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UNITED STATES OF AMERICA

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DEPARTMENT OF ENERGY

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ENERGY EFFICIENCY AND RENEWABLE ENERGY

OFFICE OF BUILDING TECHNOLOGIES

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PRELIMINARY ANALYSIS PUBLIC MEETING FOR 

RESIDENTIAL CENTRAL AIR CONDITIONERS

& HEAT PUMPS

+ + + + +

WEDNESDAY

MAY 5, 2010

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T A B L E O F C O N T E N T S

Introductions.............................. 3

Opening Remarks........................... 13

Rulemaking Overview....................... 23

Enforcement Plan.......................... 35

Adjourn.................................. 222
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1 P R O C E E D I N G S

2 (time not provided)

3 MR. BROOKMAN: Okay. So good 

4 morning everybody and welcome. This is the 

5 U.S. Department of Energy's Preliminary 

6 Analysis Public Meeting for Residential 

7 Central Air Conditioners and Heat Pumps.

8 My name is Doug Brookman from 

9 Public Solutions in Baltimore. Appreciate you 

10 all being here on time so we can get a good 

11 start on this day. The Department is making 

12 every effort to make these meetings efficient 

13 and shorter. And so I appreciate you being 

14 here on time. That will help with this.

15 We're going to start off by doing 

16 introductions around the room. And then I'm 

17 going to do an agenda review and then we'll 

18 proceed. We'll start here and we'll go around 

19 the table. And then around the perimeter.

20 Please say your name and 

21 organizational affiliation.

22 MR. GEE: Talbot Gee, Heating, Air 
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1 Conditioning, and Refrigeration Distributors 

2 International.

3 MR. ECKMAN: Tom Eckman, Northwest 

4 Power & Conservation Council.

5 MS. TROMBLEY-McCANN: Molly 

6 Trombley-McCann, Energy Solutions for PG&E.

7 MR. STANGA: Mark Stanga for 

8 Daikin AIR CONDITION (Americas).

9 MS. HOWARD: Kate Howard, Natural 

10 Resources Defense Council.

11 PARTICIPANT: (Inaudible), 

12 Justice.

13 MR. ROSENSTOCK: Steve Rosenstock, 

14 Edison Electric Institute.

15 MR. BRESHAW: Jim Breshaw 

16 (phonetic), Ingersoll Rand Trane.

17 MR. MANDYCK: John Mandyck, 

18 Carrier Corporation.

19 MR. NICHOLS: Jeff Nichols, 

20 Johnson Controls.

21 MS. MEYERS: Karen Meyers, Rheem.

22 PARTICIPANT: (Inaudible), Air 
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1 Conditioning, Heating, and Refrigeration 

2 International.

3 MR. SACHS: Harvey Sachs, American 

4 Council for an Energy-Efficient Economy.

5 MR. BRUNDADGE: Don Brundadge, 

6 Southern Company.

7 MS. TIEDEMAN: Jennifer Tiedeman, 

8 DOE, Office of General Counsel.

9 MS. KOHL: Betsy Kohl, DOE GC.

10 MR. SABOWSKI: John Sabowski 

11 (phonetic), DOE Appliance Standards.

12 MR. WES ANDERSON: Wes Anderson, 

13 DOE Appliance Standards.

14 MR. MILLARD: Matt Millard, 

15 Navigant Consulting.

16 MR. WEBER: Collin Weber, Navigant 

17 Consulting.

18 MR. CARMICHAEL: Rob Carmichael, 

19 Navigant Consulting.

20 MR. ROSENQUIST: Greg Rosenquist, 

21 Lawrence Berkeley National Laboratory.

22 MR. SENTINO: Glen Sentino 
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1 (phonetic), Navigant Consulting.

2 MR. ERIC ANDERSON: Eric Anderson, 

3 Pacific Northwest National Laboratory.

4 MR. WINIARSKI: David Winiarski, 

5 Pacific Northwest National Laboratory.

6 MR. SCOTT: Michael Scott, Pacific 

7 Northwest National Laboratory.

8 MS. WILLIAMSON: Jennifer 

9 Williamson, Pacific Northwest National 

10 Laboratory.

11 MR. SMALL: Terry Small, Mortex 

12 Products, Inc.

13 MR. CARR: Chris Carr (phonetic), 

14 Lennox International.

15 MS. MAUER: Joanna Mauer, 

16 Appliance Standards Awareness Project.

17 MR. RAYMOND: Michael Raymond, DOE 

18 Appliance Standards.

19 MR. KHAN: Mohammed Khan, DOE.

20 MR. LEKOV: Alex Lekov, Lawrence 

21 Berkeley National Laboratory.

22 MR. INDIG: Harry Indig, DOE.
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1 MR. JAMES: Brian James 

2 (phonetic), Southern California Edison.

3 MR. HARRIS: Jeff Harris, Alliance 

4 to Save Energy.

5 MR. COMSTOCK: Owen Comstock, 

6 Energy Information Administration.

7 MR. BROOKMAN: Okay. Thanks to 

8 all of you. Did everybody get a chance to 

9 introduce him or herself? Good.

10 I think all of you registered or 

11 should have registered at the front desk as 

12 you entered the Department of Energy today. 

13 And so the Department will supply at the end 

14 of the day, perhaps more like one o'clock 

15 today, a listing of all those present.

16 And we don't have a court reporter 

17 present today. We're going to be creating an 

18 audio recording of this that will then be 

19 transcribed as the Department's official 

20 record of this meeting.

21 So it is all the more important 

22 that we use the microphones today when we 
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1 speak. We need to really be disciplined about 

2 that today. So I'm going to try and hold that 

3 as a standard.

4 John, would you like to make 

5 welcoming remarks?

6 MR. WES ANDERSON: Sure. As Doug 

7 just mentioned, since we don't have a court 

8 reporter, it's probably pretty important, too, 

9 to submit written comments. So in case the 

10 audio doesn't work out too good, we have the 

11 written comment as well.

12 And also we've had a big push, at 

13 least on my part, to make these meetings more 

14 focused and more time efficient for everybody. 

15 I know we're all busy and I think our time is 

16 best served if we could keep the comments and 

17 our presentations more focused.

18 And so with that, I would ask if 

19 you make a comment, you don't need to make it 

20 more than once. I think last week we were 

21 able to do the fluorescent ballast, both the 

22 test procedures and the standards in one day.
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1 Seventy percent of the attendees 

2 had positive feedback from doing that. And I 

3 think one of the things I noticed as we went 

4 along if someone didn't have a comment on our 

5 comment box, there was one person in 

6 particular who felt that he had to make a 

7 comment. And most of his comments started 

8 with I said this before but. If we could 

9 avoid that, I think we could be all the more 

10 efficient.

11 So with that, welcome. And let's 

12 have an efficient meeting.

13 MR. BROOKMAN: Thank you. Always 

14 strive for that.

15 I think all of you received a 

16 packet as you registered. In that was a copy 

17 of the agenda, the Federal Register notice, 

18 and also the focal point for today's meeting, 

19 which are these PowerPoint slides. I hope all 

20 of you have a copy of that.

21 If you'll take a quick peek at the 

22 agenda, I'm just going to run through this 
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1 briefly.

2 Follow this agenda review, we're 

3 going to have brief opening remarks by Wes 

4 Anderson. And there is an opportunity for 

5 anybody that wishes to do so to make very 

6 brief summary remarks about key issues and 

7 concerns that they might have.

8 Following that we'll have a 

9 rulemaking overview, regional standards 

10 background, consensus agreement, and combined 

11 rulemaking presentation, followed by an 

12 opportunity for comment for all of you. And 

13 then a market and technology assessment, 

14 screening analysis, and engineering analysis.

15 We'll take a break mid-morning.

16 Following the mid-morning break, 

17 markups for equipment price determination, 

18 energy use characterization, life cycle cost 

19 and payback period analysis.

20 And then following those 

21 presentations followed by opportunity for 

22 discussion and follow up, shipments analysis, 
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1 national impact analysis, and then preliminary 

2 manufacturing analysis, next steps, and 

3 closing.

4 There's typically another 

5 opportunity at the end of the meeting for you 

6 to make any additional comments you feel you 

7 would like to make to inform the Department's 

8 process.

9 As you can see, you're looking at 

10 the agenda, we intend to finish today around 

11 about 12:30 or so. So we're going to do 

12 everything to try and adhere to that time 

13 frame. A few people have already told me they 

14 have early afternoon meetings. So we'll do as 

15 best we can.

16 That's the overview on the agenda. 

17 Questions and comments on that?

18 (No response.)

19 MR. BROOKMAN: I see none. So I'd 

20 ask for your consideration. Please speak one 

21 at a time. And today it is especially 

22 necessary to speak into the microphone. The 
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1 little green LED light is on and if it's not 

2 on, just leave it on if you're going to speak 

3 a lot.

4 Please say your name for the 

5 record. There will be a complete transcript 

6 of this meeting made available. And it will 

7 be posted on the EERE website in the span of 

8 say a week or ten days or so.

9 I'm going to be queuing people as 

10 best I can by name to speak. I also wish to 

11 encourage follow on.

12 Are we all set? Yes?

13 Wes, speak to this gentleman. I 

14 also wish to encourage follow-on remarks. 

15 Sometimes it is very helpful to have the back 

16 and forth or supportive comments based on the 

17 original commenter's ideas.

18 So please say your name each time 

19 you speak. You don't need to say your 

20 organizational affiliation, just your name.

21 And please be concise. Share the 

22 air time. There is a lot to be said on this 
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1 subject matter if you keep the focus here 

2 during the course of the meeting today.

3 Please turn off your cells phones 

4 or turn them on silent mode. If you need to 

5 have a sidebar conversation with the person 

6 next to you, we'll understand if you take it 

7 out of the room, okay? That will be just 

8 fine. And it will keep it focused here.

9 So that's the overview. Questions 

10 or comments before we proceed?

11 (No response.)

12 MR. BROOKMAN: Okay. Then let's 

13 follow on. We need Wes.

14 Wes, you're up. Wes Anderson.

15 MR. WES ANDERSON: Hello 

16 everyone. I'm sorry for the delay. I'm Wes 

17 Anderson with the Department of Energy.

18 And this slide is here -- I'm here 

19 to introduce where we are in the process. 

20 We've had the framework and currently this is 

21 the preliminary analysis public meeting.

22 And we're here to get your oral 
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1 comments and written comments on the Federal 

2 Register notice, technical support document, 

3 and analytical spreadsheets that will be 

4 presented today. And we will be requesting 

5 data inputs from manufacturers and other 

6 interested parties. The data inputs is --

7 emphasis on data inputs from manufacturers.

8 And the issue boxes look like 

9 this. Everyone should be familiar with. So 

10 in the Notice of Public Meeting and 

11 Availability of Preliminary Technical Support 

12 document, the NOCOM (phonetic), DOE welcomes 

13 comment.

14 Throughout this presentation, 

15 specific issues will be raised for discussion 

16 on slides such as this with identifying item 

17 numbers corresponding to those in the 

18 Executive Summary. Nonetheless, comments 

19 concerning any part of the document or 

20 presentation are welcome at this time.

21 For your submission of comments, 

22 we would -- please follow these rules -- the 
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1 first three bullet points on this overhead --

2 to have the title of the rule, Energy 

3 Conservation Standards for Resident CAC and 

4 Heat Pumps, docket number, and the regulatory 

5 identification number.

6 And emails through this -- the 

7 email address and to Brenda Edwards (phonetic) 

8 for postal mails going through the Forrestal 

9 (phonetic) and personal carriers to the 950 

10 L'Enfant address.

11 The comment period closes May 

12 10th.

13 At this time, we'd like to get 

14 opening remarks.

15 MR. BROOKMAN: An opportunity for 

16 brief summary remarks about issues and 

17 concerns that you might have here at the 

18 outset.

19 It looks like Harvey Sachs is 

20 ready.

21 MR. SACHS: Wes, this is Harvey 

22 Sachs at ACEEE.
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1 And I'm appalled that the 

2 Department would propose to close the public 

3 comments three business days after this 

4 meeting.

5 MR. WES ANDERSON: Thank you.

6 Other comments here at the outset?

7 Don Brundage?

8 MR. BRUNDAGE: I agree with Mr. 

9 Sachs. If we knew this was going to -- if the 

10 proposed settlement was going to be accepted, 

11 it doesn't take real long to write I endorse 

12 the proposed settlement.

13 But we have to assume it is going 

14 to go through NOPR (phonetic). And this is a 

15 very important phase.

16 If it is going to go through that 

17 process, we need to dig into the details to 

18 provide meaningful input to the Department. 

19 And five calendar days, three business days, 

20 is just not acceptable.

21 Thank you.

22 MR. BROOKMAN: So how much would 
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1 you suggest the Department try to supply?

2 MR. BRUNDADGE: Two weeks would be 

3 a lot better.

4 MR. BROOKMAN: Okay. Thank you.

5 Steven Rosenstock?

6 MR. ROSENSTOCK: Steve Rosenstock, 

7 Edison Electric Institute. We've also come 

8 out in favor of the consensus agreement.

9 And for our previous comments that 

10 we made for the furnace rulemaking rules, it 

11 was basically kind of a -- I'll say a 

12 bifurcated comment saying we endorsed the 

13 agreement but since we had no idea if DOE was 

14 going to accept it, we made comments as if it 

15 was going to go through the full rulemaking 

16 process.

17 We find ourselves in the same 

18 situation today where we do endorse the 

19 agreement but we have to assume that lacking 

20 further input from the Department of Energy, 

21 we have to assume it's going to go through a 

22 full rulemaking process, a full detailed 
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1 rulemaking process.

2 So, again, we're going to only get 

3 kind of a, you know, split comments at this 

4 point from the Edison Electric Institute.

5 It would be helpful, again, if the 

6 Department was able to say number one, has the 

7 Department made a decision or, number two, 

8 provide a timeline to stakeholders as to when 

9 they are going to make a final decision.

10 As I recall, the Department was 

11 presented with this last October so that was 

12 over six months ago. And it would -- I think 

13 it would be helpful to everybody just to get 

14 an indication if it is a yes or a no with a 

15 consensus agreement so we really know -- can 

16 really provide the comments the Department is 

17 looking for.

18 MR. BROOKMAN: Thank you.

19 MR. ROSENSTOCK: Thank you very 

20 much.

21 MS. TROMBLEY-McCANN: Molly.

22 MR. BROOKMAN: Molly, please.
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1 MS. TROMBLEY-McCANN: Molly 

2 Trombley-McCann. I just wanted to echo what 

3 Harvey, and Don, and Steve have just said in 

4 terms of timing. Three business days is 

5 completely impossible for us.

6 And in addition, it would be 

7 helpful to have a timeline not just for a 

8 decision on the consensus agreement but also 

9 for a decision on whether or not this will be 

10 a combined rulemaking with furnaces and 

11 furnace fans.

12 MR. BROOKMAN: Good comments.

13 Karim?

14 DR. AMRANE: Well, I have a more 

15 formal statement to make. First of all, I 

16 concur with Harvey and others as far as the 

17 comment period. I think it is totally 

18 inappropriate to give just three business days 

19 for stakeholders to provide comments.

20 But having said that, I would like 

21 to speak in favor, of course, of the consensus 

22 agreement. As you all know, HRI is a 
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1 signatory of the consensus agreement that was 

2 reached between HRI and several leading energy 

3 efficiency organizations last October.

4 And of course, as a signatory, we 

5 strongly support the agreement and we urge the 

6 Department of Energy to adopt it in a direct 

7 final rule and without delay.

8 We believe that the agreement has 

9 several benefits including an accelerated 

10 effective date. What we're proposing here for 

11 central air conditioning and heat pump will 

12 take effect in January of 2015, which is a 

13 year and a half ahead of the standard that 

14 will take effect if DOE goes through the 

15 normal rulemaking process.

16 In addition, it will provide a 

17 significant amount of energy savings. We are 

18 estimating that the combined furnace and 

19 central air conditioning and heat pump 

20 standard will save about three quads of 

21 primary energy by 2030. And this is very 

22 significant.
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1 In addition, it will basically 

2 reduce about 18 million metric ton of CO2 

3 equivalent by the year 2030.

4 It will have a lot of economic 

5 benefits to consumers. We are estimating the 

6 net economic savings will be about 13 billion 

7 dollars by the year 2030.

