following the

16 manufacture impact analysis, we go straight to

17 consumer subgroup, emissions, utility impact,

18 employment impact, regulatory impact analyses.

19 At the end of the day is yet

20 another opportunity for anyone that wishes to

21 make closing remarks. Anything additional

22 that you wish to cover that hasn't been
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1 covered sufficiently, we'll do it at that

2 point.

3 This agenda reflects that we're

4 going to adjourn today at 1:00. We'll see how

5 that goes. We're not going to waste anyone's

6 time here today.

7 Questions and comments about the

8 agenda? 

9 Seeing none, I'd ask for your

10 consideration, on the front page you can see

11 some very simple ground rules. If you could

12 speak one at a time, please, it would be

13 helpful. Say your name for the record each

14 time you speak. There will be a complete

15 transcript of this meeting. Please be concise

16 and share the air time. Keep the focus here. 

17 If you haven't got your cell phone in off mode

18 or silent, please do so at this point.

19 And webinar participants, as John

20 Cymbalsky said, we welcome you and glad you

21 could join us via the web. If you could keep

22 your telephone on mute, and you can raise your
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1 hand with the software that you're in if you

2 wish to speak. And most of the time, that's

3 been working here in the room. We can hear

4 you speaking directly into the conversation

5 here. So we'll see if it works today. And

6 welcome. We're glad to have you here.

7 And I think that's the bulk of

8 what I wanted to cover. At this point, John,

9 do you want to do the opening slides. 

10 MR. CYMBALSKY: Sure. Thanks,

11 Doug. This is John Cymbalsky again from DOE. 

12 I'll take you through a few more introductory

13 slides. Again, this just reinforces that we

14 have the webinar going on and we encourage

15 you, as always, and including the people in

16 the room, to submit their comments in written

17 format. That really helps the technical team

18 draft the next rulemaking document. 

19 And the purpose of the public

20 meeting is basically to provide public comment

21 on the Notice of Proposed Rulemaking that we

22 have issued for commercial clothes washers. 
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1 You can see where the docket is, and we will

2 discuss all the analytical issues that are

3 presented in the NOPR.

4 As we go through this document,

5 you'll see these comment boxes. Here, we

6 would point out some of the things that we

7 feel are extra special in terms of needing

8 public comment on an issue that either we

9 think warrants more comment or we find maybe

10 controversial. So you'll see these scattered

11 throughout today's presentation.

12 And then, finally, how to submit

13 written comments. We have the email box for

14 this docket. You could also do regular post

15 mail, if you'd like, or by courier. But,

16 again, we'd encourage everyone to do an

17 electronic submission. It's the quickest. 

18 You can also copy me on your email because I

19 know we've recently had some issues where

20 those email addresses sometimes are hard to

21 type and people who type one character

22 incorrectly will not get their submission in
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1 and you will not get a bounce-back. So feel

2 free to copy Brenda or me in that

3 transmission. 

4 Comment period closes May 5th,

5 2014 at midnight. So at this point, we're

6 going to open it up for any opening remarks

7 from folks in the room. 

8 MR. BROOKMAN: Yes, Amanda,

9 please. 

10 MS. GONZALEZ: Hi. This is Amanda

11 Gonzalez on behalf of the California IOUs. I

12 just would like to thank the Department of

13 Energy for hosting this public meeting and for

14 their time and consideration of the different

15 standard levels within the rulemaking for

16 commercial clothes washers. 

17 We're highly supportive of this

18 rulemaking and have been impressed by the

19 analysis for front-loaders and have concerns

20 and questions about the currently-proposed

21 level for top-loaders, as well as some

22 questions about the analysis for industry net
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1 present value for top-loaders and look forward

2 to the discussion today.

3 MR. BROOKMAN: Thank you. 

4 Additional comments here at the outset? Okay. 

5 Nothing additional. 

6 MR. CYMBALSKY: Okay. John

7 Cymbalsky again from DOE. I will take us

8 through agenda item number one, which is the

9 history and the rulemaking process overview. 

10 And then you'll probably hear from me in and

11 out throughout the morning, and I will also

12 present agenda item eight. And in the middle,

13 we'll have our team, who are much more

14 intimate with the details of this analysis,

15 present the different parts of it.

16 Okay. So the regulatory history. 

17 EPCA 1975 is our statutory authority for the

18 program. It's been amended several times

19 throughout the recent past. In particular,

20 EPACT 2005 amended EPCA to add coverage for

21 commercial clothes washers. It established

22 definitions, test procedures, and standards
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1 for commercial clothes washers, and it also

2 required DOE to look at two different

3 rulemakings for commercial clothes washers. 

4 The first one we issued on December 18th,

5 2009. And then this process now is the second

6 requirement of that legislation. 

7 And the final rule is required

8 January 1st of 2015, so we're looking very

9 hard to meet that deadline. And I think, as

10 far as I can tell, everything is on time at

11 this point, so that's good news.

12 Okay. So what's the definition of

13 commercial clothes washer? It means a soft14 mount front-loading or a soft-mount top15 loading clothes washer that has a clothes

16 compartment that for horizontal-access clothes

17 washers is not more than 3.5 cubic feet and

18 for vertical-access clothes washer is not more

19 than 4.0 cubic feet. And it's designed for

20 use in applications in which the occupants of

21 more than one household will be using the

22 clothes washer, so the main ones here are
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1 multi-family housing; coin ops or laundry

2 mats, as people might call them; and then

3 other commercial applications. And you can

4 see the cite to the U.S. Code 6311, Section

5 21.

6 A little history here. So as I

7 mentioned earlier, EPACT established the first

8 set of standards. And so on January 1st,

9 2007, it set a Modified Energy Factor of 1.26

10 and a Water Factor of 9.5. 

11 DOE then amended these with the

12 rulemaking effective January 8th of last year. 

13 Top-loaders have a 1.6 MEF with a maximum

14 Water Factor of 8.5 Front-loaders, 2.0 MEF,

15 and 5.5 for the Water Factor. And, again,

16 this rulemaking will amend those standards at

17 the bottom of this table.

18 MS. GONZALEZ: John, I have a

19 question. 

20 MR. BROOKMAN: Amanda? 

21 MS. GONZALEZ: This is Amanda

22 Gonzalez with the California IOUs. I would
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1 just like to state for the record that we are

2 still highly supportive of seeing one product

3 class, as opposed to two, for top-loaders and

4 front-loaders. 

5 We conducted some research during

6 the last rulemaking phase which suggested that

7 the cycle time between the two products

8 classes was almost negligible. I think there

9 was about a four-minute difference, on

10 average, between top-loaders and front11 loaders. 

12 And if you account for the fact

13 that front-loaders, which tend to be four

14 minutes longer in cycle time, have the

15 ability, generally, to take more water out of

16 the clothes and, thereby, reduce the dryer

17 time, the overall cycle times between front18 loaders and top-loaders when you account for

19 drying would be less than the four-minute

20 difference we hypothesize. So we would

21 encourage DOE to reconsider combining product

22 classes. 
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1 MS. HARIHARAN: This is Johanna

2 Hariharan, general counsel, Department of

3 Energy. With regard to top-loading and front4 loading and product classes, under EPCA we

5 cannot combine those product classes because

6 the location of the door is a feature,

7 according to EPCA, 42 US Code 6295(q). So at

8 this point, we do not have the legal authority

9 to do that. 

10 MR. BROOKMAN: Amanda? 

11 MS. GONZALEZ: I just have a

12 follow-up question. When -- was that recently

13 revised in EPCA, the fact that it's a feature

14 now?

15 MS. HARIHARAN: It was not, but we

16 have determined by the factors listed in EPCA,

17 among other things, the utility of the

18 consumer, that it is a feature. 

19 MR. BROOKMAN: Thank you, Johanna. 

20 You all set? Yes? Thank you. 

21 MR. CYMBALSKY: That's a good

22 segue. For a couple of slides from now, we'll
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1 get into the EPCA seven factors.

2 Here's just the time line for this

3 rulemaking. You can see the NOPR document

4 came out March 4th, 2014. Here we are today

5 at our public meeting. The comment period

6 will end May 5th, and then we project that we

7 will issue a final rule by January 1st, 2015.

8 I can pretty much assure you it won't be

9 issued on that day because we won't be working

10 that day, so, hopefully, we beat that date by

11 at least one day.

12 Okay. So the language in EPCA is

13 pretty clear about what we do when we go

14 through our rulemaking process. But the new

15 or amended standards must be designed to

16 achieve the maximum improvement in energy or

17 water efficiency that is technologically18 feasible and economically justified. So

19 that's the phrase we work off of. 

20 There are some constraints that

21 the rulemaking is subject to, and we're going

22 to go through a few of them on the next slide.
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1 To determine the technical

2 feasibility, we have several analyses to show

3 that the products and the equipment that we

4 looked at are technically-feasible. So we

5 have the market and tech assessment. We do a

6 screening analysis and then the engineering

7 analysis. And we'll go through all those

8 steps here in the presentation this morning.

9 So here's the EPCA factors. We

10 had a little preview with Amanda's question

11 regarding utility, and you could see number

12 four on the EPCA factor is impact on utility

13 or performance. And so, you know, the statute

14 doesn't say top or front, in those words, in

15 EPCA. However, one could readily posit

16 reasons why a top-loader would provide people

17 utility.

18 I think we had a rule for cooking

19 products where a glass door, for example,

20 gives people utility because you don't have to

21 open the door to look at your food while it's

22 cooking. You can hit the light and look in
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1 and you can see that it's not caught on fire

2 or something like that.

3 So the term "utility" probably

4 means different things for different people. 

5 But I could say that, in lots of cases, the

6 features that exist on these products are

7 taken in a very broad sense here at DOE and

8 have been in lots of rulemakings.

9 Anyway, we can go through these a

10 little bit, but we will be going through these

11 in more detail. But you can see that the

12 seven factors here, energy conservation is

13 probably one of the biggest ones.

14 But, also, we have to look at the

15 impact on manufacturers and what it does to

16 the marketplace. Does it lessen competition? 

17 Does it create monopolies, things of that

18 nature? And as you go down the list, you can

19 see the different analysis that matches up

20 with each of the seven factors in EPCA. 

21 So at this point, unless there are

22 any questions, we're going to move to the more
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1 technical part of the presentation. You can

2 sit or whatever you prefer. 

3 MR. SUTHERLAND: Okay. So the

4 first slide will sort of guide us through this

5 whole process. The first topic we'll go

6 through is the market and tech assessment.

7 The purpose of the market and tech

8 assessment is shown in this slide. Initially,

9 we defined the product classes. We

10 characterized the overall commercial clothes

11 washer industry and the market. During this

12 process, we will gather historical shipments

13 and other relevant data that characterized the

14 market. And we use all this information to

15 identify technology options for improving

16 efficiency on these products.

17 So the first slide here is about

18 the product classes. As we just discussed a

19 minute ago, the proposed standards maintain

20 two product classes based on the location of

21 access: top-loading and front-loading.

22 A look here at the different
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1 manufacturers and market share. DOE estimates

2 that there are two major manufacturers that

3 hold the large majority of the market, and you

4 can see those listed. And then there are a

5 number of other more minor manufacturers in

6 this market listed in the right column. And

7 DOE believes that the split is, roughly 90-10

8 between those two groups.

9 On this slide, we'd like to go

10 through the distribution channel for these

11 products because it's different than for a lot

12 of the other products that we deal with on

13 these residential -- I'm sorry. It's

14 different than the residential clothes washer

15 markets, so I think it's important to

16 highlight some of the differences here.

17 So after leaving the manufacturer,

18 a commercial clothes washer product will go to

19 one of two places, and we'll talk about the

20 boxes on the top first. If it's going to a

21 multi-family housing destination, initially

22 the product will be sold to a route operator. 
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1 And, typically, a route operator will lease

2 laundry room space in the building. 

3 Typically, the route operator themselves will

4 own and operate the machines. They may also

5 maintain the facility itself, handling

6 maintenance, cleaning, repairs, that type of

7 thing. And they'll also typically take a

8 portion of the revenue that comes in from

9 usage of those machines. 

10 The building manager, on the other

11 hand, they lease the space to the route

12 operator. Most typically, the building

13 manager pays the utility bill, so the electric

14 and the gas bills. They may also take a share

15 of the revenue that comes in from usage of the

16 products. 

17 And in some cases, it's not as

18 common, but in some cases the building

19 managers may actually purchase machines and

20 operate them directly themselves. But using

21 a route operator is sort of the most common

22 method. 
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1 And the boxes along the bottom

2 pertain to coin-operated laundries or

3 laundromats. And there, typically, the

4 machines will first be sold to a distributor

5 and that distributor will then turn around and

6 sell the products directly to the laundromat. 

7 The laundromat owner purchases the machines,

8 pays the utility bills. And in both cases, at

9 the end, you have the end user, and that is

10 the customer, the customer who comes in and

11 pays to use the machine.

12 By the way, feel free to stop me

13 if there are any questions, even if there are

14 no comment boxes listed here.

15 So - looking at the sales

16 breakdown between multi-family housing and

17 coin laundries - DOE estimates that multi18 family represents the large majority, around

19 85 percent, of total annual sales. And the

20 remaining 15 percent are for the coin

21 laundries.

22 And taking a look now at the
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1 trends in shipments, historically, because

2 such a large portion of the sales are to

3 multi-family housing facilities, historically,

4 the trends in annual shipments of commercial

5 clothes washers have closely tracked trends in

6 new multi-family housing construction. And so

7 this chart shows a ten-year look-back. And

8 aside from sort of the two years, 2009 and

9 2010, you can see that trend holds pretty

10 closely.

11 One of the things to note on this

12 slide is DOE only has sales data up until 2011

13 on commercial clothes washers. So that

14 actually brings us to our first request for

15 comment, which is DOE requests information on

16 historical product shipments and market share

17 efficiency data disaggregated by product class

18 for 2012 and 2013, as those data become

19 available. 

20 MS. CLEARY: Jen Cleary of AHAM. 

21 AHAM will be glad to provide that data if we

22 can, and usually we get the request from
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1 Navigant, so we'll work with you for that. 

2 MR. SUTHERLAND: Great, thank you. 

3 MR. BROOKMAN: The submission

4 dates will work for you? 