8 Now the Department of Energy has 

9 encouraged stakeholders in the past to 

10 consider informal discussions which could 

11 result in a consensus agreement. Furthermore, 

12 Congress in 2007 amended the Energy 

13 Conservation -- the Energy Policy and 

14 Conservation Act to expedite rulemaking 

15 process by authorizing DOE to issue direct 

16 final rules, establishing new energy 

17 conservation standards upon receipt of joint 

18 stakeholder proposals.

19 The consensus agreement satisfies 

20 the criteria of the law and the process 

21 improvement rule. Consequently, again we urge 

22 the Department to issue direct final rule, 
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1 adopting the consensus agreement as soon as 

2 possible.

3 In the event that DOE cannot 

4 conduct a direct final rule, we would 

5 recommend that DOE adopt the agreement in an 

6 expedited rulemaking process.

7 Thank you.

8 MR. BROOKMAN: Thank you. Thank 

9 you.

10 Other comments here at the outset?

11 (No response.)

12 MR. BROOKMAN: No additional 

13 comments? Okay.

14 Then let's proceed with Harvey 

15 Sachs.

16 MR. SACHS: Harvey Sachs, ACEEE.

17 It goes without saying but it must 

18 be said that as a signatory to the consensus 

19 agreement, we endorse it fully. And I'm sure 

20 that in that statement, I would be speaking 

21 for the other signatories who are here just to 

22 save time.
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1 MR. BROOKMAN: Thank you.

2 And the Department, I think, is 

3 well aware of who the signatories are.

4 MR. SACHS: I guess we should then 

5 ask if there is any signatory that wishes to 

6 recant.

7 (Laughter.)

8 PARTICIPANT: I'm sorry. Was that 

9 recant or repent.

10 MR. BROOKMAN: Okay. So then no 

11 additional comments, we're going to proceed 

12 with the program and have a rulemaking 

13 overview with Wes Anderson.

14 MR. WES ANDERSON: We were brought 

15 here to -- based on the requirements of the 

16 U.S. Code 62 -- 42695 AMV. The first review 

17 was done -- was completed in August of 2004 

18 with technical amendment -- the publication of 

19 a technical amendment. And the standard was 

20 determined in `01 as to be 13 SEER.

21 Today, the second edition of this, 

22 the rulemaking will constitute a second review 
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1 for the amendment and the energy conservation 

2 standard.

3 Also pursuant to this, there was a 

4 consent decree which requires us to publish a 

5 final rule by June 30th, 2011, with an 

6 effective date of five years hence. DOE is 

7 looking for comment on the impact of the 

8 effective date occurring during the peak 

9 selling season for the regional central air 

10 conditioners and heat pumps rule.

11 MR. BROOKMAN: You can see the 

12 comment box there. We won't repeat it. 

13 Comments related to this question?

14 Yes, John Mandyck?

15 MR. MANDYCK: John Mandyck with 

16 Carrier.

17 As a manufacturer and distributor 

18 of residential central air conditioners and 

19 heat pump, I can confirm that a mid-season 

20 implementation date would be very disruptive 

21 to the marketplace, which is why Carrier is a 

22 signatory to the consensus agreement because 
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1 we established that date as January 2015 to 

2 avoid, in part, part of the distribution mess 

3 and manufacturing complexity that would occur 

4 with a mid-season implementation date.

5 Thank you.

6 MR. BROOKMAN: Thank you. And 

7 thanks for the specificity surrounding your 

8 proposed date.

9 Talbot?

10 MR. GEE: Yes, Talbot Gee with 

11 HARDI. I'd concur that the mid-season would 

12 be a special problem, especially noting the 

13 complexity and the additional components 

14 necessary to launch the more efficient 

15 equipment.

16 You'd be essentially creating 

17 multiple demand curves, multiple safety stocks 

18 in the middle of the cooling season. It would 

19 be a real problem.

20 MR. BROOKMAN: Okay. Thank you.

21 Are there other manufacturers that 

22 wish to comment on this point?
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1 Yes, please?

2 MR. NICHOLS: Only to reinforce --

3 MR. BROOKMAN: Please say your 

4 name, Jeff.

5 MR. NICHOLS: Jeff Nichols. Only 

6 to reinforce John Mandyck's comments --

7 MR. BROOKMAN: Thanks, Jeff.

8 MR. NICHOLS: -- that it is very 

9 disruptive.

10 MR. BROOKMAN: Yes, Tim?

11 MR. BALIWORTH: Tim Baliworth 

12 (phonetic), Justice.

13 Just wanted to state that I 

14 believe the Department's interpretation that 

15 it has to do an effective date five years 

16 after publication is incorrect. If the 

17 Department wants to adopt the standards in the 

18 consensus agreement, there is certainly 

19 flexibility in the statute for them to do 

20 that.

21 And even if the Department rejects 

22 those levels, there is ample flexibility in 
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1 the statute. The Department actually had to 

2 deal with the effective date in 2006 and we're 

3 now four years past that. That's the date 

4 that really matters, not the five implicit 

5 years of lead time.

6 MR. BROOKMAN: Tim, in your 

7 written comments, you'll provide some 

8 citations and the like.

9 MR. BALIWORTH: Okay.

10 MR. BROOKMAN: Yes, please?

11 MS. HOWARD: This is Kate Howard 

12 from the Natural Resources Defense Council. 

13 I'd just like to echo Tim's concerns. And we 

14 will be following up with comments on that 

15 point, written comments. Thank you.

16 MR. BROOKMAN: 

17 PARTICIPANT: Thank you.

18 Additional comments on this first 

19 box before we move on?

20 MR. WES ANDERSON: Actually, since 

21 we're recording this, I was hoping that people 

22 could maybe slow down a little bit because 
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1 we're going to have to transcribe this from a 

2 recording and speak -- get closer to the 

3 microphone because I'm having trouble hearing 

4 some of the comments at this point at this 

5 lectern.

6 MR. BROOKMAN: Okay. Thanks, Wes, 

7 okay.

8 Additional comments before we move 

9 on?

10 (No response.)

11 MR. BROOKMAN: Okay.

12 MR. WES ANDERSON: That's it?

13 MR. BROOKMAN: Yes.

14 MR. WES ANDERSON: The Energy 

15 Independence and Security Act 2007, which is 

16 effectively referred to as EISA 2007, issued 

17 three bullet points. Give an overview of what 

18 EISA has imposed on DOE.

19 If they incorporate standby and 

20 off mode for a final rule published -- any 

21 final rule published after July 1, 2010, 

22 permits DOE to establish up to two regional 
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1 standards in addition to its national 

2 standard.

3 And also DOE must consider the 

4 impacts on the distribution channel, the 

5 consumer, manufacturers, other marketing 

6 participants including the product 

7 distributors, dealers, contractors, and 

8 installers.

9 DOE seeks comment on the energy 

10 consumption of components during off mode and 

11 the potential to reduce the energy consumption 

12 of these components.

13 DOE also seeks comment on the 

14 possibility of separate standards for off mode 

15 energy consumption.

16 MR. BROOKMAN: Two issues related 

17 to off mode.

18 Steve Rosenstock?

19 MR. ROSENSTOCK: Steve Rosenstock, 

20 Edison Electric Institute.

21 I thought for central air 

22 conditioners and heat pumps that the test 
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1 procedures already incorporate the off mode 

2 energy usage. So we don't see a need for any 

3 separate standard since it is already 

4 incorporated into the annual energy efficiency 

5 metric.

6 Thank you.

7 MR. BROOKMAN: Thank you.

8 Karim?

9 DR. AMRANE: Karim Amrane and I 

10 will concur with what Steve just said. I urge 

11 DOE to review the test procedures because we 

12 believe that it is already accounted in the 

13 SEER calculations (inaudible).

14 MR. BROOKMAN: Okay. Thanks.

15 Other comments on these two 

16 issues?

17 (No response.)

18 MR. BROOKMAN: No additional 

19 comments?

20 (No response.)

21 MR. WES ANDERSON: Further 

22 clarification of what EISA requires of DOE for 
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1 the establishment of regional standards, two 

2 regional standards, in addition to a base 

3 national standard. The boundaries are -- of 

4 geographical regions must include contiguous 

5 states. Individual states cannot be bisected 

6 by the boundaries.

7 The establishment of additional 

8 regional standards must result in significant 

9 energy savings. And the establishment of any 

10 additional regional standard must be 

11 economically justified.

12 This is DOE's interpretation of a 

13 proposed regional layout with the rest of the 

14 country in green, hot, humid, hot, dry in the 

15 southwest, and hot, humid in the southeast. 

16 We've listed the states in the subsequent 

17 table for more detail.

18 DOE seeks comment from interested 

19 parties regarding DOE's regional definitions 

20 for analysis of regional standards generally 

21 used.

22 MR. BROOKMAN: Molly?
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1 MS. TROMBLEY-McCANN: Molly 

2 Trombley-McCann.

3 I just wanted to take a moment to 

4 plead the case of large states such as 

5 California who have climates that range from 

6 less than 1,000 heating degree days to over 

7 5,000 heating degree days.

8 The requirement for our state to 

9 be in only one climate zone and not to split 

10 states between climate zones is not very 

11 effective for efficiency in a state such as 

12 California.

13 This is one of the reasons that 

14 we're a supporter of the consensus agreement. 

15 It includes requirements for disclosure of 

16 performance points that allow utilities and 

17 other programs to set individual requirements 

18 within the state through efficiency rebates 

19 and other programs that this standard cannot 

20 effectively address.

21 So I just wanted to put that out 

22 there.
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1 MR. BROOKMAN: Okay. Thank you.

2 Don Brundadge?

3 MR. BRUNDADGE: Don Brundadge, 

4 Southern Company.

5 This is a different set of regions 

6 than in the consensus agreement. And I think 

7 I would prefer the consensus agreement 

8 boundaries to what's here.

9 Thank you.

10 MR. BROOKMAN: Thank you.

11 Yes, Karim?

12 DR. AMRANE: Karim Amrane, AHRI.

13 Yes, I mean it looks like DOE is 

14 using different regions that what is in the 

15 consensus agreement. I guess I'm asking the 

16 question to DOE is DOE looking at the 

17 consensus agreement and has DOE studied the 

18 consensus agreement?

19 MR. BROOKMAN: Wes?

20 MR. WES ANDERSON: Yes. We'll get 

21 to that point in the next couple of slides.

22 MR. BROOKMAN: Okay.
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1 Andrew deLaski (phonetic)?

2 MR. deLASKI: What was the 

3 criteria? How did you develop the --

4 MR. WES ANDERSON: This is about -

5 - we generally -- the boundary is around 5,000 

6 heating degree days and population base. 

7 We'll get into more detail later in the 

8 presentation with the specific analysis.

9 So -- but if you want to -- can 

10 you hold your question until then?

11 MR. deLASKI: I guess I would 

12 respond that I believe, Karim, correct me if 

13 I'm wrong, but the basis for the agreement 

14 criteria was also 5,000 heating degree days. 

15 So it would be helpful to get to the bottom of 

16 that at some point.

17 MR. BROOKMAN: We're going to 

18 proceed with this.

19 Do you have a short answer, Dave? 

20 Find the microphone, Dave, Dave Winiarski.

21 MR. WINIARSKI: Dave Winiarski, 

22 Pacific Northwest National Lab.
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1 Yes, I will address that. But 

2 roughly the boundaries are close to 4,500.

3 MR. BROOKMAN: It's slightly 

4 different, okay.

5 So then we'll address this in 

6 greater detail as we're going along.

7 Additional comments on this --

8 these regions as established -- as proposed by 

9 the Department?

10 (No response.)

11 MR. BROOKMAN: Okay, Wes.

12 MR. WES ANDERSON: Okay. Now we 

13 will start discussion on enforcement plan by 

14 Rob Carmichael.

15 MR. BROOKMAN: Robert Carmichael.

16 MR. CARMICHAEL: Thanks, Wes.

17 My name is Rob Carmichael. I'm 

18 with Navigant Consulting.

19 I'm going to briefly go over two 

20 items with you today. The first are just 

21 talking about the considerations related to 

22 regional standards enforcement. And the 
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1 second is an overview of our preliminary 

2 analysis of the impacts on the distribution 

3 chain due to regional standards.

4 But first here's the statutory 

5 obligations related to regional standards 

6 enforcement. So simply put, EISA requires DOE 

7 to start an enforcement plan rulemaking within 

8 90 days of establishing -- or issuing a final 

9 rule that establishes regional standards. And 

10 DOE must complete that enforcement rulemaking 

11 within 15 months.

12 And so DOE has not yet determined 

13 an enforcement plan but does believe that an 

14 effective enforcement plan would include some 

15 of the following elements that are shown on 

16 this slide, including labeling, enforcement 

17 through building codes, fines for noncompliant 

18 installations, warranty or product 

19 registration, consumer education, and other 

20 competitively-driven enforcement mechanisms.

21 MR. BROOKMAN: Don Brundadge?

22 MR. BRUNDADGE: If this is not the 
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1 right place to bring this up, I can defer it. 

2 I asked back in the furnace hearings a few 

3 weeks ago for some clarification on building 

4 codes on what states could and could not due 

5 on restricting the use of NACA products.

6 It comes up a lot in the south 

7 where a product may be poorly suited for a 

8 hot, humid climate but has a good SEER. And 

9 states, in particular there has been some 

10 discussions in Florida, don't think they have 

11 the right to restrict any NACA-approved 

12 products from being used.

13 Is there any clarification that we 

14 can get on that?

15 MR. BROOKMAN: Wes? Wes Anderson?

16 MR. WES ANDERSON: Wes Anderson, 

17 DOE.

18 Please, can you put that in 

19 writing in your official comments to us so 

20 that we can officially respond to that?

21 MR. deLASKI: Okay. Well, I had

22 asked at the furnace hearing for general 
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1 counsel to try to be prepared for this when we 

2 got to this meeting so we could go ahead.

3 It's really independent of this 

4 rulemaking because I think it is more of an 

5 issue coming up with people adopting the 2009 

6 IECC, which drastically increases the 

7 insulation levels and changes in the south the 

8 latent sensible load on equipment.

9 It's something that needed now and 

10 not when this rulemaking is put in place.

11 MR. BROOKMAN: Betsy Kohl?

12 MS. KOHL: Yes, I'm sorry, Betsy 

13 Kohl, DOE General Counsel's Office.

14 So it's really hard not knowing --

15 MR. BROOKMAN: Betsy, get closer 

16 please.

17 MS. KOHL: It's really hard not 

18 knowing the specifics of your question because 

19 the provisions in EPCA on preemption, 

20 particularly those dealing with building 

21 codes, are very complicated.

22 So if you do have something that 
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1 you can submit in writing, if it is separate 

2 from this comment process, we can take a 

3 closer look.

4 MR. deLASKI: Okay. Thank you.

5 MR. BROOKMAN: Thank you.

6 Yes, Steve Rosenstock?

7 MR. ROSENSTOCK: Steve Rosenstock, 

8 Edison Electric Institute.

9 I guess the other thing in terms 

10 of building codes is that you're -- there are 

11 timing issues in that building codes are 

12 updated every three years. And then under 

13 federal law, DOE is supposed to do a 

14 determination.

15 And then states have up to two 

16 years to update their codes to match or exceed 

17 the newly determined national code.

18 So, you know, if ICC comes out 

19 with their code in 2012, and DOE does their 

20 determination in the following year, they're 

21 supposed to do it within one year, and then 

22 states have two years, it might not be until 
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1 2015 until many states adopt the 2012 codes, 

2 which may or may not have the new efficiency 

3 levels.

4 So there is a time lag issue with 

5 relying on building codes in terms of an 

6 enforcement mechanism for new national or 

7 regional appliance efficiency standards.

8 Also the fact that many states 

9 when they have home rule, different cities or 

10 counties can adopt different levels if they 

11 wanted to.

12 So -- thank you.

13 MR. BROOKMAN: Thank you.

14 John Mandyck?

15 MR. MANDYCK: John Mandyck with 

16 Carrier.

17 I'd like to make a comment on the 

18 labeling item on the slide, which we think is 

19 the least effective of all of the enforcement 

20 mechanisms.

21 The AHRI directory has some 

22 600,000 combinations in it. And this comes 
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1 from a personal experience where I put an 

2 addition on to my house last year and the 

3 system or my condensing unit arrived with a 15 

4 SEER hang tag but it was being installed with 

5 a high efficiency indoor furnace with a 

6 variable speed fan, which combined together 

7 achieved a 16 SEER official rating.

8 And so it is impossible to label 

9 products because systems are matched and they 

10 are shipped differently. And sometimes they 

11 are not even shipped by the same manufacturer.