5 MS. CLEARY: When it becomes

6 available works for us. 

7 MR. BROOKMAN: Thanks, Jen. 

8 MR. SUTHERLAND: So here on this

9 slide, we're taking a look at the efficiency

10 trends over the past ten years. And this

11 shows that there has been a modest increase in

12 efficiency over the past decade from an

13 average of around 1.3 MEF in 2002 to, as of

14 2011, somewhere around just above 1.6 MEF, the

15 shipment-weighted average.

16 MS. GONZALEZ: I have a question. 

17 This is Amanda with the California IOUs. 

18 Which test procedure are you using for these

19 MEFs?

20 MR. SUTHERLAND: Yes, that's a

21 great question and something that we should be

22 sure to clarify any time we're showing these
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1 slides. So this would be based on Appendix

2 J1. All of these MEFs are rated values

3 according to Appendix J1.

4 And this slide here shows the

5 efficiency distribution for top-loading, which

6 are the blue columns on the left, and front7 loading, the orange columns on the right. And

8 the thing to note here is that there is no

9 overlap in efficiency levels between top10 loaders and front-loaders.

11 Okay. So that takes care of the

12 slides on the market assessment. Let's talk

13 a little bit about the technology assessment.

14 At the beginning of the technology

15 assessment, DOE identified these initial

16 options that could be used to improve energy

17 efficiency in commercial clothes washers. I

18 don't think I'll go through reading off each

19 of these, but you can see them in the table

20 there. 

21 MR. BROOKMAN: I have a question.

22 MR. SUTHERLAND: Sure. 
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1 MR. BROOKMAN: Edward Osann

2 writes, "What is the basis for this split in

3 sales between coin laundry and multi-family? 

4 When was this 15-85 ratio established or re5 verified?" 

6 MR. SUTHERLAND: DOE re-verified

7 that split during this current rulemaking and

8 did so through data that we received from AHAM

9 on shipments and also through discussions with

10 manufacturers.

11 MR. BROOKMAN: Thank you. 

12 MR. SUTHERLAND: Okay. So after

13 looking at that table of initial technology

14 options, the next analysis is the screening

15 analysis. And the purpose of the screening

16 analysis is to identify any technologies that,

17 for a variety of reasons, would be eliminated

18 from further consideration throughout the

19 rulemaking.

20 And so from that initial list, DOE

21 screened out three of the technology options. 

22 The first two listed here, ozone laundry and
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1 polymer bead cleaning, DOE ruled those out on

2 the basis of technological feasibility and the

3 practicability to manufacture and install and

4 service that technology within the time lines

5 associated with this rulemaking.

6 And the third technology option,

7 temperature-differentiated pricing controls,

8 DOE ultimately screened that out, as well,

9 because the potential energy savings of that

10 technology option really depend on changes to

11 consumer behavior, which, of course, occur

12 after the point of manufacture. So DOE does

13 not have any data on how consumer behavior

14 might change accordingly if that feature is

15 present on the machines. And so for those

16 reasons, that technology option was screened

17 out. 

18 So the table that's shown here

19 shows the final list of technology options

20 that DOE considered to be valid options for

21 improving efficiency of commercial clothes

22 washers. 
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1 Any questions on any of that? 

2 Okay. Let's head into the engineering

3 analysis. 

4 So the purpose of the engineering

5 analysis is to evaluate various design options

6 that are used to improve efficiency. 

7 Ultimately, the output of the engineering

8 analysis is a characterization of the

9 manufacturer production costs, which you'll

10 see abbreviated throughout as MPC, as a

11 function of efficiency level. So that sort of

12 graph in the lower left shows a typical cost

13 efficiency curve that might be developed.

14 These cost efficiency curves are

15 developed individually for each product class. 

16 And they feed into the downstream analyses

17 that are listed in that box on the right.

18 So, first, just a quick note on

19 test procedure notation here. The proposed

20 standards are based on the new metrics

21 contained in the Appendix J2 test procedure. 

22 And, specifically, it's the MEF and the IWF
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1 metrics within the test procedure. So to

2 distinguish between MEF from J1 and MEF of J2,

3 DOE has added the J2 notation on MEF. 

4 And in the green box, you can see

5 a summary of some of the major differences

6 between MEF J1 and MEF J2. J2 incorporates,

7 for top-loaders, a revised description of the

8 capacity measurement level. And there's also

9 a revised drying energy calculation, and that

10 pertains to both top-loading and front11 loading. And those things affect the MEF

12 value.

13 The IWF is Integrated Water

14 Factor, and the difference between IWF and WF,

15 Water Factor, is that IWF incorporates water

16 consumption from all the wash temperatures

17 that are tested as part of the energy test

18 cycle, rather than, with Water Factor it just

19 looks at the cold wash/cold rinse cycle.

20 So all of the products on the

21 market are currently rated according to MEF

22 and Water Factor as measured using Appendix
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1 J1. So part of what we'll go through here is

2 to talk about what DOE did to sort of convert

3 that all over to equivalent Appendix J2

4 values.

5 And so we'll go through these five

6 topics here. Well, I won't talk through them

7 specifically here. We'll go through these in

8 order.

9 So the first thing that DOE did

10 was to choose a representative set of units

11 for analysis. And to do this, DOE selected

12 five representative products from each product

13 class, and these products span the entire

14 range of efficiencies available on the market. 

15 I should also note that they represent the

16 widest range of manufacturers that we could

17 find, as well.

18 So this chart here shows the

19 distribution, in terms of MEF on the X-axis

20 and Water Factor on the Y-axis, of the units

21 that DOE selected. And these are J1 ratings

22 in this chart here.
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1 MS. GONZALEZ: And this is Amanda

2 with the California IOUs. In looking at this

3 chart for top-loaders, the blue data point

4 farthest to the right, is that supposed to be

5 representative of the second or level two

6 efficiency level?

7 MR. SUTHERLAND: That little blue

8 data point all the way on the right would

9 actually be the max tech level.

10 MS. GONZALEZ: Okay.

11 MR. SUTHERLAND: I should say

12 maximum available level, which corresponds to

13 the max tech level. 

14 So the first thing DOE did was to

15 establish the different efficiency levels

16 based on the Appendix J1 ratings. So for top17 loading, the baseline was defined as the

18 current minimum standard: 1.6 MEF, 8.5 Water

19 Factor. DOE defined a gap fill level of 1.7

20 MEF, and then level two corresponds with the

21 maximum available on the market, which is 1.85

22 MEF, 6.9 Water Factor.
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1 And on the front-loading side,

2 again, the baseline defined as the current DOE

3 standard of 2.0 MEF, 5.5 Water Factor. Level

4 one and level two correspond to the former CEE

5 tiers, tier 2 and tier 3, 2.2 MEF, 2.4 MEF. 

6 And then level three corresponds to the

7 maximum available on the market, which is 2.6

8 MEF, 3.7 Water Factor.

9 So to start understanding how this

10 all looks when we're looking at Appendix J2,

11 DOE tested each of these units first according

12 to Appendix J1, then second according to

13 Appendix J2. And based on these test

14 results, DOE determined equivalent Appendix J2

15 values for each of the efficiency levels that

16 we just showed, which were based on Appendix

17 J1.

18 Just a note here. In the

19 following slides, we'll highlight the MEF

20 translations just for the sake of time, but

21 DOE also used the same methodology for the

22 Water Factor translations, as well. And those
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1 details are described in full in chapter five

2 of the technical support document.

3 So first here, taking a look at

4 the top-loading test results, these plots show

5 Appendix J1 ratings on the X-axis and the Y6 axis shows the tested Appendix J2 values. 

7 So let me go to the next slide. 

8 This little diagram will show up in the right

9 corner there. So based on these test results,

10 DOE translated the three levels that we talked

11 about before, translated those into Appendix

12 J2 values, which are 1.15 MEF, 1.35 MEF, and

13 1.55 MEF. 

14 MS. CLEARY: I just want to

15 clarify from slide 39. So you compared the

16 tested values to the rated values, not tested

17 to tested? 

18 MR. SUTHERLAND: DOE looked at

19 both tested to tested and tested to rated. 

20 This plot here shows tested to rated. 

21 MS. CLEARY: And which one was

22 ultimately used to develop the crosswalk? 
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1 MR. SUTHERLAND: Ultimately -- let

2 me think about that for a minute. Ultimately,

3 the rated values are what DOE placed the most

4 weight on because there's a recognition that

5 when DOE samples just one unit, you know, for

6 statistical reasons, there may be some

7 variation there. So, ultimately, the

8 translations are done on the rated value

9 basis.

10 MS. CLEARY: Thank you.

11 MR. BROOKMAN: Edward Osann has

12 another question -- 

13 MR. SUTHERLAND: Sure. 

14 MR. BROOKMAN: -- where he writes,

15 "Please elaborate on the conclusion that

16 access of loading represent a distinct

17 consumer utility-related feature when the

18 consumer of commercial washers are the

19 purchasers of commercial laundry equipment. 

20 What data has DOE relied upon to reach this

21 conclusion?" 

22 MR. SUTHERLAND: Can I pass that
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1 back to Johanna or John maybe?

2 MR. BROOKMAN: Right. John

3 Cymbalsky? 

4 MR. CYMBALSKY: So I guess the

5 question is, if I heard it right, that

6 consumers aren't purchasing the equipment, but

7 they are the users of the equipment. And in

8 my mind, I could easily and readily, someone

9 like me who has a herniated disk in their

10 back, can say that bending over and putting

11 laundry in at that angle doesn't necessarily

12 feel so good when that occurrence happens.

13 So it's not so much the

14 engineering that you referred to in your

15 question as much as the application of that

16 access in practical terms to the consumer. So

17 that would be my answer. 

18 MR. BROOKMAN: Okay, thank you. 

19 MR. SUTHERLAND: Okay. 

20 MS. GONZALEZ: This is Amanda with

21 the California IOUs. With respect to the plot

22 on slide 39, can you comment on any observed
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1 differences between rated and tested values? 

2 MR. SUTHERLAND: No, I don't think

3 it would be appropriate to comment on any

4 observed differences there. As I mentioned

5 because of the statistical nature of how

6 manufacturers develop the rated values, any

7 one particular unit that sort of, that may

8 test differently than its rated value would

9 not be appropriate to draw conclusions on

10 that. So . . . 

11 MS. GONZALEZ: Okay. And just for

12 clarification, you're using the rated values

13 for the basis of the standard? 

14 MR. SUTHERLAND: That's correct. 

15 Okay. Just one other thing to know, and,

16 actually, it's easier to look at in this plot. 

17 For top-loaders, we saw that the translation

18 can be different whether your machine has a

19 manual fill system or whether you have an

20 adaptive fill system, so that the efficiency

21 level that you're at, so whether you're at

22 baseline, level one, level two, under J1 may
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1 not correspond to the same level you would be

2 at under J2. 

3 Okay. And so we'll look at the

4 same set of plots here for front-loading. 

5 This plot here shows the J1/J2 results for

6 front-loaders. You'll see that the point in

7 gray is labeled as a virtual model, and what

8 does that mean? So in DOE's market sample,

9 the lowest efficiency product that the DOE

10 could find available on the market was 2.2

11 MEF. And, of course, the standard is

12 currently 2.0 MEF. So the virtual model

13 represents an extrapolation of the results

14 down to the 2.0 level. 

15 So based on this curve, DOE, in a

16 similar fashion, translated the results for

17 each of the four efficiency levels so that the

18 baseline becomes 1.65 MEF J2 and level one,

19 level two, level three are 1.8, 2.0, and 2.2

20 MEF.

21 Any other questions on those

22 translations before we move along? Okay.
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1 So after performing the J1, J2,

2 and other tests, DOE then performed tear3 downs, which is a complete disassembly or

4 reverse engineering of the products, to

5 develop the manufacture or production costs

6 relationships as a function of efficiencies. 

7 And from those tear-downs, DOE creates a

8 detailed bill of materials for each individual

9 product. These bill of materials describe in

10 great detail the individual product components

11 that are used to create the machine, but they

12 also include estimates of materials, labor,

13 capital equipment, and overhead costs

14 associated with producing the equipment.

15 So we won't go into the tear-downs

16 in much detail here. Chapter five of the TSD

17 provides full details on DOE's methodology for

18 tear-downs, as well as the results from this

19 analysis. 

20 MS. GONZALEZ: Yes, hi. This is

21 Amanda with the California IOUS. I just have

22 a question about this analysis. Can you
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1 explain how or to what extent this feeds

2 directly into product conversion costs? Is

3 this, like, 90 percent of what goes into

4 product conversation costs? I guess I'm

5 trying to figure out how much the manufacturer

6 interview gets accounted for. 

7 MR. SUTHERLAND: Nicole, is that

8 actually something you can . . . 

9 MS. BUCCITELLI: The product

10 conversion cost and capital conversion cost

11 used in the manufacturing impact analysis, for

12 the most part, reflect the input from

13 manufacturer interviews more than anything

14 else. 

15 MR. BROOKMAN: Okay. Thank you,

16 Nicole. 

17 MR. SUTHERLAND: Thanks, Nicole. 

18 MS. GONZALEZ: And did you -- this

19 is Amanda with the California IOUs. Were you

20 able to compare those qualitative inputs to

21 the bill of materials and overhead costs

22 associated with these tear-downs just as a
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1 sound check to see if they were in the same

2 order of magnitude? 

3 MR. BROOKMAN: Back to Nicole. 

4 Yes? 

5 MS. BUCCITELLI: Yes, sorry. This

6 is Nicole. First of all, the inputs from

7 manufacturers on their estimated conversion

8 costs were quantitative estimates. And we did

9 make sure that they were consistent with what

10 Tim found in the engineering analysis in terms

11 of what design options corresponded to each

12 TSL, and they were consistent. 

13 MS. GONZALEZ: Okay. Are we going

14 to discuss product conversion cost again, or

15 should we talk about that now? 

16 MS. BUCCITELLI: Yes, we'll

17 discuss it during the manufacturing impact

18 analysis.