12 So labeling would have to account 

13 for the fact that there are 600,000 

14 combinations which achieve an official rating 

15 within the AHRI directory and would be nearly 

16 impossible to do.

17 MR. BROOKMAN: Would you suggest 

18 an alternative to the Department?

19 MR. MANDYCK: Well, we would 

20 suggest that we look at all the other issues 

21 on the chart, including enforcement at the 

22 local level by building inspectors. But I 
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1 guess my point today is that labeling should 

2 either be removed from the chart or should be 

3 the least preferable method because of its 

4 complexity and almost impossibility.

5 MR. BROOKMAN: Thank you.

6 Talbot?

7 MR. GEE: Well, Talbot Gee with 

8 HARDI Air Conditioning Distributors.

9 I would agree with John's 

10 comments. And we've seen this just even with 

11 efficiency programs where you have to require 

12 that you can certify that it is a properly 

13 installed matched system to achieve an 

14 incentive, which requires additional 

15 documentation that any single label on a piece 

16 of product wouldn't have achieved.

17 I'd also point out that there is a 

18 few things here we again bring up that we did 

19 during the furnace rulemaking, that the 

20 warranty registration as an enforcement 

21 mechanism is probably not feasible because 

22 some states have consumer protection laws that 
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1 would prevent any type of mandate tied to 

2 warranty registrations.

3 In general, for the wholesale 

4 distributor community, product registration, 

5 period, is not that effective. Most 

6 homeowners don't return that type of 

7 information. And it would be very, very 

8 costly for industry to try to do that.

9 I would point on the consumer 

10 education on regional standards is not an 

11 enforcement mechanism, especially if it is in 

12 absence of an actual enforcement mechanism 

13 that might be in the marketplace, which drives 

14 down to the last point.

15 Reiterate again that competitively 

16 driven enforcement works if there is actually 

17 an enforcement body that you would report to. 

18 And so far we've not had a real positive 

19 experience.

20 If we take, for example, EPA --

21 (tape change, some audio missing)

22 PARTICIPANT: -- in the cold 
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1 climates and in the warmer states because the 

2 BIN temperature effect on the heat pump is 

3 fairly significant in that distribution. And 

4 the northern tier is really different than in 

5 the southern tier. And so the performance is 

6 really different for the same ARI or AHRI 

7 writing in climate zone 4, which is where it 

8 gets rated.

9 So we don't get the same 

10 performance, sometimes better, sometimes 

11 worse, than that rating. And we really to do 

12 the simulation model or BIN temperature 

13 approach to that to get the right answer.

14 MR. CARMICHAEL: Okay. I'd like 

15 to talk to that maybe in another slide or two.

16 MR. BROOKMAN: Steve Rosenstock?

17 MR. ROSENSTOCK: Steve Rosenstock 

18 EEI.

19 And I think following up with Don 

20 Brundadge, if -- and maybe if there is a trend 

21 in replacements towards I'll say more hybrid 

22 systems where a central air conditioner is 
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1 replaced with an air source heat pump along 

2 with the fossil fuel heating system as a back3 up (inaudible) or just preferenced during the 

4 really cold weather, that is going to have an 

5 impact on the analysis.

6 Especially if more and more 

7 households are doing that, that definitely has 

8 an impact on the life cycle cost analysis for 

9 the heat pumps.

10 Thank you.

11 MR. BROOKMAN: Thank you.

12 MR. CARMICHAEL: So this is a 

13 basic diagram of the simplified residential 

14 energy use calculation. Over in the top 

15 lefthand side, we start with REXX (phonetic). 

16 Along the left row there, we use the age of 

17 the household and, where reported, the age of 

18 the air conditioner or heat pump in REXX.

19 We use AHRI average shipment SEER 

20 ratings to generate an estimated SEER for each 

21 particular household observation.

22 And then, as was alluded to in the 
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1 discussion, there is a basic scaling process 

2 where we take the stock unit energy 

3 consumption and multiple it by the ratio of 

4 the SEER estimate for the stock to the SEER 

5 estimate for a particular standard level that 

6 we're interested in.

7 We do that for a baseline 

8 analysis, baseline being a 13-SEER product was

9 was used in the engineering analysis at least 

10 for those classes where that's appropriate. 

11 We also do it for each standard level that DOE 

12 is analyzing off to the right.

13 We also, because we recognize that 

14 there is going to be a distribution of 

15 products sold into the market at different 

16 SEER levels, we develop for each household a -

17 - or we develop a general distribution of 

18 SEERs for the market and then for each 

19 household, we randomly sample from that 

20 distribution to estimate the SEERs for the 

21 market baseline. And I'll talk about that in 

22 a little bit.
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1 The commercial process is a little 

2 more complicated but essentially we start with 

3 a small office building model. We used a 

4 reference building or a benchmark building 

5 that was developed by DOE. It's about a 5,500 

6 square foot single-story small office 

7 building. It kind of looks like that picture 

8 on the right.

9 We simulated with 237 typical 

10 meteorological year locations. That's the 

11 TMY2 set. And we simulated for each product 

12 class four different efficiency levels, a 13, 

13 a 14, a 16, and whatever is the max tech level 

14 for that particular product class.

15 And we actually simulated the coil 

16 only and the blower coil, pretending that 

17 they're two separate product classes for this 

18 analysis.

19 Simulation was done in EnergyPlus. 

20 And from each simulation in each climate 

21 zone, we extract out the hourly annual 

22 cooling, heating, and fan use from the 
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1 simulation as well as the peak sizing that was 

2 established in EnergyPlus for that product.

3 And then we normalized the average 

4 energy use or average cooling, heating, and 

5 fan energy use for the building to reflect 

6 that for a three-ton air conditioning unit so 

7 that we can fit it with the rest of the 

8 analysis work that's being done on the 

9 residential side.

10 And, again, we develop a market 

11 baseline distribution and a standard level 

12 distribution because we explicitly simulated 

13 the 13 SEER that comes directly out of the 

14 analysis as the baseline energy use 

15 distribution.

16 MR. BROOKMAN: Steve Rosenstock?

17 MR. ROSENSTOCK: Steve Rosenstock, 

18 Edison Electric Institute.

19 In this case, again obviously 

20 depending on what part of the country you're 

21 in, you just basically kind of took a zone 

22 approach that you said well, in the north it 
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1 might be two units of three tons each but in 

2 the south it might be four units three tons 

3 each, something like that?

4 MR. CARMICHAEL: No, actually the 

5 way it works is in the simulation, you have to 

6 -- when you set up the input deck for the 

7 building model, you have to define the zones 

8 and the systems directly.

9 So the small office building model 

10 is assumed to have five zones, four perimeters 

11 and a core zone appropriate to this -- roughly 

12 appropriate to this size building. And then 

13 as the unit moves around the country, for each 

14 weather tape that you use, it will develop a 

15 different sizing of equipment for that.

16 So you'll end up with, for 

17 instance in the south maybe it will be -- I'm 

18 going to throw out a number here -- like 12 

19 tons and maybe in the north it will be ten 

20 tons.

21 MR. ROSENSTOCK: But, again, Steve 

22 Rosenstock, EEI, thanks. But following up on 
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1 that in terms of -- but you still -- the model 

2 assumed that -- again, just to kind of match 

3 it -- you didn't assume one ten-ton unit or 

4 one 12-ton unit did you?

5 MR. CARMICHAEL: No. What you 

6 would end up with, if it is sized for --

7 you've got five units in there, okay.

8 MR. ROSENSTOCK: It's five units, 

9 thank you.

10 MR. CARMICHAEL: Yes, there's five 

11 units. And we just normalize it down to a 

12 single three-ton unit.

13 MR. BROOKMAN: (Inaudible)?

14 PARTICIPANT: In the northern 

15 tier, how was the heat pump sized?

16 MR. CARMICHAEL: Heat pump sized 

17 on cooling.

18 PARTICIPANT: Good. Thank you 

19 very much. Just asking. Wrong but just 

20 asking.

21 MR. CARMICHAEL: Yes.

22 MR. BROOKMAN: John Mandyck?
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1 MR. MANDYCK: Harvey, stay calm.

2 MR. BROOKMAN: Let's let Harvey 

3 follow on. Harvey, go ahead.

4 MR. SACHS: I'm conscious that Ron 

5 Lewis is not here. But I'll still try to be 

6 polite.

7 I guess I really don't understand 

8 why it would be looking at northern heat pumps 

9 being sized for cooling rather than for 

10 heating. That's the major load and that's 

11 what I'm buying the equipment for.

12 And the consequences in terms of 

13 total energy use are rather extraordinary if I 

14 buy it sized for cooling. And I did learn to 

15 think about high bill complaints.

16 MR. CARMICHAEL: Yes. But to 

17 follow up, you know, essentially on the 

18 cooling side, the heat pump, the compressor is 

19 effectively sized so that it can meet the 

20 cooling requirements for the building and 

21 operation around the country.

22 Where that compressor cannot 
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1 provide the amount of heat under design load 

2 conditions, electric resistance backup was 

3 assumed.

4 MR. SACHS: I'm sorry. Is that 

5 the recommended standard practice I would 

6 find, for example, in an ACCA manual for 

7 serving customer needs? I can't believe that 

8 best practices in this industry are still to 

9 size a Seattle heat pump for the cooling load.

10 PARTICIPANT: Right. Seattle has 

11 300 heating degree hours -- hours. Not days. 

12 Sizing a heat -- you get a one-ton heat pump 

13 in these zones instead of a three- or four14 ton, which is --

15 PARTICIPANT: This is a heat pump 

16 and air conditioner framework, isn't it?

17 PARTICIPANT: No, it's 

18 preliminary.

19 PARTICIPANT: I'm sorry. It is a 

20 --

21 PARTICIPANT: If we do the 

22 consensus agreement, we bypass this problem.
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1 (Laughter.)

2 PARTICIPANT: And if we don't, I 

3 would recommend suggesting comments on what is 

4 the appropriate sizing mechanism for heat 

5 pumps across the U.S.

6 PARTICIPANT: I want to back up. 

7 You said 300 hours cooling --

8 PARTICIPANT: Cooling load --

9 PARTICIPANT: Thank you.

10 PARTICIPANT: -- cooling degree 

11 hours.

12 MR. BROOKMAN: John Mandyck?

13 MR. MANDYCK: John Mandyck with 

14 Carrier.

15 I have several questions regarding 

16 the simulated levels.

17 MR. CARMICHAEL: Yes.

18 MR. MANDYCK: The first one is 

19 what was max tech that you evaluated for 

20 central air conditioners?

21 MR. CARMICHAEL: What was max 

22 tech? Was it -- 22, I think for the blower 
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1 coil.

2 MR. MANDYCK: Okay. Did you use 

3 the same four simulated points for your 

4 residential analysis, too?

5 MR. CARMICHAEL: We did not 

6 simulate the residential analysis. That was 

7 done using the REXX data.

8 MR. MANDYCK: Okay. Great.

9 And then on this, I'm curious as 

10 to why you went from 13, 14 and then jumped to 

11 16. Does that mean that 15 SEER is not 

12 considered a possible standard if you don't 

13 accept the consensus agreement?

14 MR. CARMICHAEL: No, no, that's 

15 not what it means. Basically in using the 

16 EnergyPlus, we had lots of levels to simulate. 

17 And there's a lot of simulations involved 

18 here.

19 So what we did is we simulated 

20 these four levels for each product. Between 

21 those levels, the energy use is interpolated. 

22 And I'll go into that in the next slide if 
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1 that's all right.

2 MR. BROOKMAN: Go to the next 

3 slide.

4 Harvey?

5 MR. SACHS: Harvey Sachs, ACEEE.

6 I guess I am surprised and stunned 

7 is probably not too strong a word that if I 

8 look back at slides like 45 on the markups, 

9 we're going to extraordinary measures to get 

10 estimates to the third decimal.

11 And then when I look at how we're 

12 looking -- setting up our models, setting up 

13 our fundamental assumptions, it sounds like 

14 we're not looking at climate zone-specific 

15 HSPFs, we're not sizing for heating load in 

16 northern climates for heat pumps, and these 

17 are things that are on the other side of the 

18 decimal place.

19 And it just is a very surprising 

20 thing that we're so very, very careful about 

21 some things. But at the level of the common 

22 sense engineering, understanding what a 
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1 practitioner would be expected to do, it seems 

2 as though we're missing some things that might 

3 be pretty important.

4 MR. BROOKMAN: Okay. Thank you.

5 Keep going.

6 MR. CARMICHAEL: Okay. So, again, 

7 we had to make -- for anyone who has been 

8 involved or listened to people talk about how 

9 you actually do a simulation model, we've got 

10 to make some assumptions, starting with the 

11 fact that once we have the building model 

12 described, we need to come up with a way to 

13 effectively input what corresponds to a SEER 

14 or a HSPF level that's being developed in the 

15 engineering analysis to get that information 

16 actually into the simulation.

17 So to start with in that process, 

18 there was a multi-step process. The first was 

19 converting the SEER and HSPF ratings, which 

20 cannot be directly simulated, to what we call 

21 a full load EER. It's a 95-degree EER and a 

22 COP at 47 degrees heating.
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1 That process utilized a paper 

2 that's been written by a couple of researchers 

3 who looked at AHRI data and developed this 

4 particular curve you see in the right-hand 

5 corner, relating SEER and EER.

6 Yes?

7 MR. SACHS: Harvey Sachs, ACEEE.

8 I'm not familiar with the Wasman 

9 Brandemule (phonetic) curve. But it has been 

10 our experience with a lot of other curves, 

11 Henderson, for example, that there is a break 

12 and we see two different families at 

13 intermediate SEER values depending on whether 

14 we have a step-modulating or other modulating 

15 compressor so that EER has a different slope 

16 with SEER for a single-stage unit than it has 

17 for a modulating unit.

18 And without some measure of 

19 variance, I just can't believe this curve is 

20 looking like this quasi-linear relationship 

21 with the nearest spread. It just doesn't make 

22 sense from looking at data.
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1 You're missing the story, I think.

2 MR. BROOKMAN: Okay. Do you want 

3 to respond to that?

4 MR. CARMICHAEL: Oh, sorry, I 

5 thought Steve had his hand up.

6 There are a couple of curves you 

7 do get that type of relationship. One of the 

8 issues, in particular, with the commercial 

9 building assumptions and the modeling of 

10 commercial buildings is exactly how you handle 

11 the fan power, whether, in fact, the fan is 

12 allowed to essentially go to a lower fan speed 

13 or not in the modeling.

14 MR. SACHS: I'm sorry. I'm not 

15 talking about the fan. I'm talking about the 

16 compressor. The fan issue we haven't gotten 

17 to yet. At SEER 14, 15, and perhaps 

18 manufacturers can fill in, whether it goes up 

19 to 16 or not, I can use either a two speed or 

20 inverter technology or a single speed.

21 And my SEER/EER relationship is 

22 very different depending on which of those 
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1 compressor choices I've made. That's not 

2 reflected in this curve.

3 MR. CARMICHAEL: Nor, in fact, is 

4 it clearly reflected in the standard that DOE 

5 would publish. DOE will publish -- if it 

6 publishes a SEER, it does not explicitly say 

7 single speed or two-speed equipment. This is 

8 reflection sort of a number of products that 

9 were available on the market.

10 MR. SACHS: But this reflects the 

11 analysis because the energy use at different 

12 temperature bins will depend on which one of 

13 these units you're using in your model 

14 equipment. Maybe I'm missing something but I 

15 think I'm on solid ground here.

16 MR. BROOKMAN: Harvey, maybe you 

17 could send it in detailed comments.

18 MR. SACHS: We published this 

19 several years ago in our analysis of regional 

20 standards.

21 MR. BROOKMAN: Don Brundadge.

22 MR. BRUNDADGE: I'm just amazed 
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1 I'm agreeing with Harvey so much today.

2 (Laughter.)

3 MR. SACHS: I'm sorry, Don.

4 PARTICIPANT: It's proximity.

5 MR. BRUNDADGE: I think if you 

6 just did SEER 16 and max tech as dual or 

7 variable speed, it would solve a lot of these 

8 problems. The curve you've got here looks to 

9 me like you are assuming single speed all the 

10 way up through SEER 20.

11 You need to have a change when you 

12 switch the technologies. And that's probably 

13 going to happen around SEER 16. And you are 

14 going to get a very differently looking EER 

15 slope on variable speed compressors.