19 MS. GONZALEZ: Okay, thank you. 

20 MR. BROOKMAN: John Cymbalsky? 

21 MR. CYMBALSKY: Maybe I can give a

22 little context here. So I think we're
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1 confusing -- the tear-downs, what they do is

2 they basically rip it all apart and price out

3 the components and reverse engineer it back to

4 what the product would cost to manufacture. 

5 Conversion costs are the impact to the

6 manufacturer if we set a different standard

7 for that product, what they would have to do

8 their product lines to convert it to build

9 that new machine.

10 So I don't -- it sounds to me

11 you're comparing two things here that are

12 related but not a one-for-one input there. 

13 But I don't see these surveys they do with the

14 manufacturers because it's NDA stuff. But,

15 generally speaking, the way I understand it is

16 these guys create a bill of materials from

17 their tear-down, and when they go on their

18 interview they actually discuss that bill of

19 materials with the manufacturer and get

20 feedback from them on whether or not these

21 costs are reasonable. So unless I mis22 characterized it, that's what I think a major
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1 part of the MIA is. 

2 MR. BROOKMAN: Nicole, do you wish

3 to comment? 

4 MS. BUCCITELLI: Yes. Just to

5 comment on, follow-up on what you just said,

6 I agree with what John said. The creation of

7 the MPC values, based on the different design

8 options, is related to what manufacturers will

9 see as their capital conversion costs for the

10 corresponding design options. So, you know,

11 in the case here, as you'll see, there's very

12 little conversion costs related to TSL 1 and

13 2 and that's consistent with the MPC

14 incremental costs for those two TSLs.

15 MS. GONZALEZ: Yes. And this is

16 Amanda with the California IOUs. I'm sure

17 we'll come back to this, but, if you would, at

18 least for top-loaders, if you compare the

19 design options between level one and level

20 two, they overlap pretty significantly. I

21 mean, of course, for level two, there are

22 additional design options, but it seems like
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1 the conversion costs associated with those

2 additional design options, it's -- 

3 MS. BUCCITELLI: Are you talking

4 about efficiency level or TSL?

5 MS. GONZALEZ: I'm talking about

6 efficiency level just for -- I'm focused on

7 top-loaders.

8 MS. BUCCITELLI: Okay.

9 MS. GONZALEZ: But we can come

10 back to -- 

11 MS. BUCCITELLI: All right. Are

12 you going to talk about the design options for

13 the different efficiency -- 

14 MR. SUTHERLAND: No, we don't have

15 any slides that speak to that specifically. 

16 So let's -- 

17 MR. BROOKMAN: So, Nicole, do you

18 want to elaborate on that? 

19 MR. SUTHERLAND: Well, actually,

20 maybe -- 

21 MS. GONZALEZ: I can read them out

22 loud for the public record, if that would be
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1 helpful.

2 MR. SUTHERLAND: Yes, we do, we

3 have -- a couple slides down, we'll show the

4 cost efficiency curve for top-loaders. Let's

5 pause when we get to that chart and we can go

6 into a little more detail there. 

7 MS. GONZALEZ: Okay, thank you.

8 MR. SUTHERLAND: Okay. So just at

9 a sort of high level, what DOE does when we

10 create these cost efficiency curves, in this

11 case we essentially created unique curves for

12 each major manufacturer, and then we combine

13 these curves into one using estimates of

14 weighted market share. So for each product

15 class, we come out with one cost efficiency

16 curve, which represents the industry-weighted

17 average.

18 Let's see if -- so let me just

19 show this plot real quick. This is the top20 loading cost efficiency curve. As always, the

21 baseline is defined as zero. For top-loaders,

22 level one also has a zero incremental cost and
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1 level two has $38.89 incremental cost over the

2 baseline. And to sort of explain that in a

3 more general sense, DOE's testing and tear4 downs showed that, at level one, manufacturers

5 use primarily software-related control

6 strategies to achieve that efficiency level

7 over the baseline. So there's no increase in

8 hardware that would result in a higher MPC.

9 To achieve level two, there's a

10 much larger jump. There's a major platform

11 overhaul that's required to achieve that with

12 associated physical hardware components, and

13 so that explains the higher cost to get up to

14 level two. 

15 So I think this would be a good

16 chance now if you have more detailed

17 questions.

18 MR. BROOKMAN: Amanda, please.

19 MS. GONZALEZ: Yes. So it sounds

20 like the -- this is Amanda with the California

21 IOUs. It sounds like the hardware components

22 that you're referring to for level two for
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1 top-loaders would be a spray-rinse, increased

2 capacity to the tub, a low-profile agitator

3 design, and improved motor efficiency. It

4 seems like, with the motor efficiency, that's

5 probably just a selection of a different

6 motor, unless these manufacturers built the

7 motors in-house. And then the low-profile

8 agitator design seems more like an up-front

9 cost because you're going to have an agitator

10 no matter what. So that doesn't seem like

11 that would really change in terms of the

12 production.

13 And I guess if you could comment

14 on how spray-rinse and increased capacity and

15 to the extent agitator design really changed

16 the production, that would be great.

17 MR. SUTHERLAND: Sure. So from a

18 general sense, if I understand your question

19 correctly, it's sort of along the lines of the

20 options that we observed to get to level two,

21 they don't sound like options that would add

22 up to $39 in additional hardware cost. Is
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1 that sort of the gist of the question?

2 MS. GONZALEZ: Yes. More, I guess

3 -- I guess I'm more focused on these

4 conversion costs. I'm referring to Table

5 12.4.11 in the TSD where at efficiency level

6 one it's about $10 million in conversion

7 costs, and that, presumably, is for the

8 software components. And then level two is

9 $50 million. So I guess I just want to know

10 how we got $40 million from improving the

11 agitator and increasing the capacity, as well

12 as spray-rinse. 

13 MR. SUTHERLAND: Sure. So the

14 changes that are required to be made, DOE

15 describes it as sort of a major platform

16 overhaul. So when you're looking at things,

17 such as the motor, in this case, you know, it

18 may not be as simple as just swapping out one

19 motor for another. The way the motor is

20 integrated with the whole agitator assembly,

21 the way the motor itself is integrated with

22 the tub itself can be highly specific to the
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1 type of motor that's chosen. 

2 So in this case, we saw, from the

3 motor standpoint, there's a lot of other

4 changes hardware-wise that occur. You can't

5 just swap out one motor for another. There's

6 a lot of these interfaces that have to change

7 and different components that also are related

8 to that. 

9 Similarly, regardless of the

10 technology, the machines itself are just

11 constructed in a fundamentally different way

12 that requires different material selection,

13 which then means different types of machinery

14 required to make the product, different

15 assembly processes, that type of thing. 

16 So does that answer your question? 

17 MS. GONZALEZ: Yes. This is

18 Amanda with the California IOUs. I guess I

19 would like if you could identify, I guess, the

20 top two most expensive design considerations

21 and conduct sensitivity on that to remove them

22 and evaluate a level without those high-cost
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1 design options, taking one or two out to see

2 what the new INPV would be, that would be

3 something we would like to see. Because with

4 level two, it seems like a slam dunk for the

5 consumer and it also seems like a slam dunk

6 for at least the impacts on the small

7 businesses, like the route operators and the

8 distributors. It seems to be pretty small for

9 those, and it seems like the major barrier of

10 this impact on manufacturers. And since we're

11 leaving a lot of water savings and energy

12 savings on the table, I think it would be

13 worthwhile to conduct sensitivity by

14 potentially removing one of these design

15 options, recalculating what the efficiency

16 level would be, as well as what the impact on

17 the manufacturer would be.

18 MR. SUTHERLAND: That's something

19 DOE can look at. One other thing I would just

20 say is that, in some cases, you actually, from

21 a technical standpoint, can't remove just one

22 design option because some of these design
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1 options are required to work together in order

2 for the machine to work properly. For

3 example, on machines that have the low-profile

4 agitator, you may be required to also have

5 spray-rinse with that because the low-profile

6 agitator requires there to be a much lower

7 quantity of water in the tub in order for the

8 agitator to be able to catch the clothing so

9 that the clothing is not suspended in water

10 and the agitator has nothing to catch. So it

11 may not be possible to separate out some of

12 these individual components. 

13 MS. HARIHARAN: This is Johanna

14 Hariharan. I was just wondering do you have

15 anything specifically in mind that you're

16 asking about? 

17 MS. GONZALEZ: In terms of a

18 sensitivity analysis? 

19 MS. HARIHARAN: Yes, anything

20 that's detrimental or very expensive. 

21 MS. GONZALEZ: So I don't know

22 which of -- there are six design
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1 considerations for level two for top-loaders,

2 and it's hard for me to say which one of those

3 six is potentially the largest contributor to

4 making the jump from a $10 million conversion

5 cost from EL 1, level one, to $50 million

6 conversion cost for level two. And I think

7 that that data is probably something that

8 stakeholders are not privy to. So I would ask

9 DOE to evaluate the possibility of removing

10 one of those six design options and

11 recalculating what the MEF would be, as well

12 as the impact on manufacturers and savings

13 potential. 

14 MR. BROOKMAN: Okay. Edward Osann

15 has a question, and we will unmute him. 

16 Edward, unmute your phone and speak clearly.

17 MR. OSANN: Yes. Do we have a

18 live connection? 

19 MR. BROOKMAN: You sound good. 

20 MR. OSANN: Okay. Apologies for

21 the lag time here. It's a bit hard for those

22 who aren't in the room to get questions in as
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1 the presentation is moving forward. I wanted

2 to confirm in a follow-up to my previous

3 question that DOE has no data upon which to

4 base its conclusion about distinct consumer

5 utility for separate product classes of

6 commercial clothes washers, other than cycle

7 time. Is there any data for any factor other

8 than cycle time? 

9 MR. SUTHERLAND: Well, the issue

10 of top-loading, the issue of axis of loading

11 being a feature just by definition is not

12 something that there would be any data

13 associated with. It's just that, you know,

14 it's determined, GC has determined that that

15 is a feature by definition.

16 MR. OSANN: Of consumer utility? 

17 MS. HARIHARAN: This is Johanna

18 Hariharan. So based on our past analyses of

19 other products, as a matter of practice we

20 look at the consumer, the end user, rather

21 than the person who's selling it or possibly

22 purchasing it. In this case, it would be a
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1 laundromat. We look at the person who is

2 actually going to be using it, and it's a

3 matter of established practice here in GC.

4 MR. BROOKMAN: Thank you, Johanna. 

5 Ed, did that, does that get to your question? 

6 MR. OSANN: Yes, I think the

7 answer was there is no data. 

8 MR. BROOKMAN: Okay, thank you. 

9 MR. SUTHERLAND: Okay. So DOE

10 will take under consideration all of the

11 comments that have been presented here. Thank

12 you. 

13 So now, similarly, we'll look at

14 the front-loading curves. Again, baseline is

15 defined as zero. In this case, level one also

16 is zero. Level two is a small cost, $0.31. 

17 And level three, a jump up to $19.55. 

18 As some sort of discussion around

19 this, so, as I mentioned before, DOE could not

20 find any products available on the market at

21 the baseline level of 1.6. So efficiency

22 level one represents basically an effective
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1 baseline on the market, so that explains the

2 zero dollar incremental cost there. 

3 At efficiency level two, DOE

4 observed that manufacturers, for the most

5 part, use software-related changes to bump the

6 efficiency up from efficiency level one to

7 efficiency level two. And then at efficiency

8 level three, there's a much more significant

9 platform change that's required, including

10 motor upgrades, larger tub size, that sort of

11 thing. And so that explains why the jump is

12 a bit more there for efficiency level three.

13 Any questions on the front-loading

14 curves? Okay.

15 So this comment box is numbered

16 issue nine. I should mention these issue

17 boxes are not in numerical order. They

18 correspond to how they're numbered in the NOPR

19 document. So, in general, DOE requests

20 comment on the assumptions applied in the

21 engineering analysis regarding the baseline

22 efficiency levels and the technology cost
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1 assessment. Although it's not listed here,

2 DOE also invites comment on the higher

3 efficiency levels and the max tech levels, as

4 well. 

5 MR. BROOKMAN: Edward Osann has

6 another question. Edward, you are unmuted. 

7 Speak. 

8 MR. OSANN: Yes. In the case of

9 both the front-loaders and top-loaders where

10 increased tub size is identified as a design

11 option, are those, is it clear that those

12 increases are to sizes that remain within the

13 size thresholds for the respective product

14 categories? 

15 MR. SUTHERLAND: Yes, that's

16 correct. The increase in size remains within

17 the statutory definition of what's considered

18 a covered product.

19 MR. BROOKMAN: Amanda? 

20 MS. GONZALEZ: With respect to the

21 increase in size, if manufacturers are already

22 producing those units with increased sizes or
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1 just if the sizes range across commercially2 available products, then would you agree that

3 there's zero product conversion costs

4 associated with the increased tub size? 

5 MR. SUTHERLAND: If a manufacturer

6 is not producing a product at the increased

7 tub size, then there will be conversion costs

8 because they'll have to change their equipment

9 to get there. If a manufacturer produces

10 across the whole spectrum let's say, and so

11 then they have a product at the max tech level

12 and other efficiency levels, typically there

13 will also be some product conversion costs

14 associated with bringing the lower efficiency

15 products up to whatever new level you're

16 looking because there will be changes required

17 to the assembly line or, you know, things like

18 that. So there typically will still be

19 conversion costs associated with that type of

20 transition. 

21 MS. GONZALEZ: This is Amanda with

22 the California IOUs. I guess I'd like to
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1 clarify my statement and question. It seems

2 that manufacturers probably create different

3 products with different tub sizes to sell to

4 the market, and so if we're only talking about

5 products within a given tub size threshold and

6 they're already making tubs of varying sizes

7 for the market, the higher efficiency products

8 would tend to just shift towards the larger

9 tub sizes that are already being produced for

10 products. 

11 MR. CYMBALSKY: So volume, right? 

12 So they wouldn't be able to produce at the

13 volume that's necessary at the standard level. 

14 I mean, it's not a free cost. I mean, if you

15 told Coke, all right, you produce 3-liter

16 bottles and 2-liter bottles but the

17 relationship is one-third/two-third, they just

18 can't go produce 3-liter Coke bottles at no

19 cost. 