16 Thank you.

17 MR. BROOKMAN: Thank you.

18 Steve Rosenstock?

19 MR. ROSENSTOCK: Steve Rosenstock, 

20 EEI.

21 And I will also agree with Harvey 

22 and Don. Hopefully they don't faint over 
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1 there.

2 But I also have to say the impact 

3 of using this nice linear curve where 

4 everything -- EER always go up with SEER -- is 

5 that especially on the commercial side, that 

6 regardless of what's actually happening with 

7 EER, that energy use always goes down and peak 

8 demand always goes down.

9 And, therefore, your economic 

10 analysis always looks better when that's not 

11 always going to be the case based on a lot of 

12 the testimony that's been heard earlier today.

13 So I understand why you're doing 

14 this. But I think there's better methods. 

15 Number one, in terms of the EER levels already 

16 assigned to those units. You don't have to 

17 convert the EER if the EER is already -- there 

18 is a published EER already. There's no need 

19 for conversion. Use the actual number in 

20 terms of some of simulation.

21 And, again, it's probably 

22 bifurcated at the higher levels in terms of 
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1 very low EERs and pretty high EERs. But, 

2 again, using this will distort the eventual 

3 energy and life cycle costs and energy savings 

4 analysis.

5 Thank you.

6 MR. BROOKMAN: Okay. Thank you.

7 Harvey?

8 MR. SACHS: It's a little bit 

9 digressive but there's a piece of equipment in 

10 the hall manufactured by an outfit named 

11 Shortridge (phonetic). I'd like to see the 

12 hands of anyone in this room who has used such 

13 a piece of equipment. Thank you.

14 It's a fundament piece of 

15 equipment for balancing the flow from air 

16 registers, one with which every contractor 

17 should be familiar. And it's relevant to the 

18 kinds of experience people have for doing 

19 these analyses.

20 Thank you. End of rant. I'm 

21 sorry.

22 MR. BROOKMAN: Thank you.
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1 Jim?

2 MR. BRESHAW: Jim Breshaw.

3 I've just got to state that this -

4 - assuming this is EER at 95, these don't look 

5 appropriate if you go dig into the AHRI 

6 directory. I don't think you'll find 14, 15 

7 EERs on most of these equipment. It just 

8 doesn't look right to me.

9 MR. BROOKMAN: Molly?

10 MS. TROMBLEY-McCANN: Having dug 

11 into the AHRI directory about a week ago, this 

12 does not look to me at all. So, you know, I'm 

13 not sure what the sources were for the paper. 

14 And I should probably look up the paper and 

15 figure out, you know, what they were doing. 

16 But based on what's on the AHRI directory 

17 right now, this does not look accurate.

18 MR. BROOKMAN: Thank you. It's in 

19 the TSD, Dave, is it not?

20 MR. WINIARSKI: The paper?

21 MR. BROOKMAN: Your citations.

22 MR. WINIARSKI: Oh, yes, yes, 
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1 that's in the TSD. This is actually a fairly 

2 well-known paper for those who need to look at 

3 it.

4 One of the things we can do is we 

5 can propose to show this along with results 

6 from the AHRI directory in comparison.

7 MR. BROOKMAN: We need to keep 

8 moving along here, folks.

9 Jeff first. And then to Andrew.

10 PARTICIPANT: Just, you know, to 

11 reinforce some of the other statements. If 

12 you are analyzing different compressor 

13 technologies, you have to take into account 

14 the fact that they are going to be different. 

15 Single stage is going to give you one EER at 

16 a 16 SEER. And a two stage is going to give 

17 you a different EER in a 16 SEER. 

18 At the same SEER level, they're 

19 going to be different because the technologies 

20 are different. And that will have to be taken 

21 into account.

22 MR. BROOKMAN: Okay.
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1 Andrew?

2 MR. deLASKI: So just to follow on 

3 this thread, just to agree that, you know, 

4 clearly this is going to impact the LCC. It's 

5 going to impact the NES. And, you know, these 

6 are the fundamental parameters of the 

7 rulemaking.

8 It is also going effect the 

9 utility impact analysis. And in central air 

10 conditioners, peak demand impacts is a 

11 critical concern for this docket. And, you 

12 know, my recollection of the last docket is, 

13 you know, we saw huge energy savings for --

14 peak savings from the last central air 

15 conditioner standard.

16 But that the Department in the 

17 last docket concluded that over SEER 13 or 14, 

18 the relationship between SEER and EER broke 

19 down.

20 And it strikes me that, you know, 

21 in a market where you look at the market today 

22 and what Molly has observed -- just said now 
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1 that she doesn't see a real relationship over 

2 SEER 14 is that, you know, that relationship 

3 may very well become more clear once a 

4 standard is set and as the market migrates to 

5 the lowest cost compliance path.

6 And if that results in higher EER, 

7 than, you know, what's modeled is that we will 

8 have undermined the goal of the savings. So I 

9 think this really needs to be sorted out in a 

10 way that reflects what is the low cost 

11 compliance path.

12 MR. BROOKMAN: Okay. So thanks 

13 for all those comments.

14 Take final comments. You see a 

15 series of assumptions listed here and some of 

16 which have been addressed. I'm not sure they 

17 all have. Final comments on the assumptions 

18 listed on slide 50.

19 Yes, Jim?

20 PARTICIPANT: On the static 

21 pressure, is that the external static pressure 

22 that the blower system sees? Does that 
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1 include the coil pressure drops as well?

2 MR. WINIARSKI: I was going to 

3 clarify that. The static pressure that you 

4 see there is used in the conversion between a 

5 -- effectively what the simulation model needs 

6 is it separates out the fan from the 

7 condensing unit.

8 And so in order to come up with an 

9 effective cooling COP and heating COP for the 

10 condensing unit, you have to extract out the 

11 fan, you have to extract out the fan power at 

12 test conditions.

13 At test conditions, we estimated 

14 that a typical static pressure -- total static 

15 pressure for the system was around this 1.1 

16 inches. The actual building model when it's 

17 run, it's closer to, I think, 1.5 inches.

18 PARTICIPANT: And you're assuming 

19 this is for residential equipment applied in a 

20 commercial building?

21 MR. WINIARSKI: Exactly. A very 

22 small commercial building.
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1 PARTICIPANT: But if you look 

2 through our application guide, you won't find 

3 any equipment that's rated above an inch. So 

4 I'm not sure how you could get an inch, inch 

5 and a half.

6 MR. WINIARSKI: That's external 

7 static, right?

8 PARTICIPANT: I thought that's 

9 what you just said but --

10 MR. WINIARSKI: Oh, yes, that's 

11 what I'm saying. So this here is the total 

12 static pressure.

13 PARTICIPANT: This includes the 

14 pressure drop across the coil and the filter 

15 and the internal losses of the air handler?

16 MR. WINIARSKI: Yes, the whole 

17 thing.

18 PARTICIPANT: Okay.

19 MR. WINIARSKI: Yes.

20 MR. BROOKMAN: Okay. Jeff?

21 PARTICIPANT: One last question. 

22 On the fan efficiency of .58 and .65, I assume 
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1 that's .58 for 13 and .65 for 14 is what 

2 you're modeling?

3 MR. WINIARSKI: No. The fan 

4 efficiency, the efficiency of the actual fan 

5 itself, you know, brake horsepower-type 

6 efficiency is assumed to be .58 --

7 PARTICIPANT: Okay.

8 MR. WINIARSKI: -- the blower 

9 motor --

10 PARTICIPANT: I'm sorry. I 

11 apologize. I missed that.

12 MR. WINIARSKI: Yes.

13 MR. BROOKMAN: Okay.

14 Harvey Sachs?

15 MR. SACHS: First of all, thank 

16 you for using the total static pressure and 

17 for using realistic values instead of the 

18 rating method values. I guess I'm not at all 

19 confident that these motor efficiencies or 

20 combined efficiencies are realistic at these 

21 high ASPs for residential equipment.

22 MR. BROOKMAN: Okay.
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1 Tom Eckman?

2 MR. ECKMAN: On the presumption 

3 that we move to a simulation of the heat pump 

4 on residential as well as on commercial, I 

5 think -- and we take at least some look at 

6 inverted ribbon technology, I think picking a 

7 single point COP temperature is probably wrong 

8 in trying to fit a curve through that because 

9 inverter-driven technology has a wholly 

10 different performance curve as temperatures go 

11 down relative to other technologies.

12 And so if that's evaluated on the 

13 heat pump side, we need to look at the 

14 performance curves with that technology 

15 embedded in the system versus the non-inverted 

16 ribbon compressors because they perform quite 

17 differently at lower temperatures relative to 

18 the standard rating points that we have right 

19 now available.

20 MR. WINIARSKI: For what it's 

21 worth, let me respond to that.

22 I believe that the simulation 
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1 tool, EnergyPlus, allows for a single and a 

2 double stage model. Essentially there are 

3 performance curves that handle how the COP or 

4 condensing unit efficiency varies as a 

5 function of indoor wet bulb, outdoor dry bulb 

6 temperature. All these things.

7 And so there's only a limited 

8 selection of curves currently available in 

9 EnergyPlus to do that. I don't think inverter 

10 is one of them. Just a general comment.

11 MR. ECKMAN: That would be a 

12 limitation for evaluating that technology then 

13 I gather.

14 MR. BROOKMAN: Thanks, Tom.

15 Okay, yes, Molly?

16 MS. TROMBLEY-McCANN: I just kind 

17 of wanted to sum up here in terms of as a 

18 representative of a utility. The SEER rating 

19 as it is current designed is based on the 

20 performance at 82 degrees.

21 And as you push harder to get a 

22 better SEER rating, you prioritize performance 
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1 at those lower temperatures over performance 

2 at much higher temperatures.

3 What you end up seeing, at least 

4 in my experience with the equipment that's on 

5 the market, is that for a very high SEER, the 

6 EER at 95 and above actually goes down 

7 compared to lower SEER.

8 And the reasons this is such an 

9 important issue for us is because that means 

10 that peak performance goes down as you 

11 nominally increase the efficiency of the 

12 equipment.

13 For utilities in hot, dry areas 

14 that have really high peak loads, this is 

15 potentially catastrophic. And it is one of 

16 the reasons that we are so emphatic about not 

17 using SEER as the only or even any efficiency 

18 metric in hot, dry regions.

19 So if this curve is wrong, you 

20 could potentially miss extremely important 

21 impacts to utilities and also to consumers. 

22 So it's not just that we're nitpicking about 
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1 whose study is right. It's really important.

2 MR. BROOKMAN: Okay. Thanks for 

3 that summary. That's helpful.

4 Karim?

5 DR. AMRANE: Karim Amrane, AHRI.

6 Just a comment here. I mean we're 

7 talking about what, seven percent of the 

8 market here, for commercial buildings? So I'm 

9 not sure -- we're spending a lot of time on 

10 this but I don't think at the end of the day 

11 it's going to make a lot of difference in the 

12 analysis. That's my personal opinion.

13 MR. BROOKMAN: Thank you.

14 Don Brundadge? But we do need to 

15 keep moving along or we'll be here all 

16 afternoon.

17 MR. BRUNDADGE: Yes. I agree it's 

18 only seven percent. But part of the reason I 

19 think we're spending so much time is we'd 

20 really like something more similar to this 

21 done on the residential side because for all 

22 the flaws, this is still a better approach 
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1 than what you're doing on residential.

2 Thank you.

3 MR. BROOKMAN: Great.

4 Harvey?

5 MR. SACHS: Harvey Sachs, ACEEE.

6 And, again, Mr. Brundadge took 

7 words out of my mouth. I'll quit -- there was 

8 something else I wanted to say but he took the 

9 words out of my mouth on the first piece.

10 MR. BROOKMAN: Okay. Thank you. 

11 Then we're going to move on then.

12 MR. WINIARSKI: Okay. So this is 

13 essentially an estimate of the market baseline 

14 efficiency distributions for each product 

15 class. In the past, I think in past 

16 rulemakings this data was made available by 

17 the industry. It was not available for this 

18 rulemaking so DOE had to make some estimate 

19 for what the distributions looked like.

20 Essentially the distributions are 

21 built around first establishing SEER bins off 

22 to the left, the SEER bins that -- at the 
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1 center point for the most part, the bins have 

2 one of the design efficiency levels from the 

3 engineering analysis.

4 We then took some data, some 

5 industry trade press data that essentially 

6 suggested in the market in 2007, I believe, 

7 how much of the market was in say 13 to 14 

8 SEER, 14 to 15, 15 to 16 SEER. And I think 17 

9 and above is another group.

10 And then we developed 

11 distributions such that using that data, using 

12 the characteristic efficiencies for the bins, 

13 we could come up with weighted average SEERs 

14 that matched the weighted average statistical 

15 data that ARI had in 2007.

16 These -- so the values on the 

17 bottom basically reflect the AHRI -- pardon 

18 me, in 2007, we noticed on of the interesting 

19 things -- I think one of the product classes, 

20 single packaged AIR CONDITIONERS, I think the 

21 2007 data actually suggested that the shipment 

22 weighted average efficiency was below 13.
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1 I think that reflects -- I'm not 

2 quite clear what that all reflects but we 

3 adjusted for that for the 2008 data and then 

4 developed the distribution shown here. 

5 Basically we would like any type of comment 

6 from the industry on whether these 

7 distributions look about right.

8 MR. BROOKMAN: Steve Rosenstock?

9 MR. ROSENSTOCK: Steve Rosenstock, 

10 EEI.

11 Just a quick question. Again, 

12 this is going -- looking at if there's any 

13 data for 2009 in terms of the impact of the 

14 federal tax credits because for those they 

15 were either -- I think they were 15 or 16 

16 depending on the technology, 15 for heat pumps 

17 and 16 for central air conditioners.

18 So, again, I don't know how 

19 recently you want to look but there might have 

20 been -- those tax credits in effect for 2009 

21 and 2010 might have had an impact on some of 

22 this distribution.
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1 And I know there are proposals to 

2 extend the tax credits for several years. I 

3 know that some just came up recently.

4 Thank you.

5 MR. BROOKMAN: Talbot?

6 MR. GEE: Well, yes, this is 

7 Talbot with HARDI.

8 And I think it is a good point to 

9 consider what impact that may have had. And 

10 we talked about this a lot in our initial 

11 comments that I would recommend that there 

12 actually be an added analysis of the impact of 

13 efficiency programs on all of the deployment 

14 of these products because first of all, if you 

15 are going to say that okay, the mix has 

16 shifted to more high efficiency products but 

17 then you find that it is 90 percent due to 

18 some sort of an efficiency incentive, then I 

19 don't believe that justifies an increase in 

20 the minimum standard because if you increase 

21 the minimum standard, you are thereby probably 

22 undermining those efficiency programs, which 
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1 may not exist in the long run.

2 So in other words, you could hurt 

3 the product shift going forward. Now, again, 

4 we even said in our comments, we're not 

5 experts in efficiency programs but we know 

6 that there is some cost effectiveness that has 

7 to be established in those things.

8 And we think it would be well 

9 worth the DOE's time in this rulemaking and 

10 frankly other ones that apply to incentivized 

11 products to thoroughly study the impact of 

12 efficiency standards on any type of energy 

13 efficiency incentive program be it utility, 

14 state, federal.

15 But also not falling into the trap 

16 to think because heavily incentivized products 

17 may have shifted a little bit of market shares 

18 that it therefore justifies that it would be 

19 an easy jump to just raise the standard to 

20 that level or one close to it.

21 MR. BROOKMAN: Okay. Thank you.

22 Don?
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1 MR. BRUNDADGE: A general comment 

2 on data over the last few years. These have 

3 not been normal times. You've had near 

4 Depression era type conditions in 2008. You 

5 had a lot of incentives and tax credits thrown 

6 at things over the last year or two.

7 It may be that rather than 

8 automatically using the most recent data you 

9 need to consider these impacts and make 

10 adjustments or drop back to earlier data.

11 I mean we don't want to make long12 term projections going forward based on the 

13 roller coaster of the last couple of years and 

14 where your snapshot happened to grab it.

15 Thank you.

16 MR. WINIARSKI: If I can make two 

17 other comments. One, one of the issues is 

18 obviously 2006, the 13-SEER rule went in so 

19 there is not a lot of earlier data to rely on 

20 for something like that.

21 The other issue I want to bring 

22 forth is, again, we established these 
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1 distributions for 2008 based on the data that 

2 we were able to come up with. These actually 

3 also form the distributions in the LCC 

4 analysis that Mike Scott will address earlier 

5 -- or will address in a little bit.

6 So they've essentially been held 

7 flat for that period from today through the 

8 start of the rule.

9 MR. BROOKMAN: Andrew deLaski?

10 MR. deLASKI: Dave, a question for 

11 clarification.

12 MR. WINIARSKI: Yes?

13 MR. deLASKI: So in your table --

14 let's go back to the prior slide. In your 

15 table, you're showing that you're estimating 

16 about half the products are in that second 

17 bin, which is 13.25 to 13.57. And I'm 

18 wondering what you are observing or what you 

19 are finding.

20 Is it that -- you know, in 

21 shooting to meet the standard, maybe the 

22 manufacturers can answer this better than you 
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1 or I'm sure they can -- but maybe they can't 

2 but maybe they will -- but are manufacturers 

3 shooting for a higher SEER to be assured of 

4 meeting the standard or is this market driven?

5 You know why are we observing half 

6 the market -- you know, because there are 

7 costs in being a little bit more efficient. 

8 And we're seeing half the market go to that 

9 level that's a little bit higher than the 

10 standard.

11 MR. WINIARSKI: Okay. I can speak 

12 to the process used for developing this, we 

13 had to come up or we attempted to come up with 

14 distributions that would actually get us to 

15 those weighted average SEER numbers that we 

16 had with the AHRI data.

17 And it was difficult using the 

18 limited trade press data we had. And, in 

19 fact, in some cases -- in the case of the 

20 split system AIR CONDITION, given, you know, 

21 this limited accuracy of the trade press data 

22 which basically said, you know, we know we 
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1 have X percent of the market at between 14 and 

2 15 to, you know, one significant digit.

3 All right. So they'll say it's 

4 like ten percent. We, in fact, couldn't 

5 achieve that weighted average SEER of 13.77 

6 without assuming that a significant fraction 

7 were slightly above 13.

8 So, you know, that was our 

9 analytical process. We certainly welcome data 

10 from the industry on, as you pointed out, 

11 whether they shoot for a little higher than 

12 13.

13 MR. BROOKMAN: Karim?

14 DR. AMRANE: Karim Amrane, AHRI.

15 We don't capture, as far as 

16 statistics, we don't capture SEER by the .25 

17 or .5. I mean it's either -- by bins from 13 

18 to 14, 14 to 15, that's how we capture the 

19 data.

20 So we have no -- at least at AHRI, 

21 we cannot estimate, you know, what is the 

22 percentage at 13.25.
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1 MR. BROOKMAN: Molly?

2 MS. TROMBLEY-McCANN: Molly 

3 Trombley-McCann.

4 As a clarification, you were 

5 trying to match 13.77, which was the AHRI 

6 weighted SEER based on model availability?

7 MR. WINIARSKI: That's shipment.

8 MS. TROMBLEY-McCANN: That's 

9 shipment weighted, okay.

10 MR. BROOKMAN: Andrew?

11 MR. deLASKI: Just to make sure I 

12 understand the methodology here.

13 The weighted average SEERs in the 

14 bottom of the table are what AHRI provided to 

15 you?

16 MR. WINIARSKI: 

17 MR. SACHS: That's correct.

18 MR. deLASKI: Okay.

19 MR. BROOKMAN: Thank you, Andrew.

20 Dave, keep going.

21 MR. WINIARSKI: Yes. Okay, we 

22 talked a little bit about the standard regions 
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1 that were developed for this analysis. Those 

2 standard regions were actually developed prior 

3 to the consensus agreement.

4 Here is the map that Wes showed 

5 you earlier. I want to talk a little bit 

6 about how they were developed.

7 Essentially we looked at the 

8 cooling load hours map that has been available 

9 from AHRI for years now. A picture of it is 

10 off to the right.

11 Essentially with the assumption 

12 that the standard SEER rating is based on 

13 about 1,000 cooling load hours, you can think 

14 that a hotter climate would be those with 

15 greater than 1,000 cooling load hours.

16 That 1,000 cooling load hour line 

17 is here. You can see it kind of squiggles up 

18 in the country. It goes up -- it take some of 

19 Kentucky, it goes below Virginia.

20 What we actually did is we looked 

21 at that issue, we looked at the relative 

22 humidity from a bunch of weather data for I 
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1 think it was 1,000 sites, the TMY3 data.

2 During those cooling load hours, 

3 we looked at cooling degree day data in terms 

4 of establishing that. And we also considered 

5 the EISA requirements for contiguous regions 

6 and whole states within each region.

7 When you get, as was alluded to 

8 earlier, when you get out to the western 

9 states, there are huge variations in cooling 

10 degree days. It's really hard to characterize 

11 anything as necessarily hot from a geographic 

12 perspective. And you can see that kind of the 

13 cooling load hour map, the compressed lines 

14 off to the left here around California and 

15 into Arizona.

16 So we took a lot of this into 

17 account in trying to come up with a boundary 

18 for our map that I showed you earlier. Really 

19 the differences here between this and the 

20 consensus region are I think you've got -- the 

21 states of Virginia, Kentucky, Delaware, and 

22 Maryland in this analysis were put into the 
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1 rest of the country, the northern region. I 

2 think the consensus agreement puts those into 

3 the southern region.

4 And as we were developing this, we 

5 also consulted with people with the furnace 

6 rulemaking trying to establish where we 

7 thought OPRI ORI (phonetic) would be the 

8 benefits to improving furnace standards or 

9 improving the air conditioning standards in 

10 trying to establish this initial map.

11 Let's see here. We talked about 

12 the wide variation in temperatures. The 

13 regions in this map, obviously one of the 

14 issues is that the REXX data is aggregated at 

15 the census division level. And any climate 

16 map we use will force us to divide that data. 

17 So we have to allocate certain REXX 

18 observations to one side or the other of a 

19 boundary.

20 And in addition, the DOE, an 

21 appendix of the PSE talks about the 

22 development of a possible SEER hot, dry 
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1 metric, a separate metric for the hot, dry 

2 region. That hasn't been proposed. We have 

3 done the analysis. That we're looking really 

4 toward feedback on whether that is a viable 

5 approach.

6 MR. BROOKMAN: So you can see the 

7 comment box there. The Department seeks 

8 comment on introduction of regional SEER, the 

9 use of bin method, and the calculation of 

10 cooling load and hours, bins for determining 

11 the regional SEER and also the use of SEER for 

12 establishing cooling efficiency standards in 

13 hot, dry region of the country.

14 Let's take comments on these.

15 Steve Rosenstock?

16 MR. ROSENSTOCK: Steve Rosenstock, 

17 Edison Electric Institute.

18 Again, I didn't read Appendix 7C. 

19 You'll have to forgive me here.

20 In terms of the SEER hot, dry 

21 metric, is DOE looking at basically a separate 

22 test procedure for that part of the country? 
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1 And if so, if you're looking at a SEER HD and 

2 the numbers are different, would you have to 

3 redo some of this analysis as well if the SEER 

4 HD results are, you know, different.

5 It's, you know, the rest of the 

6 country it's 14 SEER but under the SEER HD 

7 metric, it's 13.5. I mean I'm just trying to 

8 think of the implications of this in terms of, 

9 you know, number one changing the test 

10 procedure, and then number two, redoing this 

11 analysis based on the new metric for that part 

12 of the country.

13 MR. BROOKMAN: Molly, you want to 

14 go ahead?

15 MS. TROMBLEY-McCANN: No.

16 MR. BROOKMAN: Okay. Then Karim? 

17 Oh, Dave, go ahead.

18 MR. WINIARSKI: I was going to let 

19 Wes answer something.

20 (Laughter.)

21 MR. WES ANDERSON: No, I was going 

22 to say the test procedures currently being 
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1 rewritten now -- this is Wes, DOE, and there 

2 will be a public meeting on that to address 

3 any issues. So any reference, we can't really 

4 speak to the test procedure right now until 

5 it's signed by the Secretary. It's going to 

6 be --

7 MR. ROSENSTOCK: This is Steven 

8 Rosenstock. Thank you very much.

9 But, again, if -- and, again, I 

10 don't know if you're looking at a separate 

11 test procedure for the hot, humid climates, 

12 which in a way makes more sense, but then 

13 again, if these new test procedures are 

14 established, this could have quite the impact 

15 on numbers in this. And it would have to 

16 impact the candidate standard levels.

17 If you're doing a separate test 

18 procedure, you'd have a whole new set of 

19 numbers I would guess. And that would change 

20 a lot of the -- possibly change the economics 

21 and it changes everything in terms of an 

22 efficiency standard.
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1 MR. BROOKMAN: Harvey Sachs?

2 MR. SACHS: Harvey Sachs, ACEEE.

3 To my mind as an advocate, trying 

4 to think about putting myself in the other 

5 guy's shoes, it makes no sense at all to have 

6 a different regional boundary for air 

7 conditioning versus heating products, if 

8 nothing else because the heat pump bridges 

9 that gap.

10 So my question is whether the

11 Department and its contractors sat down and 

12 did at least a back of the envelope 

13 calculation on the 4,500 bases it has 

14 presented versus the 5,000 versus a 4,000 or a 

15 5,500. I mean we certainly spent a great deal 

16 of effort in the development of the consensus 

17 agreement thinking about what made sense in 

18 terms of energy savings and the market.

19 So I'm curious about the process 

20 that led to the 4,500 line as opposed to a 

21 5,000.

22 MR. WINIARSKI: Well, going back 
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1 to the development, 4,500 is roughly an 

2 outcome. It's not the input to developing 

3 this process. So bear that in mind.

4 The other thing I want to say is 

5 that if you consider the issues that DOE had 

6 to deal with, as you move that line farther 

7 south and you are considering regional 

8 standards, obviously you start to get hotter 

9 and hotter climates and the SEER level that 

10 can be cost justified obviously goes up.

11 As you move the line -- and at the 

12 expense of on the furnace side, if you -- and 

13 DOE was considering consistent boundaries when 

14 we looked at this, the furnace efficiency that 

15 you justify is now for warmer climates and 

16 appears to be going down.

17 So there is a choice here in terms 

18 of what -- there is an effective outline. I 

19 will say that when we looked at it from an LCC 

20 analysis on air conditioners and heat pumps, 

21 that change is very, very minor in the 

22 resulting positive LCC.
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1 MR. SACHS: But, Dave, my 

2 underlying question was trying to get inside 

3 your all's process. Did you and the furnace 

4 guys talk together about where the line ought 

5 to be?

6 MR. WINIARSKI: Yes. We have 

7 meetings about that.

8 MR. SACHS: Thank you.

9 I have another statement if I 

10 might and that's an apology. I believe that 

11 our publication was the first to propose a 

12 SEER sub HD for the hot, dry climate. This 

13 was to be based on using bin hour 

14 distributions appropriate. And, in fact, the 

15 economic value of the electricity used at high 

16 temperatures as (inaudible) bin hour 

17 distributions.

18 We did that and I assume you did 

19 as well on the assumption that the 

20 Department's theology would not allow using 

21 dual metrics. We've heard this morning from 

22 Kate and I believe from Tim as well, that 
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1 there is good precedent for using both an EER 

2 and a SEER. And there will be a great deal 

3 more discussion of that.

4 And partly in support of the 

5 consensus, I want to say that to me SEER sub 

6 HD hides so much and is so awkward, in part in 

7 the terms that Steve has suggested for 

8 marketing, that it is a really bad third 

9 choice if we can't do the right thing.

10 MR. BROOKMAN: Okay.

11 MR. SACHS: Thank you.

12 MR. BROOKMAN: Thank you.

13 Let's go to Karim first.

14 DR. AMRANE: Karim Amrane, AHRI.

15 I'd like to agree with Harvey.

16 (Laughter.)

17 MR. SACHS: I'm becoming a frame 

18 of reference.

19 DR. AMRANE: And I think if you 

20 look at the consensus agreement, you know, we 

21 came up with an EER metric as well for the 

22 southwest and to address this hot and dry 
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1 climate issue. So I think it is taken care of 

2 in the consensus agreement. And that's why 

3 DOE should be adopting it.

4 MR. BROOKMAN: Thank you.

5 Let's go to Kate and then to 

6 Molly.

7 MS. HOWARD: Dave, in your 

8 opinion, what is the difference? Or what is 

9 the advantage I suppose? Or actually just 

10 could you compare SEER HD to EER. What do you 

11 -- you know, I'm a lawyer. I don't understand 

12 the technical stuff as well as many of the 

13 others in the room.

14 But I'm just wondering in your 

15 mind what you feel is the relative difference 

16 or if you could offer a quick comparison, that 

17 would be great. Thank you.

18 MR. WINIARSKI: Yes. I can speak 

19 to that a little quick.

20 Appendix 7C describes the 

21 methodology. The methodology was based on bin 

22 hour data for -- I believe we used 20 KMY 
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1 sites that we had population weights for that 

2 covered I think it was like 98 percent of the 

3 population of that region.

4 It is heavily weighted by 

5 California, as you might guess. And the 

6 result, we essentially used a load line that 

7 looked very similar. In other words, assuming 

8 that cooling starts at 65 degrees and sort of 

9 -- and moves up from there for the climates 

10 within that region.

11 The result is a slightly different 

12 bin hour distribution. It tends to be more 

13 heavily weighted both on the cooling or the 

14 lower part of the scale in terms of 

15 temperature as well as on the higher. So it 

16 is kind of a flatter load profile versus the 

17 current SEER profile tends to be more mounded 

18 around 82 degrees.

19 MS. HOWARD: I'm more concerned 

20 about the difference between SEER HD and EER 

21 than SEER HD and SEER.

22 MR. WINIARSKI: Right, right.
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1 MS. HOWARD: Okay. Thanks.

2 MR. WINIARSKI: So the SEER HD 

3 that was discussed here, basically one of the 

4 outcomes was that the weighted average cooling 

5 temperature, outdoor temperature, isn't that 

6 much different than the 82 degrees that you 

7 come up with with the current bin hour method.

8 So you really don't capture that 

9 high end performance that you get with EER or 

10 even, you know, if you were looking for 

11 specific temperature ratings for equipment.

12 MR. BROOKMAN: Molly. And then 

13 back to Harvey.

14 MS. TROMBLEY-McCANN: So first I 

15 want to say thank you because we did submit 

16 comments in the framework stage strongly 

17 advocating for a SEER HD. And you are 

18 responding to us. And I appreciate that.

19 And I'm sorry but now I'm going to 

20 tell you that I want you to do something 

21 really different.

22 (Laughter.)
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1 MS. TROMBLEY-McCANN: So I do want 

2 to acknowledge that this was something we 

3 asked for. But as Harvey said, it was 

4 something we asked for on the assumption that 

5 we couldn't get what we really wanted.

6 And what we really want is 

7 specific information about performance at 

8 specific temperature points about 90 degrees. 

9 So for me the biggest difference between a 

10 SEER value and an EER value is that SEER is a 

11 seasonal average. It does not give you 

12 information about a specific performance at a 

13 specific temperature.

14 And, you know, averages, while 

15 very useful especially for things like 

16 statewide standards, cannot give you 

17 information about performance in individual 

18 climate areas. So one of the reasons that 

19 more information, in terms of like an EER as 

20 well as a SEER, is helpful for us is that it 

21 helps us to unpack how is that unit actually 

22 performing at each of the different 
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1 temperature points because in reality, 

2 performance of an air conditioner is a curve 

3 that varies with outdoor temperature 

4 continuously. So it is not a single value.

5 So for us, as a state, being able 

6 to have access to more information so that we 

7 can set incentive programs in other 

8 requirements that are individually climate9 specific is really helpful.

10 So that's one of the reasons that 

11 a SEER and an EER is preferable and also one 

12 of the reasons that for us the consensus 

13 agreement is very important because it 

14 includes a provision that manufacturers will 

15 disclose performance at a number of different 

16 temperature points, which is very helpful for 

17 us.

18 MR. BROOKMAN: Thank you.

19 Harvey?

20 MR. SACHS: Harvey Sachs. If you 

21 steal from one person, it's plagiarism. If 

22 you steal from 20, it's research.
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1 One of the diagrams in our initial 

2 paper on regional standards was shamelessly 

3 taken from earlier work by Horowitz and

4 others. But it shows that the cost of air 

5 conditioning seasonal energy -- that 30 

6 percent -- 35 percent of the cost of seasonal 

7 air conditioning energy in the hot, dry 

8 climate is characteristically at temperatures 

9 above 95, both because EER falls off so 

10 quickly and because of the value of high 

11 temperature electricity to capacity 

12 constrained utilities.