20 MR. SUTHERLAND: The other thing I

21 would mention is that, while capacity in this

22 example may be one route that a manufacturer
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1 chooses to go down to achieve higher

2 efficiency levels, different manufacturers may

3 choose different paths to get there. So it

4 really depends on the manufacturer, depends on

5 sort of the current mix of products that that

6 manufacturer develops. A lot of factors go

7 into that, and that's a lot of what we

8 discussed with the manufacturers under, you

9 know, NDA agreement and all of that

10 information sort of gets rolled into the INPV

11 calculations.

12 MS. GONZALEZ: This is Amanda with

13 the California IOUs. I just have a follow-up

14 question to that remark. For the different

15 efficiency levels, there's different design

16 considerations. Are you saying that, in order

17 to meet that efficiency level, you don't

18 necessarily have to have each of those design

19 considerations? You could pick and choose

20 however you've crafted those design

21 considerations that would meet -- 

22 MR. SUTHERLAND: That's correct. 
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1 When DOE, in the technical support document,

2 lays out sort of the design considerations at

3 each efficiency level, that represents kind of

4 an industry average of what we've observed

5 based on the product samples that we've tested

6 and torn down. So you can think of that as

7 sort of the industry average of what it takes

8 to get from level one to level two to level

9 three. But an individual manufacturer may

10 decide to do something slightly differently. 

11 And with clothes washers, because

12 there are a number of different strategies

13 that you can use to get higher efficiency,

14 some manufacturers may prefer to go down one

15 route, other manufacturers may prefer other

16 strategies. So it can differ by manufacturer

17 how they choose, how they decide they want to

18 get there. 

19 MS. GONZALEZ: This is Amanda with

20 the California IOUs. Thank you. I guess I

21 still have questions about how that would

22 impact conversion costs. But if, Nicole, you
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1 think it makes sense for me just to wait on

2 those questions until we get to that section,

3 that's fine.

4 MS. BUCCITELLI: Yes, I mean, I'd

5 just comment that we assume that manufacturers

6 are factoring, you know, the choices that they

7 are thinking about making in order to comply

8 with standards in the estimates that they give

9 us. So, you know, we work with those

10 estimates. 

11 MR. BROOKMAN: Yes, Johanna? 

12 MS. HARIHARAN: This is Johanna

13 Hariharan. We have a comment from a webinar

14 from Joanna Mauer, and she says, "In the 2010

15 final rule, DOE said that access without

16 stooping is not a consumer utility that would

17 warrant the definition of separate equipment

18 classes. Has DOE changed their view on this?"

19 and I believe Joanna is referring to John's

20 previous example, illustrative example about

21 stooping. He did not mean that this is the

22 only thing we considered, and what we meant to
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1 say was that if this was the only issue,

2 stooping or not, then that wouldn't warrant a

3 different product class. 

4 So this is just one issue. There

5 are other things, like cycle times and many

6 other things. And we don't even look at only

7 utility to the consumer. We look at other

8 things. So thanks for your comment, but this

9 is not the only thing that we considered. 

10 MR. BROOKMAN: Okay. Thank you,

11 Johanna. 

12 MR. SUTHERLAND: Okay. 

13 MS. GONZALEZ: This is Amanda with

14 the California IOUs. Do you mind expanding on

15 the other things that you did consider for

16 commercial clothes washers? I know the

17 advocates on the line would appreciate that. 

18 MS. HARIHARAN: So as I mentioned,

19 we did look at cycle time in addition. And I

20 would have to get back to you on other things

21 that we did consider, which I'd be happy to do

22 so after the break. 
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1 MS. GONZALEZ: This is Amanda with

2 the California IOUs. With respect to cycle

3 time, did DOE factor in the fact that with the

4 front-loaders, if it's able to get more water

5 out of the clothing, that the dryer time would

6 actually be shorter and, thus, the overall

7 cycle time associated with the consumer

8 waiting at a laundry mat would either be the

9 same or less? 

10 MS. HARIHARAN: I would have to

11 get back to you on that. I am not sure.

12 MS. GONZALEZ: Okay, thanks. 

13 MR. SUTHERLAND: Okay. This is

14 the last slide on the engineering analysis. 

15 So from people in the room or people on the

16 line, are there any further questions related

17 to market and tech, engineering analysis? 

18 Okay. If not, we will turn it

19 over to Maithili Iyer, and she will talk

20 through the next phase of the analysis. 

21 MS. IYER: Thank you, Tim. My

22 name is Maithili Iyer. I'm with the Lawrence
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1 Berkeley National Laboratory. In the next

2 hour or so, I'll be covering analysis that

3 sort of follows the engineering analysis and

4 looks at the economics, the consumer economics

5 and economics at the national level. 

6 As part of the consumer economics,

7 we'll be looking at life-cycle cost analysis

8 and payback period calculations. I will begin

9 with two of the key inputs into the life-cycle

10 cost analysis. Those two are markups analysis

11 and the energy and water use characterization.

12 So we will begin with markups. 

13 The purpose of the markups is to convert the

14 manufacturer price to the final consumer

15 retail price. So for doing that, DOE first

16 establishes the distribution channels that the

17 products go through. I think Tim spent some

18 time going over the distribution channels.

19 This particular view graph that

20 you see on top was developed by the Consortium

21 for Energy Efficiency, and they determined

22 that about 93 percent of the products go
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1 through distributors to laundromats and

2 through route operators to multi-family

3 housing. So laundromats and multi-family

4 housing were sort of the two main applications

5 that DOE was looking at since most of the

6 units are used in these two locations. 

7 And since distributors and route

8 operators are the two entities between the

9 manufacturer and the final consumer, DOE

10 developed the markups for distributors and

11 assumed that the route operators would

12 probably experience the same kind of profits

13 and markups. So for developing the markups,

14 DOE looked at two components: the baseline

15 markup and an incremental markup.

16 Baseline markups typically include

17 pretty much everything that a product goes

18 through, from the manufacturer to the final

19 user, whatever the distributor has to go

20 through in terms of expenses or profits, any

21 kind of overheads, for a product that sort of

22 meets the minimum efficiency standard, a
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1 product that's the baseline product. So that

2 sort of constitutes the baseline markup.

3 The incremental markup, on the

4 other hand, has costs that are specific to

5 selling a more efficient product. So these

6 tend to be smaller typically. In our case, we

7 actually came up with a baseline markup of

8 1.96 and an incremental markup of 1.62. These

9 are the overall markups, which includes the

10 manufacturer markups.

11 That sort of concludes the markups

12 analysis. If there are any questions, I'll be

13 happy to take. 

14 Okay. So we move on to energy and

15 water use characterization. This is the

16 second key input into the LCC and the payback

17 period analysis. 

18 Energy and water use sort of

19 determine how much operating cost the consumer

20 experiences over the life of the equipment. 

21 For determining energy and water use, DOE

22 looked at the per-cycle energy use and
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1 multiplied that by the number of cycles that

2 any application will experience during the

3 year. 

4 Since we're looking at two key

5 application areas, the laundromats and the

6 multi-family housing, DOE looked at studies,

7 and did a very comprehensive literature review

8 to find studies that look at the number of

9 cycles that these applications or application

10 areas face. DOE found about eight studies

11 that look at multi-family housing and about

12 six studies that look at laundromats.

13 Based on that -- I'm sorry I

14 didn't move the slide. Based on that, DOE

15 found that, on average, multi-family housing,

16 the common-area laundry in multi-family

17 housing has an average of three cycles per

18 day, which ranges between 1.5 to 4.3. And in

19 the case of laundromats, the average was

20 around 4.1 and it ranges between 2.8 to 6.0. 

21 The ranges are kind of important because they

22 sort of set the variability that we experience
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1 when we consider different uses. 

2 This is a view graph that just

3 explains the methodology that we followed for

4 calculating the energy and water use. One of

5 the things that is to be noted here is that

6 the test procedure sets the number of cycles

7 based on residential usage. And because we're

8 looking at commercial clothes washers, we

9 needed to actually come up with a usage factor

10 that represented commercial clothes washers in

11 the field, and that's sort of why we actually

12 established the number of cycles per day

13 pertaining to multi-family and the laundromat

14 applications.

15 The equation on the right is taken

16 out of the test procedure, and there are three

17 components to energy use here: the water18 heating energy, the machine energy, and the

19 dryer energy. The machine energy is, of

20 course, typically, the motor energy to rotate

21 the agitator or the wash basket. We take the

22 per-cycle energy use and multiply that by the
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1 number of cycles to get, for any application

2 type, the annual energy use. 

3 At this point, here's a comment. 

4 And we actually would request any comment that

5 you may have on usage specifically about on6 premise laundry. In the last meeting, there

7 were requests that we actually characterize

8 this usage, and DOE did not find any studies

9 that actually looked into that. Even though

10 this is a very small market, extremely small,

11 we assumed that the usage is kind of similar. 

12 So any new information that anybody could

13 provide would be useful.

14 That sort of concludes the markups

15 and energy use for now. Should I continue, or

16 shall we break? Continue? 

17 MS. GONZALEZ: I have a question I

18 meant to ask. This is Amanda with the

19 California IOUs. The studies that you used

20 for the basis of the number of cycles per day

21 -- 

22 MS. IYER: Yes. 
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1 MS. GONZALEZ: -- how old are

2 those studies?

3 MS. IYER: I think the most recent

4 one is from 2009.

5 MS. GONZALEZ: Okay, thanks.

6 MS. IYER: Sure. Okay. So moving

7 on to life-cycle cost and payback period

8 analysis. The purpose of the life-cycle cost

9 analysis calculation is to determine how much

10 a user would have to spend in terms of

11 purchasing and operating the equipment over

12 the life of the equipment and how would that

13 compare at a different efficiency level

14 compared to the baseline product. 

15 So basically, it includes the

16 purchase expense, which we call is the first

17 cost, and the operating cost over the life,

18 over the entire life of the equipment. DOE

19 discounts the future operating costs to the

20 time of purchase and adds it up over the

21 lifetime to come up with the life-cycle cost.

22 The life-cycle cost calculations
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1 are implemented in Excel spreadsheet. The

2 same spreadsheet also calculates the payback

3 period. Payback period is typically the

4 amount of time it takes for a user to recover

5 any increase in expense they would incur from

6 moving to a higher-efficiency product through

7 a reduction in operating cost. 

8 So recognizing that there are, you

9 know, we're trying to represent pretty much

10 all the consumers, and there are a lot of

11 uncertainties and variability associated with

12 the inputs that go into the life-cycle cost

13 calculation, DOE used the Monte Carlo

14 simulation approach to calculate the life15 cycle costs and used probability distributions

16 to characterize variability and uncertainty. 

17 The life-cycle costs that are calculated are

18 actually performed for every single efficiency

19 level for each product category or product

20 class that is considered in the analysis.

21 One of the things that is critical

22 in the analysis is to sort of take into
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1 account the percentage of consumers that are

2 already buying equipment that are at a higher

3 efficiency level so that we do not

4 overestimate the benefits of moving to a

5 higher-efficiency level. So DOE utilized the

6 base case efficiency distribution, which was

7 developed on the basis of data submitted by

8 AHAM, to characterize the life-cycle cost

9 savings in comparison to the base case that

10 was there.

11 Among the other inputs that go

12 into the LCC analysis, we have energy and

13 water prices. These, along with energy and

14 water consumption, complete the operating

15 expense.

16 The electricity prices were taken

17 from EIA's Form 861. EIA's Form 861 publishes

18 data on revenues and sales for all electric

19 utilities in the country. DOE weighted the

20 population across the different states that

21 these utilities have to come up with weighted

22 average prices for the 27 states and group of
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1 states for the country, and this is consistent

2 with the 2009 RECS in terms of regional

3 variability. And this is how DOE established

4 regional variability across consumers.

5 For natural gas, we used EIA's

6 Natural Gas Monthly. This, again, publishes

7 prices for all the states, and we used the

8 population to come up with a weighted average

9 for 27 states and group of states.

10 For water and wastewater prices,

11 DOE utilized the Water and Wastewater Rate

12 Survey published by Raftelis Consultants and

13 the American Water Works Association. This

14 survey covers about 216 water and about 153

15 wastewater utilities. And since these number

16 of utilities were not large enough for us to

17 characterize or come up with a large regional

18 set of prices, we came up with average prices

19 for the four census regions to establish

20 regional variability for water prices.

21 For forecasting the water and

22 energy prices into the future, DOE used the
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1 2013 AEO for energy prices. And the Bureau of

2 Labor Statistics' CPI Index for water and

3 sewerage for forecasting the water prices.

4 Okay. The other set of inputs to

5 the LCC analysis include installation costs,

6 repair and maintenance costs, discount rates,

7 and equipment lifetime. 

8 DOE set the base cost at $223. 

9 This is based on the RS Means mechanical cost

10 data from 2013. For repair and maintenance,

11 DOE assumed it to be sort of related to the

12 retail price. It was taken as one-half of the

13 equipment price divided by its lifetime. So

14 there was some correlation with what happens

15 when the price goes up with an increase in

16 efficiency.

17 For discount rates, which are,

18 again, used to bring the operating cost

19 expenses to present value, DOE basically

20 looked at finance costs or the financing

21 method that consumers may choose while buying

22 the equipment, whether it is through debt that
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1 is incurred while purchasing the equipment or

2 the opportunity cost of using equity to

3 purchase the equipment. So we basically used

4 the weighted average capital cost that the

5 firms experience to establish the interest

6 rate that can be used as discount rate. The

7 weighted average real discount rate was found

8 to be around 5.7 percent. 

9 MS. GONZALEZ: I have a question. 

10 This is Amanda with the California IOUs. Can

11 you explain the basis for the repair and

12 maintenance costs not specific to commercial

13 clothes washers or -- 

14 MS. IYER: This is not specific to

15 commercial clothes washers. This is something

16 that has been used in other rulemakings, and

17 DOE has found there to be a basis for this. 

18 In the last rulemaking, manufacturers talked

19 about this being, you know, something that

20 could be considered, and it was developed

21 during that time. And we did not get any

22 feedback from anybody saying that this wasn't
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1 the case, so we continued to use that. 

2 MS. GONZALEZ: Okay. This is

3 Amanda with the California IOUs. The repair

4 and maintenance cost is applied to each of

5 the, to the baseline in addition to each of

6 the efficiency levels? 