13 So simply say that SEER HD is 

14 shifted a few degrees, say to 87 instead of 

15 82, fails to capture the enormous importance 

16 of that relatively small number of very high 

17 valued hours when the air conditioners are not 

18 working as well when the temperature is above 

19 95 degrees.

20 This is a major conceptual defect 

21 in a simple shift with a modest min 

22 displacement, which is what I'm hearing not 
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1 having read 7C in any detail yet.

2 Thank you.

3 MR. BROOKMAN: Thank you.

4 I'm thinking we're starting to get 

5 redundant here. And I'm also thinking that 

6 we're going to have to pause for lunch pretty 

7 soon.

8 Don?

9 MR. BRUNDADGE: Well, just a quick 

10 comment on this. I think given that you've 

11 got EER in the consensus agreement and 

12 assuming that you find a way to stick EER in 

13 the hot, dry states in an eventual rule, 

14 whether the consensus agreement happens or 

15 not, I think the main value of SEER HD in the 

16 western utilities, correct me on this, is to 

17 provide an estimate of energy use for 

18 consumers. It's more something that ought to 

19 appear on the yellow label rather than be part 

20 of the standard if you are going to actually 

21 require EER.

22 MR. BROOKMAN: Okay.
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1 MR. BRUNDADGE: I think it does 

2 have value though.

3 MR. BROOKMAN: Let's take final 

4 comments on this comment box because we're 

5 almost at a pausing point here.

6 Final comments on this before we 

7 move on?

8 (No response.)

9 MR. BROOKMAN: Okay.

10 MR. WINIARSKI: Okay. And the 

11 last slide is just some results here by 

12 efficiency level for the energy use in each 

13 climate.

14 As you can see, hot and humid 

15 tends to have more energy use both at the 

16 baseline when you compare it to the other 

17 climates compared to -- down at the higher 

18 efficiency levels, the same trend exists.

19 One of the interesting things is 

20 that the hot, dry number is actually fairly 

21 close to the national number, maybe slightly 

22 below that, the national being for the nation 
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1 as a whole. Rest of country is relatively low 

2 here.

3 This is for one product class. 

4 The results for the other product classes are 

5 in the TSD.

6 And that's it.

7 MR. BROOKMAN: Comments on this 

8 table?

9 Harvey Sachs?

10 MR. SACHS: Harvey Sachs.

11 Thank you very much for this 

12 table. And, again, I believe this is REXX 

13 based?

14 MR. WINIARSKI: This includes the 

15 results of both the residential and the 

16 commercial modeling.

17 MR. SACHS: But so it is REXX 

18 dominated. What I feel the need to emphasize, 

19 although the utility representatives can do it 

20 much better than I, is that the hot, dry 

21 climates tend, in most cases, to be climates 

22 with fairly large downhill swings.
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1 So some people are moderating 

2 their air conditioning use with evening 

3 cooling from ambient. And, again, the key 

4 issue in the hot, dry climates is the 

5 consumption of electricity at the same time 

6 that everybody else wants it, in the 

7 afternoon.

8 It's not just the total kilowatt 

9 hours. And this is why California has gone to 

10 the extraordinarily complex and sophisticated 

11 time-dependent valuation methods that have 

12 been used so extensively there for screening 

13 resources.

14 This is a simplification that is 

15 instructive but it is hardly complete in terms 

16 of the economic analysis.

17 MR. BROOKMAN: Thank you.

18 Steve Rosenstock?

19 MR. ROSENSTOCK: Steve Rosenstock, 

20 EEI.

21 I guess -- and, again, it falls 

22 into that fact is, you know, especially at the 
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1 higher SEER level, we don't know where EER is 

2 going. And then for some of those climates, 

3 you know, it looks like a constant energy 

4 reduction.

5 As you go up the SEER level, you 

6 are always getting like a certain percentage 

7 of energy usage reduction. And personally I 

8 don't believe that's the case, especially in 

9 either the hot, dry or the hot, humid climates 

10 where, you know, you are going to be so well 

11 above some of the -- I just -- I don't see 

12 that relationship.

13 Just seeing, again, it looks like 

14 it is a perfect line going downhill. And I 

15 just don't see it, especially in some of the 

16 hot, dry climates, especially if the EERs go 

17 down as SEERs go up.

18 Thank you.

19 MR. BROOKMAN: Okay. Thank you.

20 Final comments on this table?

21 (No response.)

22 MR. BROOKMAN: Okay. We're at a 
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1 break point. And based on the agenda, as 

2 written, we're almost an hour behind schedule. 

3 And we probably have at least -- probably 

4 close to another hour to complete this 

5 content.

6 So I'm going to suggest we take a 

7 break for lunch. It's now 12:25. It's hard 

8 to do lunch in less than an hour in this 

9 building. So I'd like to --

10 PARTICIPANT: Is it not possible 

11 to wage on John?

12 MR. BROOKMAN: To what?

13 PARTICIPANT: To wage John.

14 MR. BROOKMAN: I think it's 

15 possible if people are up for it. If they 

16 want to keep pressing on, we can keep pressing 

17 on. How many people would like to keep 

18 pressing on? That's the majority of the room.

19 How many of you will be seriously 

20 discomforted if we do press on? Okay, let's 

21 try it then. Okay?

22 And if anybody needs a comfort 
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1 break, you can leave and come back quickly. 

2 Let's press on.

3 MR. SCOTT: Okay, Mike Scott 

4 again. 

5 Life cycle cost, payback period 

6 analysis. When you get to this stage, having 

7 heard all of the discussion beforehand, you 

8 wonder why am I even here talking about 

9 numbers. But I'll go ahead and go through it.

10 MR. BROOKMAN: Do it quickly.

11 MR. SCOTT: I will do.

12 Okay. So what we're going to be 

13 talking about here, very briefly I hope, is a 

14 discussion methodology. Those of you who have 

15 been involved in more than one rulemaking, 

16 we're doing it basically the same -- pretty 

17 much the same way we always do.

18 Life cycle cost equals the product 

19 installed price, that is including 

20 installation. It includes the annual energy, 

21 maintenance, and repair costs associated with 

22 the equipment. And anything that happens 
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1 after the first year is discounted to a 

2 particular base year.

3 The analysis is done from a 

4 consumer perspective, using consumer discount 

5 rates, not federal rates.

6 It's done with an Excel 

7 spreadsheet. It is implemented in uncertainty 

8 mode using a Monte Carlo implementation tool, 

9 which is a way of saying that we sample from 

10 distributions for the values that we do for 

11 any particular run.

12 We do 10,000 runs through the 

13 spreadsheet and report the summary statistics.

14 In addition, we do do a simple 

15 payback period, the number of years required 

16 to offset any differences in the product 

17 installed price from increases in efficiency 

18 that are gained from changes in the annual 

19 operating costs.

20 The Monte Carlo analysis, as I 

21 said before, allows DOE to consider end user 

22 variability and variability across regions, 
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1 and to conduct sensitivity analysis.

2 Energy use, as you've seen from 

3 the residential analysis in particular, varies 

4 across individuals because we were using the 

5 REXX data. There are variations in 

6 installation repair and installation costs --

7 I'm sorry, repair and maintenance costs.

8 We, in these analyses, select 

9 either from the commercial or residential body 

10 of data for individual observations. We 

11 correlate inputs where necessary. For 

12 example, electricity price and sector would 

13 correlate as well as location and electricity 

14 price.

15 The results wind up being 

16 distributions of life cycle cost and payback 

17 period by product class, region, and 

18 efficiency level.

19 The flowchart that you see in your 

20 packet corresponds to what I just told you.

21 Factors that vary by region, we've 

22 already talked about this a little bit, 
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1 markups, especially sales taxes, installation 

2 costs, electricity consumption for cooling and 

3 heating, electricity prices.

4 The factors that vary over time 

5 include electricity prices and we're talking 

6 about this in real terms, that is in constant 

7 year dollars. We don't have the other costs 

8 varying over time, not in real terms anyway.

9 What factors vary by individual 

10 consumer? Well, the product efficiency will, 

11 particularly in the market baseline 

12 distribution. Dave was showing you what those 

13 were in the preliminary analysis, the market 

14 baseline, energy consumption therefore varies. 

15 Product lifetime varies by individual.

16 Observation, we sample the product 

17 lifetime for any particular observation from a 

18 distribution that allows for equipment to 

19 progressively fail at longer and longer 

20 lifetime periods.

21 Discount rates vary by individual. 

22 Those are, again, sampled. And electricity 
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1 prices observed by an individual vary by 

2 individual. People have different changes of 

3 being located in particular utility service 

4 areas.

5 The electricity prices, the 

6 residential, in view of the time available, 

7 I'm going to just simply refer you to Chapter 

8 8 of the technical support document and a copy 

9 of the appendices there, B and C, to get a 

10 sense of the detail that was gone into in 

11 order to basically come up with marginal 

12 prices for electricity at the time the 

13 electricity is saved.

14 Those are based on electricity 

15 tariffs from 90 utilities across the country. 

16 The difference -- there is an important 

17 difference between the residential and the 

18 commercial. For residential, we did not use 

19 time of use tariffs. There are no mandatory 

20 time of use tariffs at the time we did the 

21 analysis at least for residential customers. 

22 That may have changed since. And that may be 
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1 updated.

2 The market penetration, at least 

3 in the data we were looking at for residential 

4 customers taking advantage of voluntarily time 

5 of use tariffs was less than one percent of 

6 residential customers, deemed to be small.

7 And there was no significant 

8 difference on average between the default 

9 price -- or default marginal tariff and what 

10 you would have gotten had you used time of use 

11 prices at the points of time that the savings 

12 occurred, where the kilowatt hour savings 

13 occurred. And that's in one of the appendices 

14 to the document.

15 Yes, sir?

16 MR. SACHS: Harvey Sachs, ACEEE.

17 And I really want to object to 

18 this approach. The Department of Energy, 

19 headquartered in this building, is trying to 

20 steer tens of billions of dollars into the 

21 Smart Grid.

22 The mostly likely expression of 
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1 the Smart Grid for a residential consumer will 

2 be ubiquitous residential tariffs, residential 

3 time of use tariffs.

4 Mr. Brundadge is shaking his head 

5 affirmatively on that.

6 For the Department, for this time 

7 period, to not at least simulate what that 

8 would look like in terms of costs for 

9 customers, well, I guess if you're not doing 

10 EER, you don't care.

11 But this is just penny wise, pound 

12 foolish. And it is just totally unrealistic 

13 in terms of the direction of public policy 

14 that is being implemented today over the 

15 period in which this set of standards would be 

16 in force.

17 I'm sorry. I'll try to be nice. 

18 But it just stuns me.

19 MR. BROOKMAN: That's okay. 

20 You've been articulate.

21 Molly?

22 MS. TROMBLEY-McCANN: For all the 
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1 reasons that Harvey just cited, I don't think 

2 any of those three bullets will be true in 

3 2015 when these standards go into effect. I 

4 think time of use tariffs are going to be 

5 present and important in the impact of this 

6 standard. And you should analyze it.

7 MR. BROOKMAN: Thank you.

8 So the Department would benefit 

9 from your thought processes, your projections 

10 about how this might happen because they are 

11 going to have to rely on something to -- if 

12 they do projections, they're going to have to 

13 rely on something to do that analysis.

14 Don Brundadge?

15 MR. BRUNDADGE: The only comment I 

16 would add to this is yes, not using time of 

17 use is not a good approach. But it's all 

18 built on a house of sand with the REXX data.

19 And I'm not really clear on 

20 whether the reason they're doing this -- and 

21 you could respond to it -- is because REXX 

22 doesn't register time of use so you can't use 
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1 REXX and do time of use with it. Is that why 

2 you're going in this approach is you can't use 

3 REXX data in this way?

4 MR. BROOKMAN: Greg?

5 MR. ROSENQUIST: Greg Rosenquist 

6 from LBNL.

7 You know we looked at the time of 

8 use tariffs and to see what sort of impact 

9 they would have on electricity prices. And it 

10 does vary widely by region.

11 On a national average, it doesn't 

12 change that much compared to the default 

13 tariffs. But, again, places like California, 

14 the time of use tariff is higher.

15 And in places -- there's actually 

16 60 percent of the utilities of the sample that 

17 we had actually offered voluntary time of use 

18 tariffs. And in many of those regions, the 

19 actual time of use tariff was lower than the 

20 default tariff price.

21 So we did an analysis to see -- to 

22 do that comparison and determined based upon 
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1 that analysis, it was worthwhile at that point 

2 only to proceed with the default tariffs.

3 PARTICIPANT: I think one of my 

4 comments, and I may disagree with my 

5 colleagues on this is given that you are 

6 dealing with REXX, which is backward-looking 

7 data and a relatively smaller percentage of 

8 customers were on time of use tariffs at the 

9 time your data was collected, then in that 

10 case, for using this backward-looking data, 

11 not time of use might be a reasonable 

12 assumption.

13 But you need to find some way to 

14 adjust it for forward looking.

15 MR. BROOKMAN: Steve Rosenstock?

16 MR. ROSENSTOCK: Steve Rosenstock, 

17 EEI.

18 Just to follow on to Mr. 

19 Brundadge. Again, forward looking for --

20 again, just thinking about the future as more 

21 smart meters get in place, I believe some 

22 estimates say by 2019, there will be at least 
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1 58 million electric smart meters deployed in 

2 the United States, the analysis is going to be 

3 quite widely variable.

4 And again, this is looking 

5 forward, the Department is going to have to 

6 realize that there are probably going to be 

7 default rates with varying prices. But also 

8 there could be multiple rates that the 

9 customers can choose from.

10 Instead of just having a default 

11 rate and a time use rate, there could multiple 

12 choices for those customers depending on their 

13 situation, depending on the type of equipment 

14 they are using, depending on how aggressive 

15 they want to be in terms of either demand 

16 response or energy efficiency.

17 It's probably going to make the 

18 analysis much harder. But, again, going 

19 forward, that is going to be the situation. 

20 And especially with seasonal equipment, that's 

21 going to make things even more interesting.

22 Thank you.
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1 MR. BROOKMAN: Other comments on 

2 these electricity pricing issues?

3 (No response.)

4 MR. BROOKMAN: Okay, let's go.

5 MR. SCOTT: Okay. The good news 

6 on the commercial side, we did use time of use 

7 rates.

8 (Applause.)

9 MR. SCOTT: And that included 

10 demand charges, block rates, seasonal rates, 

11 and any mandatory time of use rates where they 

12 exist. So, again, the voluntary ones weren't 

13 in there.

14 All right. I offer this with some 

15 trepidation. The regional averages of 

16 residential annual average and seasonal 

17 marginal prices, this is intended as an 

18 indicator only because what we're really doing 

19 is in each individual case, in the case of 

20 REXX, or in the case of each individual 

21 building, you know, on the commercial side, 

22 we're actually using whatever price applies at 
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1 the appropriate hour of the year, you know, 

2 given the constraints that we've already 

3 talked about, for energy savings.

4 So what these really are is the 

5 difference in energy -- difference in annual 

6 energy bill divided by the difference in 

7 energy savings.

8 MR. BROOKMAN: Steve Rosenstock?

9 MR. ROSENSTOCK: Steve Rosenstock, 

10 Edison Electric Institute.

11 And, again, having not dug through 

12 this part of the technical support document 

13 yet, in terms of some of these -- again, 

14 because in the previous slide it was talking 

15 about you got data from 90 utilities on their 

16 tariffs. I'll assume that's both residential 

17 and commercial.

18 But now with REXX, you had the 

19 1,854 data points for air conditioners and 339 

20 for heat pumps. I'm going to assume you tried 

21 to match those 1,854 with the 90 utilities 

22 where you could and the 339 with the 90. And 
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1 then you came up with these values.

2 Is that -- am I correct in that's 

3 how the approach was done? Because then I 

4 have a follow-up question.

5 MR. SCOTT: That's roughly it, 

6 yes.

7 MR. BROOKMAN: Greg Rosenquist.

8 MR. SCOTT: Yes, mapping the 

9 utilities --

10 MR. ROSENSTOCK: Okay.

11 MR. SCOTT: -- to each one of the 

12 REXX households.

13 MR. ROSENSTOCK: So, again -- and 

14 again as a follow up, then I'm not exactly 

15 sure why -- and I'll say especially in July --

16 the marginal prices would be different for air 

17 conditioners and heat pumps since they have 

18 the same operation unless it's just a matter 

19 of the weighting of just the sheer numbers of 

20 air conditioners. There's 1,854 -- 1,800 air 

21 conditioners with 90 utilities versus 339 heat 

22 pumps and 30 utilities. And that's the reason 
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1 for the difference in these marginal prices?

2 MR. SCOTT: It's due to the 

3 location of the heat pumps, all right?

4 MR. ROSENSTOCK: Okay.

5 MR. SCOTT: So --

6 MR. ROSENSTOCK: Because, again, 

7 when you think about it, the tariff for air 

8 conditioners and heat pumps are not going to 

9 be different in the summertime. So -- and, 

10 again, this will effect the impact. Now in 

11 some cases, it helps and in other cases it 

12 might hurt.

13 But, again, looking at the July 

14 marginal price, using the July marginal price 

15 for the air conditioner, July marginal price 

16 for the heat pumps would not be totally 

17 inaccurate I would say because the tariffs are 

18 going to be the same.

19 MR. BROOKMAN: Steve Rosenstock 

20 back to Greg.

21 MR. ROSENSTOCK: Yes, for a 

22 household that's located in the same place 
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1 with the same utility, right, it's going to 

2 see the same marginal price regardless of 

3 whether it is an air conditioner or a heat 

4 pump.

5 What you're seeing here are these 

6 weighted average numbers, right, based upon 

7 where those air conditioners and heat pumps 

8 are located. So as a result then you come up 

9 with a different weighted average price, 

10 again, based upon where those air conditioners 

11 are mostly located and based upon where most 

12 of those heat pumps are located.

13 So it just so happens for air 

14 conditioners, you know, where they are located 

15 results in a higher weighted average marginal 

16 price than where the heat pumps are located.

17 MR. ECKMAN: Right. Because the 

18 heat pumps are in the northern tier and --

19 MR. BROOKMAN: Tom Eckman.

20 MR. ECKMAN: Tom Eckman -- the 

21 heat pumps are in the northern tier or in 

22 southeast and the air conditioners, by and 
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1 large, are in California.

2 MR. ROSENQUIST: Yes, but Steve is 

3 looking specifically at the hot, dry region, 

4 right? But it is the same sort of idea.

5 MR. BROOKMAN: Okay. And so that 

6 was Tom and then back to Greg Rosenquist.

7 Tom Eckman?

8 MR. ECKMAN: Yes, I know this is a 

9 limitation of the REXX data but the deployment 

10 of air conditioning and heat pump as we go 

11 forward in time may or may not match the 

12 current geographical distribution of that 

13 equipment.

14 And so I don't know how you deal 

15 with it. But clearly looking at some trends 

16 in terms of where the population is employing 

17 those devices rather than just a point in 

18 time, so maybe looking backwards to the prior 

19 REXX to see whether there is a growth in the 

20 application of those technologies in various 

21 regions to see whether you could adjust on a 

22 going-forward basis because right now you've 
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1 got a single point in time estimate of where 

2 heat pumps are being used and where air 

3 conditioning is being used and the rates 

4 associated with those.

5 And I'm not quite certain that 

6 that long-term trend or that current picture 

7 matches where the long-term trend of 

8 population growth and system --

9 MR. BROOKMAN: Greg Rosenquist.

10 MR. ROSENQUIST: Right. For the 

11 purposes of the LCC analysis, what you are 

12 saying is true. But we tried to capture that 

13 to some extent in the national impact analysis 

14 which will be described later because we're 

15 doing things at the regional level.

16 MR. ECKMAN: Can you--

17 MR. ROSENQUIST: And so, you know 

18 construction starts, for example, and 

19 saturations of equipment in those starts will 

20 change over time based upon the data that we 

21 had.

22 MR. ECKMAN: Is there any way --
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1 this is Tom Eckman -- is there any way to 

2 connect the dots between the NES and the life 

3 cycle costs so that you get consistent 

4 treatment?

5 MR. ROSENQUIST: The way the life 

6 cost analysis is structured, you know, it is a 

7 hypothetical where every single household or 

8 commercial building gets its equipment 

9 replaced in the year that the standard becomes 

10 effective, which is, you know -- it gives you 

11 a close approximation of what you might get 

12 from the NAI but not exactly. So in short, 

13 no.

14 MR. BROOKMAN: Thanks, Greg.

15 Andrew deLaski?

16 MR. deLASKI: This is a follow on 

17 on prices and I had to step out so I hope I'm 

18 not hitting on a point that was already 

19 covered.

20 But, Greg, I recall from the last 

21 analysis for the 2001 final rule that the 

22 Department found on that docket that marginal 
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1 prices were lower than average prices. And 

2 what I'm seeing here is that, you know, by and 

3 large marginal prices are now higher than 

4 average prices at least for the national as a 

5 whole, which I think is kind of what we would 

6 expect given the trans-electricity pricing.

7 But I'm still curious about what's 

8 happening, for example, in the hot, humid 

9 region where we see marginal prices lower than 

10 average prices. What's driving that?

11 MR. BROOKMAN: Greg Rosenquist?

12 MR. ROSENQUIST: Yes, hi. Some of 

13 those tariffs still have declining block 

14 rates. That was certainly the case ten years 

15 ago. I think that trend is reversing itself. 

16 Maybe Don or this other company can add to 

17 that.

18 But that's mostly the case there 

19 that as you use more energy, you are actually 

20 charged less.

21 MR. deLASKI: For residential.

22 MR. ROSENQUIST: For residential.
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1 MR. BRUNDADGE: Don Brundadge. 

2 That -- I can't speak for the whole southeast 

3 -- in our companies, you tend to have higher 

4 prices for higher energy use in the summer and 

5 lower prices for higher energy use in the 

6 winter.

7 One of the major differences 

8 between hot, humid and some of the other 

9 regions is many of our areas have nine or ten 

10 months of the year significant air 

11 conditioning usage. So you do have 

12 significant air conditioning usage during off 

13 peak times. And that may be why you have this 

14 marginal less than average issue.

15 In a place like Florida, you are 

16 going to have over half the air conditioning 

17 energy use is going to be not in the summer 

18 season.

19 MR. BROOKMAN: Okay. So let's 

20 keep moving on.

21 Final comments or questions with 

22 respect to average and seasonal marginal 
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1 prices before we keep going.

2 (No response.)

3 MR. SCOTT: Okay. All right. The 

4 equivalent chart here for commercial is a 

5 little bit different. We've got it on a 

6 census division basis.

7 And the other thing that we've 

8 done here is rather than look at a single 

9 change in energy use, we're looking here at 

10 energy consumption varying by SEER level. And 

11 so we also have the effective marginal price 

12 varying by SEER level as well as location.

13 There is a scaling factor reported 

14 in the right-hand side of the column. It was 

15 deemed that because we had a relatively small 

16 number of commercial customers as opposed to 

17 residential customers, the -- correct me if 

18 I'm wrong here, Greg -- the effort in updated 

19 the commercial prices for the number of 

20 utilities and the number of tariffs concerned 

21 made it sort of unworkable to update 

22 everything from 2004 to 2008 dollars directly.
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1 So what we did was we applied a 

2 correction factor to the 2004 prices in order 

3 to have appropriate prices, correct?

4 MR. BROOKMAN: He's nodding.

5 Andrew?

6 MR. deLASKI: Mike, can you 

7 explain why prices vary by SEER?

8 MR. SCOTT: Not as well as Dave 

9 can.

10 MR. BROOKMAN: Dave Winiarski? 

11 Find a microphone, Dave. Dave Winiarski.

12 MR. WINIARSKI: Yes, I can try to 

13 explain that.

14 Essentially the simulation model 

15 made certain assumptions for what was assumed 

16 in a 13, a 14 SEER, a 16 SEER, and the max 

17 tech. And so basically what we actually 

18 recorded out of the simulations were the 

19 hourly loads.

20 Those were converted into annual 

21 bills, taking into account all of the 

22 different tariff structures that were used.
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1 Then when the effective marginal 

2 prices here are effectively dividing the 

3 annual bill by the energy savings to come up 

4 with an effective marginal price, and 

5 depending on whether you achieve that by 

6 improving, for instance, a higher EER 

7 effecting maybe the peaks a little bit or 

8 whether the major gain in efficiency was due 

9 to fan changes, that reflects itself in slight 

10 variations in the marginal pricing.

11 MR. BROOKMAN: Doug?

12 PARTICIPANT: (Inaudible.)

13 MR. WINIARSKI: Yes. Within a 

14 given census division within those 

15 observations, I think, and between 14 and like 

16 19, you see a couple big drops.

17 PARTICIPANT: The disconnect of 

18 what you said is that this is connecting back 

19 to your assumption, for example, about what 

20 the EER is for a given region.

21 MR. WINIARSKI: Exactly. And the 

22 actual commercial modeling assumptions.
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1 PARTICIPANT: Then your 

2 relationship (inaudible)

3 MR. WINIARSKI: It's actually not 

4 that linear when you look at it. But yes, 

5 it's that curve.

6 MR. BROOKMAN: Tom Eckman and then 

7 to Steve.

8 MR. ECKMAN: That was my point. I 

9 think that we have the same concern that 

10 Harvey and others raised about the linearity 

11 or the high correlation -- I won't call it 

12 linear -- but the high correlation between 

13 improving SEER and EER.

14 And the fact that it may or may 

15 not be the case. So this may or may not turn 

16 to be in practice what the consumer sees 

17 because they don't get the EER benefit that is 

18 being forecast here.

19 MR. BROOKMAN: Steve Rosenstock?

20 MR. ROSENSTOCK: Steve Rosenstock, 

21 Edison Electric Institute.

22 In terms of some of the numbers, 
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1 were you using some of the SEBX (phonetic) 

2 data for -- as a starting point for some of 

3 these -- for some of the costs?

4 I know you were using utility 

5 tariffs but, again, just as a backstop to kind 

6 of see what kind of, you know, what kind of 

7 numbers you're getting for some of the costs, 

8 the actual cooling costs?

9 MR. SCOTT: I don't think we've 

10 compared any of these back to the SEBX for any 

11 given region. You could look at it -- you'd 

12 have to look at the actual whole building 

13 energy use and SEBX doesn't record it 

14 marginally.

15 MR. ROSENSTOCK: Okay. And the 

16 second thing I want to say -- and I said this 

17 ten years ago -- the approach, the annual bill 

18 savings divided by the energy savings to get 

19 the marginal costs for commercial customers is 

20 not really appropriate for the fact of, you 

21 know, demand charges for commercial customers 

22 can be ten, to 30, to 40 percent of their 
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1 bill.

2 And with SEER EER curve, if EERs 

3 go down, that means the peak demands are 

4 actually going to go up. That means that your 

5 bill savings are going to be a lot less than 

6 what you are probably projecting in the 

7 simulation.

8 I'm not sure exactly how it 

9 effects your marginal prices but it would be a 

10 very significant impact on the life cycle cost 

11 analysis and on these marginal prices.

12 I guess I am a little baffled, 

13 again, that -- again, I'd have to look at the 

14 model -- that all the marginal prices go up as 

15 you go to SEER 19 because I would guess with 

16 the curve that we've seen, it would always --

17 I would assume the marginal prices would go 

18 down.

19 I'm surprised there is that kind 

20 of trend. Again, I'd have to look at all the 

21 data and everything. And I also, you know, 

22 especially when you say something like 32 
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1 cents per kilowatt hour, in census division 

2 one, it's SEER 14. I'm not exactly sure. I 

3 know prices are high in New England.

4 But, again, it is a matter of you 

5 are mixing and matching energy and demand and 

6 you are getting a number that is not really 

7 reflective of what the customer is really 

8 seeing or paying.

9 MR. BROOKMAN: Dave Winiarski, 

10 please let's everybody say your name before 

11 you speak.

12 MR. WINIARSKI: Yes, Dave 

13 Winiarski.

14 And, again, in responding to that, 

15 these are effective or back-calculated 

16 marginal prices. They are actually not used 

17 in the analysis.

18 The analysis relies on the actual 

19 energy bills' savings going between levels for 

20 the building. So to the extent that you can 

21 compare these marginal prices with say the 

22 last block on the tariff, it's not the same 
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1 thing.

2 MR. ROSENSTOCK: That does help. 

3 But, again, the way it's presented, it makes 

4 it appear that that is the number that's being 

5 used in terms of some of the analysis. That 

6 helps a lot. That really does help a lot.

7 But, again, the way it is 

8 presented, it makes it seem like that's what 

9 you are using in terms of how you are 

10 calculating the savings and eventually going 

11 into the life cycle cost analysis. So it's 

12 presentation.

13 MR. BROOKMAN: Harvey Sachs. 

14 Let's leave that microphone turned on. Harvey 

15 Sachs?

16 MR. SACHS: This one or that one?

17 MR. BROOKMAN: Both of them.

18 MR. SACHS: Harvey Sachs, ACEEE.

19 I'm very impressed with the 

20 sophistication of this analysis for the 

21 relatively small number of commercial 

22 buildings in the analysis.
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1 On the other hand -- and the 

2 scaling factor seems to be a reasonable 

3 approach. I don't know if it's right. And I 

4 sure would like to get -- a physical 

5 explanation would help me understand why in 

6 most of the cases, there's not a linear trend 

7 at all but a minimum at SEER 16 with higher 

8 reported marginal prices at both SEER 14 and 

9 SEER 19.

10 And that seems to be true for both 

11 heat pumps and central air conditioners. I'm 

12 just not getting it.

13 MR. BROOKMAN: Dave Winiarski.

14 MR. WINIARSKI: Yes, I think 

15 actually a large portion of that goes back to 

16 those assumptions built into actually how you 

17 model the equipment.

18 In general, between 13 and 14, the 

19 savings come from improving the condenser 

20 performance because we held the fan power 

21 assumption constant.

22 As you move between 14 and 16, you 
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1 are moving to get to those higher SEER values 

2 by improving the fan efficiency, going to an 

3 ECM motor, which has an impact on energy 

4 savings throughout the year because the fan is 

5 running all the time in a commercial building. 

6 But actually it doesn't have that big impact 

7 on the peak monthly demand.

8 MR. SACHS: Wait a minute, Dave. 

9 This is Harvey Sachs again.

10 You just said something really 

11 important. You said the fan is running all 

12 the time.

13 But this is residential equipment 

14 used commercially. This is not commercial 

15 equipment equipped potentially with 

16 ventilation capabilities and economizers.

17 MR. WINIARSKI: That is true. It 

18 is running to provide circulation air in the 

19 building.

20 MR. SACHS: I do not believe that 

21 that -- I think we need some empirical data to 

22 show that that's the predominant mode of 
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1 operation in these very small commercial 

2 buildings that are running residential 

3 equipment.

4 Thank you.

5 MR. BROOKMAN: Thank you.

6 Final comments on this segment?

7 (No response.)

8 MR. BROOKMAN: Let's keep going.

9 MR. SCOTT: Okay. Price 

10 escalation is, as in previous rulemakings, is 

11 based on the annual energy outlook, high, low, 

12 and reference cases. The information is also 

13 in the chapter.

14 The -- it's actually not 

15 displaying very well on the screen. I just 

16 noticed that.

17 In any event, we have a 

18 significant amount of spread between the 

19 cases. And we will update this for annual 

20 energy outlook 2010 at the NOPR stage.

21 Repair, maintenance, and 

22 installation costs, major repairs, we based 
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1 that on a base system compressor replacement. 

2 We found data in a series of websites, 

3 primarily in the literature showing a range of 

4 costs anywhere from 700 to 1,500 dollars for a 

5 base system compressor replacement.

6 We assumed that the probability of 

7 replacing the compressor sometime during the 

8 lifetime of the overall system would be 0.5. 

9 That is there would be a change of doing it, 

10 on average, once.

11 We increased the cost of the 

12 compressor replacement with the index of the 

13 product price, that is with the efficiency 

14 level.

15 We varied it regionally. And we 

16 annualized it so that we basically had an 

17 annualized average repair cost that we could 

18 apply.

19 Annual maintenance costs, we found 

20 numbers up to 120 dollars for a full-service 

21 contract on a residential system. We needed a 

22 lower bound. We put in an assumed value of 20 
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1 dollars. This also -- all of this also 

2 increased with product price or efficiency 

3 level and varied regionally.

4 And finally, we were cognizant of 

5 the fact that installation costs likely varied 

6 between product class so we had those from 

7 RSMeans (phonetic) database. And we also were 

8 able to vary it regionally based on RSMeans, 

9 primarily because labor costs varied by 

10 region.