7 MS. IYER: Yes, yes.

8 MS. GONZALEZ: And then I had an

9 additional question about the installation

10 cost.

11 MS. IYER: Yes?

12 MS. GONZALEZ: That's $223 for

13 front and top-loaders because it's just cost

14 to install? 

15 MS. IYER: Yes.

16 MS. GONZALEZ: Okay. And what was

17 that based on? 

18 MS. IYER: RS Means mechanical

19 cost data. So regarding equipment lifetime,

20 we looked at, you know, several sources for

21 this, including the Appliance Magazine and the

22 past technical support documents, and came up
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1 with an average of 11.3 for multi-family, the

2 common laundry and multi-family buildings, and

3 7.1 for laundromats. And we used the lower

4 and the upper bound that we found on the

5 lifetimes to characterize the distribution

6 using a Weibull function. 

7 I talked about the importance of

8 the base case efficiency distribution in

9 ensuring that DOE does not overstate the

10 benefits, nor understate the benefits that can

11 be experienced moving to a higher efficiency

12 level. So the table here actually represents

13 what we got in terms of data from AHAM. The

14 left side is the top-loading, and the right

15 side of the table presents the front-loading. 

16 The horizontal rows are the different levels,

17 and the market share sort of shows you that,

18 in the case of top-loading, most of the market

19 is currently at baseline. There is hardly any

20 market at levels one and two, while for front21 loading it's more evenly distributed with

22 pretty much no market share at the max tech
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1 level. So, again, this is the basis for us to

2 evaluate any new standard. 

3 Here is a table that sort of

4 presents the analysis for a particular

5 scenario. We're looking at efficiency level

6 one for top-loaders and level two for front7 loaders. The column, the net benefits

8 compares well with the market share efficiency

9 distribution that I showed you a while ago. 

10 You'll see that, for both applications for

11 top-loading, about 99 percent of the consumers

12 benefit from moving to level one, while about

13 61 percent of front-loading market, or the

14 consumers benefit from moving to level two. 

15 And, you know, the payback period, of course,

16 is zero since you'll hardly have any cost

17 increase at this level. 

18 So we're coming up for comments

19 here. This one is pertaining to any new

20 information that we can get on the lifetime

21 for both applications. And this one is

22 specifically for repair and maintenance, so if
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1 you have any data or any information that sort

2 of suggests that what we are assuming is not

3 the right thing to do, please feel free to do

4 so.

5 MS. GONZALEZ: This is Amanda with

6 the California IOUs. I just wanted to comment

7 that, under the life-cycle cost analysis and

8 the payback period analysis, that the results

9 for the analysis for level two for top-loaders

10 as presented in the technical support document

11 were overwhelmingly favorable to consumers, as

12 well. 

13 MR. BROOKMAN: Thank you. 

14 MS. IYER: Okay. So moving on. 

15 Okay. So we now get into shipments analysis

16 and the national impact analysis. 

17 MR. CYMBALSKY: And then we'll

18 take a break just so that one can have the

19 right frame of mind. We'll gear up for the

20 MIA because I think that's where -- 

21 MS. IYER: All the questions are

22 going to be. Well, the purpose of the
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1 shipments analysis is pretty straightforward. 

2 It is to actually forecast shipments during

3 the analysis period, which becomes an integral

4 input into the MIA, and it also becomes an

5 integral input into the national impact

6 analysis. The shipments analysis actually

7 produces not just the shipments data, but it

8 maintains the stock of the entire commercial

9 clothes washer population and looks at the

10 different vintages so that we are able to

11 attribute the relevant energy and water use

12 factors to the stock while considering the

13 total energy consumption. 

14 The national impact analysis

15 actually tells us how much energy can be saved

16 by moving to a higher-efficiency level at the

17 national level. And we also look at the

18 economic impact at the national level, which

19 is determined by the NPV of the operating cost

20 savings. 

21 MR. CYMBALSKY: If we could pause

22 there, Joanna Mauer has a question. Joanna,
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1 you are unmuted.

2 MS. MAUER: Can you hear me?

3 MR. CYMBALSKY: Yes, you sound

4 good.

5 MS. MAUER: Great. So I had a

6 question about the energy and water use

7 analysis. It looks like for front-loaders at

8 efficiency levels three that total water use

9 and especially hot water use are significantly

10 higher than at level two, and I was just

11 wondering if you could explain why we see that

12 result? 

13 MS. IYER: Is that something, Tim,

14 you want to take? 

15 MR. SUTHERLAND: Yes, sure. The

16 result -- this is Tim Sutherland from Navigant

17 Consulting. Part of that result may be that

18 manufacturers choose different strategies to

19 reach one efficiency level over another. So,

20 for example, one manufacturer may decide, to

21 get to the next tech level, I'm going to just

22 increase my spin speeds or another
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1 manufacturer may decide I'm going to adjust my

2 water levels, that type of thing. 

3 So it's possible, for the sample

4 that DOE looked at, that differences like that

5 that occur in the relative amounts of hot

6 water energy versus machine electrical energy

7 versus drying energy, that may explain some of

8 that. The other thing that factors in here at

9 that level is the issue of the capacity. The

10 larger machine at that level, there's a

11 presumption that that machine will have larger

12 load sizes that go into it. And so as used by

13 consumers, that machine, from sort of a

14 nominal energy perspective, not normalized for

15 capacity or normalized for load size, on a

16 per-cycle basis, that machine may also use

17 more energy than the level just below it.

18 Now, DOE did do some correcting

19 for that, which Maithili will be able to

20 describe in more detail. But probably I would

21 say those two factors together would explain

22 most of what we're seeing there. 
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1 MR. BROOKMAN: Thank you. 

2 MS. MAUER: Thank you. Yes, I'm

3 interested in hearing a little bit more about

4 the correction for the increase in capacity. 

5 MS. IYER: Sure, sure. So we

6 wanted to make sure that, when we were

7 conducting the LCC analysis, we were comparing

8 apples to apples. So we normalized the

9 increased tub volume with the baseline model. 

10 Now, in order to do that there's a

11 question here about whether or not, just

12 because the consumer sees an increase in

13 volume, they're going to completely stuff it

14 in or they're not going to. It's not clear

15 that we can actually say that 100 percent of

16 all the consumers are going to fill it

17 completely. 

18 So because we did not have the

19 data to know what percentage the consumers

20 actually will make use of the increased tub

21 size, we gave a 50-percent probability for

22 them filling it completely and a 50-percent
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1 probability for them not filling it

2 completely, and we sort of adjusted it that

3 way. Does that answer your question? 

4 MS. MAUER: So does that mean that

5 the analysis is implicitly assuming that more

6 total laundry is being washed at this

7 efficiency level? 

8 MS. IYER: No. So to tell you --

9 so when I say they will fill it completely,

10 we're changing the total number of cycles per

11 year. So depending on how many, you know, how

12 you're talking about the loading, the number

13 of cycles will drop down, you know, in

14 response to, you know, greater filling of the

15 tub. 

16 MS. MAUER: Oh, so you have, when

17 you've assumed that in 50 percent of cases

18 consumers will fill the machine so they're

19 washing more laundry with the higher-capacity

20 machine, you are reducing the number of cycles

21 per year?

22 MS. IYER: Right, right. I mean,
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1 in response to this, you know, the total load

2 that is actually going through these washes

3 remains the same, but, yes, the number of

4 cycles drops. You're right. 

5 MS. MAUER: So you have taken into

6 account fewer cycles --

7 MS. IYER: Yes.

8 MS. MAUER: -- in that case in the

9 analysis?

10 MS. IYER: That's right.

11 MS. MAUER: Okay, thank you. 

12 MR. BROOKMAN: Amanda? 

13 MS. GONZALEZ: This is Amanda with

14 the California IOUs. I have questions about

15 the assumption of the consumers, 50 percent of

16 consumers filling the tub to capacity. Are

17 you saying that, well, with that assumption,

18 that if you don't fill it to capacity that

19 you're using more energy for like a smaller

20 amount of load? I guess I don't really

21 understand the use of the 50 percent.

22 MS. IYER: Yes. The 50 percent
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1 is, basically, when you actually have no data,

2 you have to assign a probability of its

3 occurrence. And there are two possibilities,

4 so we assigned equal weight to both the

5 occurrences. That's all it means.

6 MS. GONZALEZ: I guess I can only

7 provide anecdotal experience, but if you walk

8 into a laundromat, there are different tub

9 sizes, and, typically, you have to pay more

10 for the larger tub size. So it's to

11 consumers' advantage to actually just choose

12 the machine that would fit their load, as

13 opposed to choosing a large machine and

14 filling it 50 percent of the way. And in

15 multi-use cases, there's typically a couple,

16 maybe not as many units as in a laundromat,

17 but I think you still have some variety. And

18 so you would suspect some similar behavior. 

19 So -- 

20 MS. IYER: Right. No, you're

21 right about that. Laundromats are a smaller

22 market than the multi-family. And if we had
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1 data, we would actually very accurately

2 characterize exactly what that percentage

3 would be, but, you know, since we don't have

4 the data, this is the best we can do. So we

5 had to sort of stick with something. It's an

6 assumption, and we would welcome any new data

7 that will make the assumption better. 

8 MR. CYMBALSKY: So I have a

9 comment. So if you walk into the laundromat

10 and all the smaller capacities are taken, do

11 you sit and wait or do you just use the one

12 available? I don't do this. You have an

13 anecdote, so I'll ask you. Would you wait

14 around, or would you just use the bigger -- 

15 MS. GONZALEZ: Great question. 

16 This is Amanda with the California IOUs. I

17 don't have a great answer for that. In my

18 experience, I've never had that issue so . .

19 . 

20 MR. CYMBALSKY: I just think it

21 may be a random event that we're trying to

22 characterize here. I'd just be careful about
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1 putting too much -- or trying to get data

2 around this. It would be great if we had it

3 and, obviously, we'll accept it. But I think

4 the circumstances around this are a little

5 random. 

6 MR. BROOKMAN: Thank you, John. 

7 MS. IYER: Okay. So we're moving

8 on. So the focus period for this analysis is

9 when the standard kicks in, which is 2018, to

10 30 years out, which is 2047. And DOE

11 developed its shipments model to forecast

12 shipments for this period. We took into

13 account two market segments while developing

14 the model: the new construction which

15 basically is triggered by multi-housing starts

16 and replacements which is basically driven by

17 retirement of older equipment. 

18 In order to calibrate our

19 shipments model, we used historical data,

20 basically developed a backcast through our

21 shipments model, and used the historical data

22 to calibrate it. And the discrepancy that we
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1 found was used as the calibration point, and

2 this sort of gave rise to a small segment,

3 what we call as non-replacements, which is

4 basically those units that are retired but not

5 replaced.

6 We found evidence that these were

7 probably coming from conversions of rental

8 properties into condominiums and townhomes. 

9 And we found data that kind of supported that

10 assumption, so, you know, we have that as a

11 calibration point in the model.

12 Once we forecast the base case

13 shipments, we calculate the shipments for the

14 standards case. And in this scenario, we try

15 to capture any price impact that we may have

16 on the shipments. So DOE looked at past sales 

17 and price data to see if we could actually

18 estimate a price elasticity to the shipments,

19 and we found that the two, the prices and the

20 shipments for commercial clothes washer

21 shipments, are very weakly correlated. We

22 could not find any evidence to support that
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1 there was actually going to be an impact in

2 the overall shipments. And so our default

3 case was to keep the shipments the same as the

4 base case shipments. 

5 However, while looking at the

6 market share of front-loading and top-loading

7 units, we implemented a cross-price

8 elasticity. This particular view graph shows

9 you what's happening with the market share of

10 front-loaders and top-loaders. The red line

11 is the top-loading, and the blue line is the

12 front-loading. And you see that from a 40-

13 percent market share today, front-loading is

14 moving up to about 48 percent during the

15 analysis period. 

16 The triangles and the square boxes

17 that you see is the data that we got from

18 AHAM, and we basically based our forecast on

19 that. And we looked at product movement of

20 the two, in order to establish the cross-price

21 elasticity. We did not have enough data from

22 commercial clothes washer units, so we had to
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1 resort to using the residential clothes washer

2 data for this. And DOE set the cross-price

3 elasticity at 1.07, which basically means, for

4 a 10-percent increase in the price of front5 loading washers, you'll see a 10.7 percent

6 increase in the top-loading market share or

7 vice versa.

8 This particular graph is actually

9 for top-loaders at efficiency level one and

10 front-loaders at efficiency level two. And

11 you don't see a difference in the standards

12 case because there is really not price

13 differential and, therefore, no impact in the

14 market share.

15 Here we have the results for the

16 two product categories. The left one presents

17 the top-loading washers and the right one the

18 front-loading washers. You will see that the

19 base case and two other, the yellow and the

20 green lines, are sort of overlapping. These

21 are actually the -- there's really no change

22 between the base case and those two because
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1 that's the level where you don't see a price

2 difference. It is the orange line, which is

3 basically the max tech level, that you see a

4 shift in the market share between the two.

5 MS. GONZALEZ: This is Amanda with

6 the California IOUs. I apologize. Do you

7 mind going back to slide 71 for a second? I'm

8 just trying to understand this figure here. 

9 So it looks like, over time, we see an

10 increase in the market share for front-loaders

11 and a decrease in the market share for top12 loaders.

13 MS. IYER: That's right.

14 MS. GONZALEZ: They are

15 approximately --

16 MS. IYER: It goes from 40 to 48,

17 yes.

18 MS. GONZALEZ: Can you comment on

19 sort of that trend? Because it would sort of

20 seem to imply that the market becomes, at some

21 point, indifferent between a front-loader and

22 a top-loader, which suggests that the
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1 potential utility between the two is

2 negligible in the market size.

3 MS. IYER: This is basically based

4 primarily on the data that we got from AHAM. 

5 And, you know, this is based on a fit, and we

6 have seen the market moving in this direction. 

7 So that's pretty much what it is based on.

8 MS. GONZALEZ: Okay. I guess I

9 have a question then for DOE. If at some

10 point, if not in this rulemaking, in a future

11 rulemaking, if you would at some point

12 reconsider combining product classes on the

13 basis that the market doesn't seem to have a

14 preference between the two? 

15 MS. HARIHARAN: This is Johanna

16 Hariharan, DOE. We will take your comment

17 into consideration. However, we cannot

18 violate the statute at this point.

19 MS. IYER: Okay. Moving on to

20 national impacts analysis, so DOE calculates

21 the national energy savings accruing from the

22 new shipments that occur during the analysis
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1 period of 2018 to 2047 and takes into account

2 all the energy savings that can be had until

3 the last unit shipped in that period dies out. 

4 The NPV is actually based on, is calculated

5 both at 3 and 7 percent discount rates and is

6 based on the operating cost savings. 

7

8 We talked about the base case

9 efficiency distribution earlier, and I would

10 come back to that because DOE wants to make

11 sure that we accurately represent whatever is

12 happening currently in the market. So there

13 is a base case efficiency distribution. This

14 table shows that for front-loading washers. 

15 Where we see base case, you'll see that we see

16 the same market share that we showed a few

17 slides ago and at each of the efficiency

18 levels. This sort of helps us determine the

19 shipment weighted efficiency factor, which is

20 at 1.83 for front-loaders in the base case. 

21 And in the standards case, DOE implemented a

22 roll-up scenario, which basically means when
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1 you have efficiency levels, if the baseline is

2 here and the DOE sets the standard over here,

3 all of the levels below that roll up to that

4 level at which the standard is set, but the

5 rest of the market remains the same. And the

6 other scenarios of where the standard might be

7 set sort of gives you the shipment weighted

8 efficiency for those levels. This is

9 important because it kind of determines what

10 energy and water use is attributed to the

11 stock efficiency when you move forward in the

12 calculations. 

13 We've come up for a comment here. 

14 This is basically to request any new data on

15 base case efficiency distribution and shipment

16 weighted data. Yes? 

17 MS. CLEARY: Jennifer Cleary with

18 AHAM. I just want to go back to Amanda's

19 comment about the slide 71. I'm not sure if

20 I'm understanding your comment correctly, but

21 it seems like what you were suggesting is that

22 if the market were to get to 50/50 in terms of
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1 market share for each type of product that

2 that would demonstrate no market preference. 

3 Is that what you were suggesting? 

4 MS. GONZALEZ: It doesn't

5 necessarily demonstrate no market preference,

6 but it does seem to indicate that -- it

7 sounded like previously that there might be

8 negative utility associated with the front9 loaders, which one would then suspect that you

10 would see less of them on the market. But

11 given that there's increasing market

12 penetration of it, it seems to indicate that

13 there's either consumer or route operator

14 distributor increasing preference for them. 

15 MS. CLEARY: Okay. So I can see

16 that, but I think what you seem to be

17 suggesting in your question to DOE was that if

18 it reached 50/50 then that would mean one

19 product class, and I think I disagree with

20 that because if there's still both types of

21 products on the market, especially in equal

22 amounts, then that still demonstrates that
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1 there's consumer utility in each one and that

2 the differences between the two product

3 classes still would exist. 

4 So I think that the premises upon

5 which DOE has made its decision for product

6 classes would still exist in that scenario,

7 and so I would agree with DOE that they should

8 maintain the two product classes in that

9 instance and that they don't have the

10 authority to violate the statute in any case. 

11 So, overall, AHAM is supportive of the two

12 product classes now, as well as in the future. 

13 MR. BROOKMAN: Thank you, Jen. 

14 John Cymbalsky? 

15 MR. CYMBALSKY: I was just doing a

16 little web searching here. So it appears that

17 in Europe they actually sell horizontal access

18 machines with top-loading capability. Not

19 capability. It's a top-loader with a

20 horizontal axis drum in it. To me, that means

21 something. I'm not going to say what it

22 means, but, apparently, they make these, they
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1 sell them, and there must be a reason why they

2 do that. Thank you. 

3 MS. IYER: Okay. Two more

4 comments. Anything on rebound effect and any

5 new data to better characterize cross-price

6 elasticity or elasticity. 

7 So should we cover Trial Standard

8 Levels now and then break? 

9 MR. CYMBALSKY: Let's go right up

10 until -- 

11 MS. IYER: Okay, all right. So

12 this is going to be, basically, a discussion

13 of how DOE constructed the Trial Standard

14 Levels. As we know, DOE likes to set

15 standards for a particular Trial Standard

16 Level, as opposed to a product class.

17 So DOE picked Trial Standard Level

18 to -- 

19 MR. BROOKMAN: Let's pause just

20 for a moment. Ed, you have a question, and I

21 think this relates to what we were discussing

22 previously. Ed, please go ahead. 
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1 MR. OSANN: Yes. I was trying to

2 get a question in while we were still on the

3 shipments discussion. 

4 MR. BROOKMAN: Yes. Please

5 proceed.

6 MR. OSANN: Earlier, there was a

7 depiction of market share of major

8 manufacturers, and major manufacturers held an

9 estimated 90 percent of the total market and

10 smaller manufacturers in the remaining 10

11 percent. Does DOE have information on the

12 market share of the two separate product

13 categories that are proposed to be maintained?

14 MR. BROOKMAN: Tim? 

15 MR. SUTHERLAND: This is Tim

16 Sutherland from Navigant. And if I understand

17 your question correctly, are you asking does

18 DOE have sort of a breakdown of the market

19 share but by product class? 

20 MR. OSANN: Yes. 

21 MR. SUTHERLAND: We have estimates

22 of that through our discussions with
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1 manufacturers, but, since that information is

2 proprietary, DOE is not able to publish that. 

3 But that would be information that DOE would

4 seek from AHAM, as well, in a more public

5 fashion. 

6 MR. OSANN: Right. Can you find a

7 way to get estimates of that into the record?

8 MR. SUTHERLAND: I'm looking at

9 Jennifer Cleary from AHAM. I think we would

10 need to either -- DOE would need to find a

11 published source of that information or one of

12 the stakeholders, be it AHAM or an individual

13 manufacturer, would need to submit that for

14 the record, I think, in order for DOE to sort

15 of get that information into the rulemaking

16 record for this rulemaking. 

17 MR. BROOKMAN: Okay, thank you. 

18 MS. IYER: Okay. So to assemble

19 the Trial Standard Levels, DOE picked TSL 1 as

20 the level that sort of represents the least

21 amount of change in design from both the

22 product classes. TSL level two is set as an
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1 intermediate level between levels one and

2 three. And TSL level three is set at max

3 tech. I think this table will describe it

4 more fully. 

5 So we are characterizing the

6 baseline for front-loaders and top-loaders

7 both at efficiency level zero. TSL 1 actually

8 has efficiency levels one for both front9 loaders and top-loaders. TSL 2 has efficiency

10 level two for front-loaders and level one for

11 top-loaders. And TSL 3 has levels three for

12 front-loaders and level two for top-loaders.

13 MS. GONZALEZ: This is Amanda with

14 the California IOUs. I was wondering if DOE

15 would be open to evaluating a new TSL level,

16 which would be level two for top-loaders and

17 level two for front-loaders.

18 MR. BROOKMAN: Johanna? 

19 MS. GONZALEZ: I guess I can add

20 justification. The -- 

21 MR. SUTHERLAND: I think, at this

22 point, we could just take that comment into
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1 consideration.

2 MS. GONZALEZ: Okay. The reason

3 that I ask for that additional analysis is

4 that the level two for top-loaders yielded

5 significantly larger national energy savings

6 and national water savings while maintaining

7 positive net present value for consumers and

8 lower impact on small businesses.

9 MR. BROOKMAN: Okay. Thank you,

10 Amanda. 

11 MS. IYER: I think that sort of

12 concludes -- okay. I have just one more slide

13 which sort of provides the summary of NIA

14 results. You would see that the savings in

15 quads based on the 30-year shipments varies

16 from 0.1 to 0.12, going from TSL 1 to 3. And

17 the NPV at 7 percent discount rate goes from

18 310 million to 850 million. And you'll see

19 that the shipments forecast sort of shows you

20 how there is a slight shift in the market

21 share between front and top at the level

22 three.
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1 MR. BROOKMAN: Questions here? 

2 Let's take a break. It's 11:00. Let's break

3 for 15 minutes. This means we will not be

4 taking a lunch break. We're already through

5 slides 78, so we'll just press on until we're

6 finished, which is not that many more slides

7 altogether. Eleven o'clock now. We'll resume

8 at 11:15. 

9 Please make sure and wear this

10 badge visible in the building. There are

11 restrooms on both ends of the halls, and

12 there's a coffee shop down on the ground

13 floor. Go down to the ground floor and go

14 that way and that's where it is. 

15 Thanks. And we'll see you back

16 here in 15 minutes. 

17 (Whereupon, the foregoing matter

18 went off the record at 11:05 a.m. and went

19 back on the record at 11:20 a.m.)

20 MR. BROOKMAN: Let's resume. 

21 Nicole? 

22 MS. BUCCITELLI: All right. My
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1 name is Nicole Buccitelli, and I'm going to

2 present the manufacturer impact analysis. 

3 All right. As mentioned in the

4 beginning of the presentation today, EPCA

5 specifies that DOE must consider seven factors

6 in determining whether new or amended

7 standards are economically justified. The MIA

8 assesses the economic impact of new or amended

9 standards on manufacturers and the impact on

10 competition within the industry, both of which

11 are among the specific factors DOE must

12 consider in determining whether a proposed

13 standard is economically justified or not.

14 Additionally, in the MIA, DOE

15 identifies and estimates impacts on

16 manufacturer subgroups that may be

17 disproportionately affected by proposed

18 standards. DOE also assesses impacts on

19 direct employment, manufacturing capacity, and

20 cumulative regulatory burdens.

21 In terms of the methodology used

22 in MIA, DOE employs both quantitative and
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1 qualitative analysis methods. The cornerstone

2 of the MIA is the government regulatory impact

3 model, which is also known as the GRIM, which

4 is used to analyze industry cash flows and

5 industry net present value. Information

6 gathered during manufacturer interviews is

7 used to refine inputs to the GRIM and to

8 inform subgroup analyses and qualitative

9 topics.

10 In a bit more detail, the MIA can

11 be broken down into three phases of analysis. 

12 In phase one, DOE builds from the information

13 developed in the market and tech assessment,

14 chapter three of the TSD, supplementing this

15 information with additional market research in

16 order to create an industry profile. During

17 this phase, DOE develops a set of industry18 weighted average financial parameters, which

19 are later used as inputs to the GRIM. DOE

20 also identifies important issues that require

21 further investigation. 

22 In phase two, DOE develops a
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1 preliminary industry cash flow model using the

2 information compiled in phase one and initial

3 inputs from engineering and shipments analyses

4 and prepares an interview questionnaire which

5 will form the basis of discussions with

6 manufacturers.

7 In phase three, DOE interviews

8 manufacturers and uses information obtained

9 from these interviews to refine the GRIM and

10 to qualitatively assess impacts on employment,

11 competition, manufacturing capacity and

12 regulatory burden.

13 During manufacturer interviews,

14 DOE tries to get a feel for what manufacturers

15 see as key issues related to this rulemaking

16 for their business and for the industry as a

17 whole. The following are the primary issues

18 brought up by manufacturers. Manufacturers

19 emphasize that the profit structure of the

20 commercial clothes washer market, which

21 emphasizes maximizing the number of turns per

22 day, may conflict with increased levels of
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1 product efficiency if efficiency increases

2 lead to higher-capacity tub volumes or longer

3 cycle times, both of which would reduce the

4 total number of turns per day. Thus,

5 manufacturers are constrained by a capacity

6 and cycle time limits in any effort to

7 increase the efficiency of their machines.

8 Manufacturers express concern that

9 energy efficiency efforts are inherently less

10 effective in the commercial clothes washer

11 market. They believe that the benefits of

12 higher-efficiency machines are and will

13 continue to be negated by consumer behavior

14 patterns in this market, which reflect a lack

15 of knowledge or caring about how to properly

16 use the machines.

17 Manufacturers stress that future

18 energy conservation standards would have an

19 adverse impact on cleaning performance and

20 reliability and would thus compromise consumer

21 utility. 

22 Some manufacturers emphasize that
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1 technology has not changed since the last

2 commercial clothes washer standard came into

3 effect in January 2013 and that products

4 currently at the max tech level are not truly

5 commercial products. Finally, manufacturers

6 expressed concerns relating to the

7 disproportionate competitive impacts on

8 manufacturer subgroups resulting from an

9 amended standard.

10 In order to estimate a lower and

11 upper bound of profitability for the

12 commercial clothes washer industry as a result

13 of standards, DOE modeled two markup

14 scenarios. The lower-bound profitability

15 scenario which reflects the most severe

16 manufacturer impacts is represented by the

17 preservation of operating profit markup

18 scenario. The upper bound profitability

19 scenario corresponding to the least impact is

20 represented by the preservation of gross

21 margin percentage or flat markup scenario.

22 MS. GONZALEZ: This is Amanda with
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1 the California IOUs. Do you know off the top

2 of your head what those two scenarios were,

3 the markups? 

4 MS. BUCCITELLI: You mean the

5 numbers? 

6 MS. GONZALEZ: Yes.

7 MS. BUCCITELLI: For TSLs 1 and 2,

8 the markups ended up being the same for those

9 two different scenarios. And that was because

10 there was very little difference in

11 manufacturing production costs and I think

12 only a slight difference in manufacturing

13 production costs at TSL 2 for front-loaders,

14 but that was sort of offset by the presence of

15 the cross-price elasticity at TSL 2 between

16 front-loaders and top-loaders. 

17 So they ended up being just the

18 flat markup for TSL 1 and 2, which was 1.285. 

19 And for TSL 3, for the preservation of

20 operating profit markup scenario, it was

21 something, it was reduced slightly to 1.279,

22 something like that. 
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1 The results of the GRIM DCF

2 analysis are displayed here. As you can see,

3 the industry net present values at TSL 1 and

4 TSL 2 are very similar, around 118 million. 

5 And, accordingly, the changes from the base

6 case INPV at TSLs 1 and 2 are very similar, a

7 decrease of approximately six million or five

8 percent from the base case.

9 DOE estimated total conversion

10 costs around 10 million at both TSL 1 and 2. 

11 At TSL 3, there's a substantial decrease in

12 industry net present value to somewhere in the

13 range of 28.8 to 33 million dollars,

14 corresponding to a decrease of INPV between

15 91.2 and 95.4 million, and that's about 74- to

16 77-percent decrease from the base case INPV. 

17 At TSL 3, DOE estimated total conversion costs

18 of 126 million.

19 To summarize the GRIM results at

20 the chosen TSL, which is TSL 2, INPV is

21 expected to decrease by about 5 percent to 118

22 million from the base case. Because the
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1 design options associated with TSL 2 relate to

2 software-related control strategies, rather

3 than changes to platforms, nearly all of the

4 impacts on INPV at TSL 2 are attributed to the

5 10.2 million in product conversion costs

6 associated with that TSL.

7 MR. BROOKMAN: Amanda? 

8 MS. GONZALEZ: Yes, thank you. 

9 This is Amanda Gonzalez with the California

10 IOUs. So product conversion costs as defined

11 in the TSD are investments in research,

12 development, testing, marketing, and other

13 non-capitalized costs focused on making

14 equipment designs that comply with the amended

15 energy conservation standard. These are

16 different than capital conversion costs which

17 refer to investments in property, plant, and

18 equipment needed to adapt or change existing

19 production facilities.

20 When we spoke about this

21 previously, I think the focus was on capital

22 conversion costs and in changing the
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1 manufacturing setup. So my questions have to

2 do with the top-loaders. The capital

3 conversion costs are actually about $20

4 million, no, excuse me, about $12 million

5 lower than the product conversion costs. So

6 the product conversion costs for top-loaders

7 for efficiency level two, which would almost

8 double net energy savings and increase water

9 savings significantly, the conversion costs

10 for EL 2 looks to be about 51 million, as

11 opposed to EL 1, which is 10 million. 

12 Can you explain what kind of

13 research development, testing, marketing, and

14 other non-capitalized costs would add up to 40

15 million additional dollars for the four

16 additional design considerations associated

17 with efficiency level two? 

18 MS. BUCCITELLI: I would like to

19 look at the actual conversion cost numbers. 

20 I think I have them here.

21 MS. GONZALEZ: Okay. It's Table

22 12.4.11 in the TSD.
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1 MS. BUCCITELLI: So you're asking

2 about the difference in product conversion

3 costs between --

4 MS. GONZALEZ: Yes. So to

5 clarify, for top-loaders, the difference in

6 conversion costs between efficiency level one,

7 which is what was proposed in the NOPR, and

8 efficiency level two, which still has positive

9 net present value and great benefits to the

10 consumer, the difference between those two is

11 $40 million. And I guess I just want to

12 understand what kind of marketing design

13 development is needed for the four additional

14 design considerations, which are not software

15 based. 

16 MR. SUTHERLAND: Yes, this is Tim

17 Sutherland from Navigant. Without getting

18 into the details of talking about individual

19 manufacturers, one of the things when we're

20 looking at this for the max tech levels for

21 either product category, top-loading or front22 loading, is not all manufacturers produce
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1 products at those levels. 

2 So in order to, if the standard

3 were to be set at that level, for a

4 manufacturer that doesn't currently have

5 something offered at that level, if that is a

6 level that would require a major platform

7 overhaul, you would be talking about basically

8 designing a new product from scratch. So

9 there would be the years of engineering and

10 testing and analysis and all of that that goes

11 into designing a brand new product from

12 scratch.

13 MS. GONZALEZ: Do you mind if I

14 interject?

15 MR. SUTHERLAND: Sure.

16 MS. GONZALEZ: This is Amanda with

17 the California IOUs. So for top-loaders, ESL

18 1, efficiency level one, the one that was

19 proposed, was actually a gap fill level.

20 MR. SUTHERLAND: That's right.

21 MS. GONZALEZ: There actually,

22 there's -- 99 percent of the market is
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1 comprised of the baseline for top-loaders. So

2 whether or not DOE ends up adopting efficiency

3 level one or efficiency level two, there's

4 going to be complete market transformation on

5 the manufacturer.

6 So my question is why is there

7 such a large difference between level one and

8 level two when you're effectively going to

9 have complete market transformation, and level

10 one might as well, could conceivably be

11 perceived as, like, a max tech since the

12 market share between level one and level two

13 are the same. 

14 MR. SUTHERLAND: Well, the

15 differences that are there reflect the

16 differences in what the manufacturers that we

17 spoke with would need to do to achieve those

18 levels. So to achieve -- so going from the

19 current baseline to go up to level one, based

20 on DOE's testing, we observed that

21 manufacturers are most likely to achieve that

22 through minor changes, software-related
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1 changes. So the relatively lower $9.9 million

2 product conversion cost is sort of reflective

3 of that.

4 To get up to level two requires a

5 major platform change, major platform

6 overhaul. 

7 MS. GONZALEZ: Right. So that

8 would be part of the capital conversion cost,

9 not the production conversion cost, correct? 

10 MR. SUTHERLAND: Well, because, on

11 the capital side, you're going to have all new

12 equipment, new drum machines, new plastics

13 equipment, you know, new product line. But

14 under what's covered under conversion costs,

15 you're also going to have the R&D effort, the

16 engineering, the testing, all of that that has

17 to occur to design that max tech product. And

18 I believe that that's considered conversion

19 costs. So there will be both.

20 MS. GONZALEZ: Right. I guess I'm

21 just saying that the market right now has very

22 limited options for efficiency level one and
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1 efficiency level two. They're comparable in

2 market share. So the manufacturer, regardless

3 of whether or not DOE ends up adopting one or

4 two, the manufacturer is going to have those

5 complete product conversion costs. And I

6 guess I'm just skeptical that the other few

7 design items would add up to 40 million

8 additional dollars in product conversion costs

9 when you think about the categories under

10 product conversion costs, which is R&D and

11 testing. Like, you're going to have to test

12 the product no matter what, whether or not

13 it's EL 1 and EL 2.

14 So I guess I just urge DOE to

15 reconsider its analysis and maybe that those

16 numbers, by comparing it to the residential

17 clothes washer rulemaking or -- I apologize

18 that I don't have great data for you. I just

19 am surprised to see these numbers. 

20 MR. SUTHERLAND: No, thank you. 

21 And DOE does, you know, we get this

22 information from the manufacturers during
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1 discussion, but we pair that with what we've

2 observed through testing and tear-downs as a

3 reality check. So, you know, DOE is confident

4 that the numbers that are presented here

5 accurately reflect what we've acquired. So,

6 you know, of course, DOE can take sort of a

7 closer look at the details of that.

8 MR. BROOKMAN: Amanda, just as a

9 reminder, you seem like you've got a

10 rationale. I presume you're going to put it

11 all in detailed writing to the Department

12 because that will allow them to examine your

13 thoughts more closely. 

14 MS. GONZALEZ: Yes, we'll

15 definitely be submitting comments. 

16 MR. BROOKMAN: Thank you. We're

17 working on the webinar here, for those that

18 are following us via web. Jen? 

19 MS. CLEARY: This is Jennifer

20 Cleary. I just want to comment that I don't

21 think we should underestimate testing costs,

22 R&D, engineering. I mean, those are all
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1 significant costs, and I think that, you know,

2 without commenting on the accurateness of

3 DOE's analysis, I think that what they're

4 looking at, I can see how you might think that

5 maybe the physical changes to the product or

6 whatever are the only things that are going to

7 add costs. But those other costs are very

8 significant, and so I'm not sure we should be

9 so surprised to see those numbers. 

10 MR. BROOKMAN: Okay. Let's

11 proceed with the presentation. 

12 MS. BUCCITELLI: Okay. So at this

13 point, DOE requests comment on the estimated

14 magnitude of capital and product conversion

15 costs.

16 MR. BROOKMAN: Perhaps we've

17 covered it. 

18 MS. BUCCITELLI: Yes. 

19 MR. BROOKMAN: Okay. Jennifer has

20 another comment. 

21 MS. CLEARY: I just want to

22 clarify, too. First of all, I shouldn't have
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1 said accurateness, I should have said

2 accuracy. That was embarrassing. Second of

3 all, I also want to clarify that my comment

4 was not intended to reflect on what you, you

5 know, what you were saying, Amanda or Tim, on

6 which one is correct. I'm just simply

7 stating, from a general perspective, that

8 those costs are real costs that are

9 significant and, you know, I think it's

10 important to make sure they're not

11 undervalued. So I just want to be clear about

12 the scope of my comment because we'll follow

13 up in written comments as to, you know, how we

14 think, you know, our comments on the analysis. 

15 MR. BROOKMAN: Okay, thank you. 

16 MS. BUCCITELLI: All right. In

17 general, the primary manufacturer subgroup

18 that DOE investigates in the MIA is the

19 domestic small businesses subgroup. In order

20 to identify small businesses in the commercial

21 clothes washer industry, DOE used the size

22 threshold established by the Small Business
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1 Administration for the industry group

2 containing commercial clothes washers. And

3 this group is called the "Other Commercial and

4 Service Industry Machinery Manufacturing

5 group." For this category, the SBA has set an

6 employee count threshold of a thousand or

7 less. 

8 DOE searched several publically9 available databases in order to identify any

10 domestic small business manufacturers. These

11 databases included the SBA's own database of

12 small businesses, DOE's Compliance

13 Certification Management System, and various

14 trade association lists, as well as Dun &

15 Bradstreet. DOE did not identify any domestic

16 small business manufacturers. 

17 DOE did, however, identify a

18 different manufacturer subgroup. Although not

19 a small business per the SBA definition, one

20 manufacturer was identified as having

21 significant commercial clothes washer market

22 share but much lower revenues than its
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1 diversified competitors. This manufacturer's

2 business is highly concentrated in the

3 production of commercial laundry products.

4 DOE assigned this manufacturer its

5 own subcategory, the "low-volume

6 manufacturer(LVM)," to evaluate the

7 disproportionate impacts of amended standards

8 for commercial clothes washers on this

9 manufacturer. Depending on the standard level

10 chosen, DOE believes the LVM could be impacted

11 more severely than its larger competitors due

12 to its lower total production volumes and

13 relative focus on the commercial laundry

14 market, its ability to access capital, and,

15 finally, pricing for key components, which

16 relates to its lower production volume.

17 DOE seeks comment on the number of

18 small manufacturers of commercial clothes

19 washers and on the potential impacts of

20 amended standards on those small businesses

21 and on the LVM.

22 MR. BROOKMAN: No comments. 
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1 MS. BUCCITELLI: As part of the

2 MIA, DOE analyzed the impacts of -- sorry --

3 impacts of amended standards on production

4 workers within the commercial clothes washer

5 industry. In the base case, DOE estimated the

6 industry will employ 334 production workers in

7 the standard year, which is 2018. 

8 At TSLs 1 and 2, the vast majority

9 of design options consist of component swaps. 

10 Thus, DOE does not expect any changes in

11 employment if total industry shipments remain

12 stable relative to the base case, which they

13 are forecasted to do. However, at TSL 3, DOE

14 estimates a potential growth in employment of

15 30 workers due to an increase in the industry16 average labor content of equipment. 

17 DOE does model the scenario where

18 manufacturers move production to foreign

19 locations as a lower bound to the change in

20 employment for the industry. Under this

21 scenario, the commercial clothes washer

22 industry would witness a decrease in domestic
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1 employment of 334 workers. However, based on

2 interviews, this does not appear to be a

3 likely scenario for most manufacturers at TSL

4 2.

5 DOE requests comments on expected

6 changes to direct employment in the commercial

7 clothes washer industry as a result of amended

8 standards. 

9 DOE conducted an analysis of

10 cumulative regulatory burdens impacting

11 commercial clothes washer manufacturers in

12 which it looks at other significant product13 specific regulations that will take effect

14 three years before or after the 2018

15 compliance date of the amended energy

16 conservation standards for commercial clothes

17 washers. DOE also notes that amended

18 standards for commercial clothes washers

19 became effective on January 8th, 2013. 

20 Chapter 12 of the TSD provides a full

21 description of cumulative regulatory burdens.

22 Finally, DOE seeks input on the
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1 cumulative regulatory burden that may be

2 imposed on the industry either from recently3 implemented rulemakings for these products or

4 other rulemakings that affect the same

5 industry. 

6 All right. That concludes the

7 manufacturer impact analysis section. 

8 MR. BROOKMAN: Those of you

9 listening in, I guess we're having some

10 technical difficulty, so we're trying to fix

11 that right now. Hopefully, those of you

12 joining us via the web, hopefully you now can

13 see the slides and you can continue

14 participating. 

15 Now we're going to proceed, and

16 we're going to hear miscellaneous NOPR

17 analyses. 

18 MS. IYER: Hello again. This

19 Maithili Iyer with LBNL back to talk about the

20 miscellaneous NOPR analyses. These are a set

21 of standard analyses that we go through for

22 any NOPR stage of the rulemaking.
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1 I'll start with the consumer

2 subgroup analysis. The purpose of the

3 consumer subgroup analysis is to analyze the

4 economic impact to certain groups who may be

5 disproportionately impacted compared with the

6 general user population when we conduct the

7 LCC analysis. 

8 DOE identified small businesses as

9 a subgroup which could potentially be impacted

10 disproportionately. And by small businesses,

11 you know, we mean groups such as small

12 laundromats, you know, that could be included

13 in this group.

14 The method DOE adopted for

15 analyzing impacts on this subgroup was to

16 modify the LCC spreadsheet, specifically the

17 discount rates that these businesses might

18 experience. So we used a different discount

19 rate that was applicable to this group to

20 analyze the life-cycle cost and payback period

21 for the group. We found that the subgroup was

22 not disproportionately impacted by the
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1 standard.

2 Next on my list is emissions

3 analysis. Given that we have electricity and

4 gas savings from a proposed standard, DOE

5 estimates emissions accruing from these

6 savings through reductions in power sector

7 emissions. There are four pollutants that DOE

8 considers under this: carbon dioxide, sulfur

9 dioxide, nitrogen oxides, and mercury. 

10 DOE also considers the upstream

11 emissions or the emissions from the full fuel

12 cycle that actually comes from production

13 activities and fuel transportation to the

14 power plants. And nitrous oxide and methane

15 are the two emissions that are considered

16 under this. The table over here basically

17 tabulates the emissions reductions that we see

18 for different Trial Standard Levels. 

19 DOE also monetizes the carbon

20 dioxide emissions and nitrogen oxides, the NOx

21 emissions. Basically, this is intended to be

22 a measure to sort of see what kind of damage
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1 is avoided through reduction in carbon dioxide

2 and to monetize that value. For this, DOE

3 used the most recent estimates, the SCC, or

4 the social cost of carbon estimates that was

5 developed by the U.S. government's Interagency

6 subgroup, or task force I think it is called. 

7 And we actually consider four rates for which

8 the social cost of carbon is evaluated. We

9 also monetize NOx emissions.

10 The table here provides the

11 values, the monetized values in millions of

12 dollars for all three levels for the four

13 rates that are considered. You would see

14 going from TSL level one to level three, for

15 any of the rates considered we kind of double

16 the savings. One thing to note over here is

17 that these values do not make part of, are not

18 included in the NPV that is calculated.

19 Coming up for a comment, we

20 request comments on the SCC values that are

21 used. 

22 MR. BROOKMAN: Comments here? 
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1 MS. IYER: Moving on to utility

2 impact analysis. The purpose of the utility

3 impact analysis is to estimate water

4 generation or capacity that would result from

5 the savings that we experience from an amended

6 standard. 

7 The method adopted for evaluating

8 this is to take the national energy savings

9 that comes out of the NIA, or the national

10 impact analysis, and use a model which is

11 modified to represent the impact of the

12 current DOE standards. We take the savings

13 and compare that to the AEO baseline scenario

14 using the NEMS-BT model to calculate the

15 potential savings. We find that we get about

16 55 megawatts of saved capacity from the

17 proposed standard level two. 

18 Moving on to employment impact

19 analysis. This is another thing I think --

20 MIA looks at direct employment impacts. There

21 are also indirect employment impacts that sort

22 of result from any dollars that are sort of
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1 freed up because you're not using them on

2 washing clothes, I guess.

3 So DOE uses an input/output model

4 called ImSET, or Impact of Sector Energy

5 Technologies, to look at what sort of impacts

6 we would see on employment. Basically,

7 savings are, again, an input into this model,

8 and what we found was there is very minor job

9 creation, but it's not significant to make it

10 into the labor statistics.

11 We're coming up to the last piece

12 of the analysis, which is the regulatory

13 impact analysis. DOE performs the regulatory

14 impact analysis as an alternative to a

15 standard, or a mandatory standard. Since

16 there are several efficiency programs in place

17 that sort of try to achieve the same thing

18 that an amended standard does, the idea is to

19 see how well the non-regulatory options do

20 vis-a-vis a proposed standard.

21 For this analysis, DOE looked at

22 consumer rebates, commercial customer tax
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1 credits, voluntary energy efficiency targets

2 like ENERGY STAR, manufacturer tax credits,

3 early replacements, and bulk government

4 purchases. The method adopted for evaluating

5 all of these policy measures are basically

6 taking the NIA spreadsheet and developing a

7 market impact estimate from these policies

8 based on the data that is available from

9 several programs that the utilities or others

10 may offer and to generate the national energy

11 savings and the NPV through these

12 alternatives. DOE found that none of these

13 alternatives come anywhere close to a proposed

14 standard of TSL 2.

15 I think that brings us to the

16 closing remarks. 

17 MR. BROOKMAN: Thank you. You

18 have another opportunity for closing remarks. 

19 Jennifer? 

20 MS. CLEARY: This isn't a closing

21 remark. This is Jennifer Cleary with a

22 question. Actually, I should have asked
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1 earlier. I think it would probably go to,

2 which is can you just clarify for me, and I'm

3 sure I should be able to get this from reading

4 the rulemaking, but were experience curves

5 used in the analysis? It was a little unclear

6 to me in the discussion. 

7 MS. IYER: Yes, they were used. 

8 MS. CLEARY: Okay, thank you. 

9 MR. BROOKMAN: Additional comments,

10 closing remarks before I turn it back to John

11 for the how to submit written comments slide? 

12 MS. GONZALEZ: This is Amanda

13 Gonzalez with the California IOUs. I just

14 want to thank DOE and Navigant and AHAM and

15 everyone else that participated. I know I had

16 a lot of questions, so thank you for being

17 patient as we walked through them. We will be

18 submitting comments, so we'll be able to

19 delineate our thinking and try to provide

20 something that's useful and helpful to the

21 Department. 

22 MR. BROOKMAN: Thank you. John
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1 Cymbalsky?

2 MR. CYMBALSKY: Okay. So thank

3 you for everyone for joining in today. Thanks

4 for the comments. We look forward to

5 receiving in written form all the comments

6 that were talked about today so that we can

7 sharpen our pencils on the final rule.

8 Here you'll see again the docket,

9 and comment period will close on May 5th,

10 2014. So please get your comments in as soon

11 as possible so that we can move forward with

12 the rulemaking.

13 Thanks again for coming, and get

14 home safe. 

15 MR. BROOKMAN: Ed. Okay. We're

16 still, we're still open for business, I guess,

17 so what are your questions, Ed? 

18 MR. OSANN: Well, okay. I had

19 thought that after the break the staff was

20 going to be coming back with an enumeration of

21 factors that were considered in the product

22 class determination. 
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1 MS. HARIHARAN: This is Johanna

2 Hariharan. Unfortunately, because there were

3 a number of factors considered, we did not, we

4 were not able to get that list over the break. 

5 However, we will be providing this list to you

6 if you want to contact us directly. 

7 MR. OSANN: Okay. I have an

8 additional question. The NOPR refers to the

9 cycle-time assessments that are listed in the

10 TSD chapter five. There are portrayals of

11 these cycle times in graphic form, but there

12 aren't the actual integers listed. These are

13 relatively small numbers, and I'd like to ask

14 if DOE can make available the actual integers

15 that were the result of a cycle-time test.

16 MS. HARIHARAN: This is Johanna

17 Hariharan again. We will discuss this and get

18 back with you. At this point, we don't have

19 an answer for you.

20 MR. BROOKMAN: Okay. Thank you,

21 Johanna. Do you have any additional

22 questions, Ed? 
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1 MR. OSANN: Yes. The NOPR notes

2 that there was an exclusion of one outlier in

3 the top-loading compilation of average cycle

4 time. And I note that this particular model

5 is a baseline model that -- and, as we've seen

6 from other data, 99 percent of the products

7 are in the baseline. Can DOE elaborate at all

8 on why this particular unit was viewed as an

9 outlier?

10 MS. HARIHARAN: This is Johanna

11 Hariharan. We do not have that data at this

12 time, but we will look into this and get back

13 to you. 

14 MR. BROOKMAN: Additional

15 questions, Ed? 

16 MR. OSANN: Not at the moment. 

17 Thank you.

18 MR. BROOKMAN: Thank you very

19 much. So now this meeting is concluded. 

20 Thanks to all of you.

21 (Whereupon, the foregoing matter

22 was concluded at 12:01 p.m.)
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A

$0.31 53:16

$10 47:6 51:4

$12 111:4

$19.55 53:17

$20 111:3

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$39 46:22

$40 47:10 112:11

$50 47:9 51:5

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a.m 1:11 3:2

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abbreviated 28:10

ability 14:15

121:14

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57:12 62:4 79:10

81:19 99:2 131:3

131:18 133:4

accept 87:3

access 19:21 34:16

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accruing 92:21

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accuracy 119:2

accurately 86:1

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116:7 118:7

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104:15 111:15,16

112:13 116:8

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134:14

Additionally

103:14

addresses 9:20

adds 69:20

adjourn 6:12 7:4

Adjournment 2:17

adjust 81:1

adjusted 83:2

Administration

120:1

adopted 125:14

128:7 130:4

adopting 114:2

116:3

advantage 85:11

adverse 106:19

advocates 61:17

AEO 73:1 128:13

affect 29:11 124:4

affiliation 4:7

agenda 2:2 5:10,11

6:13 7:3,8 11:8,12

agitator 46:2,8,9

46:15 47:11,20

50:4,6,8,10 67:21

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93:17

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96:7

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26:8 71:8 76:13

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131:14

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allow 117:12

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130:13

altogether 102:7

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100:13 101:10

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94:18

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13:11 16:15 103:6

103:8 107:9

110:14 121:7,20

122:3 123:7,15,17

128:5 129:18

American 1:16

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amount 70:4 84:20

99:21

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105:3 124:17,20

124:21

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2:14,15,15 5:22

5:22 6:3,6,7,7,8

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70:20,22 71:12

73:5 77:4 78:7,8,9

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133:19

anybody 68:12

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apologize 3:16,20

91:6 116:17

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asked 130:22

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99:17 100:18

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110:7 117:8,16

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119:15 121:22

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119:22 120:10,16

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mid-morning 6:3

middle 11:12

midnight 10:5

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monetizes 126:19

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Monte 70:13

Monthly 72:6

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65:14 66:14 94:11

122:18 132:11

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moving 5:20 52:1

69:6 70:6 71:4

76:11 77:12,14

78:14 79:16 87:7

89:14 92:6,19

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Navigant 1:14,22

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necessarily 35:11

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need 99:10,10,13

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100:15 103:6,8

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nitrous 126:14

nominal 81:14

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non-regulatory

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non-replacements

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normalized 81:14

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note 23:11 25:8

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perceived 114:11

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90:5 93:5 98:9,11

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weakly 88:21

wear 102:9

web 7:21 96:16

117:18 124:12

webinar 4:1 7:19

8:14 60:13 117:17

Weibull 76:6

weight 34:4 85:4

weighted 44:14

71:19,21 72:8

74:4,7 93:19 94:7

94:16 104:18

welcome 2:2 3:4

4:2 5:6 7:20 8:6

86:6

welcoming 3:11

went 102:18,18

WF 29:14

widest 30:16

wish 6:22 8:2 42:2

wishes 5:13 6:20

witness 122:22

wondering 50:14

80:11 100:14

words 17:14

work 16:19 24:1,4

50:1,2 60:9

workers 122:4,6,15

123:1

working 8:3 16:9

117:17

works 6:9 8:5 24:6

72:13

worthwhile 49:13

wouldn't 57:12

61:2

writes 26:2 34:14

writing 117:11
202-234-4433

Neal R. Gross and Co., Inc.

Page 153

written 8:16 9:13

119:13 131:11

132:5

X

X-axis 30:19 33:5

Y

Y 33:5

Y-axis 30:20

year 13:12 66:3

83:11,21 122:7

years 23:8 24:10

87:10 113:9

123:14

yellow 90:19

yesterday 3:21

yielded 101:4

Z

zero 44:21,22 53:15

53:16 54:2 56:3

77:16 100:7

0

0.1 101:16

0.12 101:16

089 1:10

1

1 42:12 51:5 99:19

100:7 101:16

108:7,18 109:3,6

109:10 111:11

113:18 116:13

122:8

1.07 90:3

1.15 33:12

1.26 13:9

1.279 108:21

1.285 108:18

1.3 24:13

1.35 33:12

1.5 66:18

1.55 33:13

1.6 13:13 24:14

31:18 53:21

1.62 65:8

1.65 37:18

1.7 31:19

1.8 37:19

1.83 93:20

1.85 31:21

1.96 65:8

1:00 6:12 7:4

10 98:10 109:10

111:11

10-percent 90:4

10.2 110:5

10.7 90:5

10:45 6:4

100 82:15

1000 1:10

102 2:12

11 2:4

11.3 76:1

11:00 102:2

11:05 102:18

11:15 102:8

11:20 102:19

118 109:4,21

12 123:20

12.4.11 47:5 111:22

12:01 134:22

124 2:15

126 109:18

130 2:16

134 2:17

15 22:20 102:3,16

15-85 26:4

153 72:14

18 2:6

18th 12:4

1975 11:17

1st 12:8 13:8 16:7

2

2 32:5 42:13 100:9

108:7,13,15,18

109:4,6,10,20

110:1,4 111:10

116:13 122:8

123:4 130:14

2-liter 57:16

2.0 13:14 32:3

37:12,14,19

2.2 32:5 37:10,19

2.4 32:5

2.6 32:7

2.8 66:20

2002 24:13

2005 11:20

2007 13:9

2009 12:5 23:8 69:4

72:2

2010 23:9 60:14

2011 23:12 24:14

2012 23:18

2013 23:18 73:1,10

107:3 123:19

2014 1:8 3:7 10:5

16:4 132:10

2015 12:8 16:7

2018 87:9 93:1

122:7 123:14

2047 87:10 93:1

21 1:8 13:5

216 72:14

21st 3:7

27 71:22 72:9

28.8 109:13

3

3 2:2,3 32:5 93:5

100:11 101:16

108:19 109:11,17

122:13

3-liter 57:15,18

3.5 12:17

3.7 32:8

30 87:10 122:15

30-year 101:15

310 101:18

33 109:13

334 122:6 123:1

39 33:15 35:22

4

4.0 12:19

4.1 66:20

4.3 66:18

40 89:12 91:16

111:14 116:7

42 15:7

48 89:14 91:16

4th 16:4

5

5 109:21

5.5 13:15 32:3

5.7 74:8

50 83:17 84:15,21

84:22 85:14

50-percent 82:21

82:22

50/50 94:22 95:18

51 111:10

55 128:16

5th 10:4 16:6 132:9

6

6.0 66:20

6.9 31:22

61 77:13

62 2:8

6295(q) 15:7

6311 13:4

68 2:10

7

7 93:5 101:17

7.1 76:3

71 91:7 94:19

74 109:15

77-percent 109:16

78 2:11 102:5

8

8.5 13:14 31:18

85 22:19

850 101:18

861 71:17,17

8E 1:10

8th 13:12 123:19

9
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS 

1323 RHODE ISLAND AVE., N.W. 

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com 

C E R T I F I C A T E

This is to certify that the foregoing transcript 

In the matter of: 

Before: 

Date: 

Place: 

was duly recorded and accurately transcribed under 

my direction; further, that said transcript is a 

true and accurate record of the proceedings. 

 

 ----------------------- Court Reporter 

154

Energy Conservation Standards for

Commercial Clothes Washers

US DOE

04-21-14

Washington, DC