11 We did do a bit of reality check 

12 here, a small amount of verification about 

13 whether installation costs would vary with 

14 efficiency level. And our contacts said that 

15 except for perhaps very high efficiency units, 

16 they did not.

17 So, we're seeking additional data 

18 on maintenance installation repair costs. 

19 It's pretty sketchy at the moment.

20 And we would like to know how they 

21 might vary with the efficiency level. And we 

22 also are seeking comments on any additional 
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1 sources that could be considered for those 

2 costs.

3 MR. BROOKMAN: John Mandyck?

4 MR. MANDYCK: John Mandyck with 

5 Carrier.

6 On your last point on installation 

7 costs by efficiency level, I think you need to 

8 dig further into that from a size perspective 

9 because if you start to move from a one-man to 

10 a two-man job simply because of the size of 

11 the unit to move it and to physically adapt to 

12 it, obviously that will impact installation 

13 costs.

14 MR. BROOKMAN: Thank you.

15 Tom Eckman?

16 MR. ECKMAN: Tom Eckman.

17 This is a question for Greg, I 

18 think, perhaps.

19 In the life cycle cost analysis, 

20 since it is a Monte Carlo simulation, is there 

21 a correlation between the probability of 

22 expending money for replacement during the 
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1 life cycle and the annual maintenance contract 

2 cost?

3 MR. ROSENQUIST: No, we don't have 

4 one in there right now.

5 MR. ECKMAN: Well, it seems to me 

6 if you've got an annual maintenance contract 

7 cost running 120 dollars, your unit better not 

8 fail.

9 MR. BROOKMAN: Okay. Thank you.

10 Harvey Sacks?

11 MR. ECKMAN: I think there is a 

12 correlation.

13 MR. SACHS: I apologize for having 

14 missed on slide 64, the electricity price. My 

15 memory is that EIA has been pretty effective 

16 at looking at carbon containment cost impacts 

17 and strategies. Again, it has been a DOE 

18 policy issue.

19 And the question is that these are 

20 low growth reference and high growth but they 

21 don't seem to have any policy scenarios that 

22 would impact electricity prices in the out 
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1 years when this has been part of national 

2 policy discussions.

3 PARTICIPANT: Maybe I can ask our 

4 EIA representative if he's still here as to 

5 what carbon -- carbon containment, is that 

6 what you asked about? Or other major 

7 policies?

8 MR. BROOKMAN: He's not here, the 

9 one that was here earlier.

10 MR. SACHS: Well, again, the 

11 question is not to EIA but it is to the 

12 Department in terms of whether these analyses 

13 include policy cases that reflect active 

14 legislative consideration and active policy 

15 activities. Not that these would drive but 

16 these are alternatives that help bound the 

17 reality.

18 MR. BROOKMAN: Thank you.

19 Get close.

20 MS. KOHL: This is Betsy Kohl from 

21 DOE.

22 When you are talking about 
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1 legislative initiatives, are you talking about 

2 proposed -- I mean we don't really consider --

3 we don't consider proposed legislation draft 

4 legislation in our analyses because it is 

5 speculative whether or in what form it would 

6 be passed.

7 MR. BROOKMAN: Harvey Sachs.

8 MR. SACHS: Thank you, Betsy. 

9 This is Harvey Sachs. And I very much 

10 appreciate that.

11 But if I'm considering electricity 

12 prices, and let's just assume for a moment 

13 that EIA did consider some scenarios for 

14 future electricity prices --

15 MR. ROSENQUIST: Not in their 

16 reference case of low and high growth case.

17 MR. SACHS: But in a policy case, 

18 didn't they?

19 MR. ROSENQUIST: Well, they've 

20 analyzed, you know --

21 MR. BROOKMAN: That's Greg 

22 Rosenquist speaking.
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1 MR. ROSENQUIST: I'm sorry. This 

2 is Greg Rosenquist from LBNL.

3 They have analyzed like, for 

4 example, Liebman and Warner (phonetic) in the 

5 past. And they did try to get after the 

6 effect of carbon legislation on electricity 

7 prices.

8 MR. SACHS: So this would seem to 

9 be a boundary value on the Department's 

10 analyses. It is a policy scenario.

11 But to exclude it as a forcing 

12 factor on possible excursions of electricity 

13 prices seems to be to be, again, very, very 

14 good about detail but occasionally missing 

15 some very large influences that have some 

16 probability of having effect.

17 MR. BROOKMAN: Don Brundadge.

18 MR. BRUNDADGE: I'm very familiar 

19 with annual energy outlook assumptions. And 

20 there are a bunch of issues like that. But 

21 they are consistent.

22 If it hasn't been issued into law 
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1 and it hasn't been issued as a final rule by 

2 DOE, it is not counted, which implicitly 

3 assumes no new efficiency standards to be 

4 issued from now until the end of time and no 

5 carbon legislation. That's a baseline to 

6 operate off of.

7 But at the same time, you're not 

8 going to see the efficiency effects of lower 

9 growth from efficiency standards. There are a 

10 lot of other effects in here.

11 And I don't know if we need to 

12 spend a lot of time on it because AEO is what 

13 it is.

14 MR. BROOKMAN: I'm eager to move 

15 back to repair maintenance installation costs 

16 on slide 65.

17 Steve Rosenstock?

18 MR. ROSENSTOCK: Yes, actually 

19 slide 65 -- and slide actually 66, I was going 

20 to go ahead for you actually to Item 5.

21 MR. BROOKMAN: Keep going.

22 MR. ROSENSTOCK: Because it was 
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1 asking about comments on impact of increased 

2 efficiency standards on end user decisions 

3 about whether to replace existing installed 

4 units.

5 I do know looking up numbers is 

6 that I know especially in the area of heat 

7 pumps, a shipment is according to AHRI and 

8 Appliance Magazine, have dropped every year 

9 since 2005 -- 2.13 million in 2005 down to 

10 1.642 million in 2009, again based on industry 

11 data.

12 And I wanted to take the year --

13 talk about the fact that, again, I was talking 

14 data before the big recession, okay, so how 

15 much of that was the economy, how much of that 

16 was consumer choice?

17 I'm not sure. But when you see 

18 that specific trend over five years, including 

19 times of good economic times and not so good 

20 economic times, it might be that a certain 

21 percentage of consumers are deciding to repair 

22 and replace longer -- repair rather than 
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1 replace.

2 So yes, repair costs might go up. 

3 But consumers are choosing that over higher 

4 initial costs of a new unit.

5 MR. BROOKMAN: Don Brundadge.

6 MR. BRUNDADGE: I think those are 

7 valid considerations. But I think there is an 

8 item you don't have a box for that is much 

9 more important than that. And that's that 

10 your installed base of air conditioning and 

11 heat pump equipment is almost entirely R22 

12 equipment.

13 And with the phase out of R22, 

14 there will be a limited amount available for 

15 serving between now and 2020. There will be

16 no new virgin stocks available for servicing 

17 after 2020. And it really desperately needs a 

18 separate study of the impact on that because 

19 you are going to see, I think after 2015, 

20 significantly faster replacement based on the 

21 equipment.

22 I'm not sure EPA has really come 
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1 out with all the regulations yet on how they 

2 are going to handle some of these things. I'm 

3 not sure you can even do a major replacement 

4 under their new rule and stick R22 into a 

5 compressor that is made after 2010.

6 MR. BROOKMAN: Okay.

7 MR. BRUNDADGE: It needs to -- it 

8 really -- a lot of the things we've been 

9 talking about today are sort of nitpicking. 

10 This is huge. And it really needs a separate 

11 study because I think you are going to see 

12 much faster replacement of the R22 units.

13 MR. BROOKMAN: You're next. 

14 Please say your name.

15 MR. BEATTEN: Warren Beatten 

16 (phonetic) with Emerson.

17 Just two comments or questions. 

18 One is the repair cost for compressors. We're 

19 trying to validate your numbers here. They 

20 look about right. But I think another 

21 consideration ought to be that if the 

22 percentage of modulated equipment increases, 
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1 which it will, to a higher efficiency 

2 standard, the repairs will be more complicated 

3 and more expensive.

4 So that is a -- we'll try to 

5 provide some input on that. But that's a 

6 factor.

7 MR. BROOKMAN: You started off by 

8 saying you think these numbers -- you're 

9 trying to validate these numbers.

10 MR. BEATTEN: I'm trying to 

11 validate the 700 to 1,500 dollar number. But 

12 also expect that number to grow.

13 MR. BROOKMAN: Okay. How much?

14 MR. BEATTEN: We'll have to get 

15 back to you.

16 MR. BROOKMAN: Okay.

17 MR. BEATTEN: The other question 

18 we have, I don't know if it fits in here but 

19 in the prior efficiency analysis several years 

20 ago, there was attention not paid to the 

21 refrigerant issue.

22 I'm assuming that DOE has elected 
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1 not to look at any scenarios where 410A would 

2 be phased out and some other alternatives 

3 would be phased in in the time period due to 

4 Cap and Trade or legislation. Is that 

5 correct?

6 MR. BROOKMAN: Matt?

7 MR. MILLARD: Yes, this is Matt 

8 Millard with Navigant Consulting.

9 We have considered looking at 

10 that. But the response that we received from 

11 industry -- we considered looking at it as a 

12 sensitivity but the response that we received 

13 from industry is that they don't really know 

14 where the next step is. And so it is very 

15 difficult for us to assess those impacts 

16 without really knowing the path forward.

17 PARTICIPANT: Nor do they describe 

18 the phase out.

19 PARTICIPANT: Excuse me?

20 MR. MILLARD: Yes, well the phase 

21 out, yes.

22 MR. BROOKMAN: Okay.
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1 Harvey Sachs?

2 MR. SACHS: Harvey Sachs, ACEEE.

3 Very quickly, I think what you're 

4 hearing in a number of respects here is a 

5 critique that the Department is doing lots and 

6 lots of very detailed analyses with 

7 continuously variable things like the LCC.

8 And what we're not seeing is the 

9 potential that would be revealed in some 

10 scenario analysis. We're not seeing that 

11 perhaps lower probability, perhaps not, 

12 impacts the very large discontinuities like 

13 the refrigerant phase out, like the potential 

14 of a carbon price that would be enormously 

15 important to the policymakers who have to make 

16 these decisions.

17 And I think that is a critique 

18 that effects a lot of these analyses.

19 MR. BROOKMAN: John Mandyck?

20 MR. MANDYCK: Well, back on the 

21 refrigerant issues. This is John Mandyck from 

22 Carrier.
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1 It is possible to model the 

2 legislation that exists today. So you can 

3 take Waxman Markey (phonetic), understand 

4 where the reduction curve is, and understand 

5 that there will be shortage of refrigerant at 

6 the time that these standards go into effect, 

7 which actually require more refrigerant to be 

8 used.

9 Higher SEER equipment is larger 

10 equipment with larger coils that requires more 

11 refrigerant charge. And so you have an 

12 intersection that is occurring here with 

13 public policies where you have climate 

14 policies that are going to restrict the use of 

15 HFCs and efficiency policies that are going to 

16 demand the greater use of HFCs at the same 

17 time.

18 And it is critical in this 

19 analysis, assuming the Department dispenses 

20 with the consensus agreement, that you 

21 understand the impact on cost of refrigerant 

22 because it is definitely related to this 
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1 rulemaking.

2 MR. BROOKMAN: Okay. Thank you. 

3 We've now heard that several times.

4 MR. BEATTEN: Just a quick follow 

5 up. Not only that --

6 MR. BROOKMAN: Say your name 

7 again.

8 MR. BEATTEN: Warren Beatten with 

9 Emerson.

10 The cost of those many additional 

11 pounds of refrigerant could be much, much 

12 higher than what is paid today. So there is 

13 going to be a leveraged effect potentially 

14 from Cap and Trade and higher efficiency 

15 standards and costs.

16 MR. BROOKMAN: I hope the comments 

17 will be novel now, Don.

18 MR. BRUNDADGE: One additional 

19 follow up on that. Even if you proceed to 

20 accept the consensus agreement, you really 

21 need to do the study on R22 and accelerated 

22 phase out because that will hugely impact your 
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1 quads of energy savings if you have shorter 

2 lifetime for that existing equipment and it 

3 gets replaced faster.

4 Thank you.

5 MR. BROOKMAN: Thank you.

6 On to discount rates.

7 MR. SCOTT: Okay. Discount rates, 

8 the residential rates used again come from a 

9 distribution, the real rates. That is 

10 inflation adjusted rates, based on borrowing 

11 costs and opportunity costs for household 

12 investments.

13 There are a number of instruments 

14 ranging all the way from credit cards to 

15 potentially sales of parts of one's assets in 

16 order to replace existing units. Typically 

17 with a new construction situation, we would 

18 expect the equipment to be included in the 

19 mortgage value of the house. And, therefore, 

20 it would be subject to the mortgage, average 

21 mortgage interest rate.

22 The averages for those two 
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1 distributions are shown there on the slide, 

2 4.8 percent as a mix of things for existing 

3 homeowners and three percent average when 

4 included in the mortgage.

5 For commercial entities, the real 

6 rates, we based it on a weighted average cost 

7 of capital reported for 1,700 companies in the 

8 U.S. Those rates are -- it's quite a broad 

9 distribution as you might expect.

10 And the average real rate is shown 

11 on the screen at 5.66 percent average. I 

12 believe that was the beginning of last year.

13 So those are the -- that's what 

14 used for discount rates.

15 For lifetimes, there was some 

16 fairly detailed analysis done of manufacturing 

17 shipments data that we received matched to the 

18 American Housing Survey stock data over time. 

19 And then finally matched against responses on 

20 the Residential Energy Consumption Survey on 

21 the age of the household's central air 

22 conditioner.
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1 MR. BROOKMAN: Steve Rosenstock?

2 MR. ROSENSTOCK: Sorry, going back 

3 to slide 67 on the discount rates.

4 MR. SCOTT: Sure.

5 MR. ROSENSTOCK: Especially on the 

6 residential side it says based on borrowing 

7 costs and opportunity costs for household 

8 investments.

9 MR. SCOTT: Right.

10 MR. ROSENSTOCK: On the new -- I 

11 can -- you're basically -- for a homeowner, if 

12 you are assuming inflation is three percent, 

13 that the average -- it's really about 7.8 

14 percent is either the borrowing costs or 

15 opportunity cost in terms of some of these 

16 decisions.

17 And, again, we've had these 

18 discussions many times. And that just seems 

19 to be on the low side, especially in these 

20 days of much tighter credits.

21 And especially there is such a --

22 if you have a great credit rating, yes, you 
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1 might get certain low borrowing costs. But if 

2 your credit rating is less than perfect or 

3 stellar, your borrowing costs up quite 

4 dramatically, well above these numbers.

5 MR. BROOKMAN: John Mandyck.

6 MR. MANDYCK: John Mandyck from 

7 Carrier.

8 The question is is the 4.8 percent 

9 for existing homeowners based on like a home 

10 improvement loan?

11 MR. SCOTT: No completely. Go 

12 ahead, Greg.

13 MR. ROSENQUIST: Greg Rosenquist. 

14 Portfolio. It's based upon data from Bureau 

15 of Economic Analysis Survey of Consumer 

16 Finances. So it is many, many respondents or 

17 many, many survey records that show basically 

18 what homeowners are doing in terms of 

19 borrowing money or saving money.

20 So this analysis reflects the fact 

21 that some homeowners are using credit cards or 

22 using home equity lines of credit or are 
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1 taking money out of savings or bonds or mutual 

2 funds. So that's what this 4.8 percent 

3 represents. It's the weighted average of all 

4 that mix.

5 MR. MANDYCK: Then I guess I would 

6 just echo as a follow on that I think it is 

7 very low as well because if you think about it 

8 in this market, three-quarters of the sales 

9 are for replacement applications, many of 

10 those of which are unplanned.

11 And so if a consumer is going to 

12 finance that, I question whether they have the 

13 time to go to a bank, fill out a loan 

14 application or credit extension.

15 I believe the more common way that 

16 this would be financed is under a credit card, 

17 which is going to have a much higher cost of 

18 borrowing than this.

19 MR. BROOKMAN: Okay. Thank you.

20 So then let's proceed.

21 MR. SCOTT: Okay. I was in the 

22 middle of talking about the lifetime of the 
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1 equipment. We've taken these three sets of 

2 data and matched them in order to pick up --

3 to essentially fix survival functions, both on 

4 air conditioners and heat pumps, and the 

5 weighted average or the average lifetime of an 

6 air conditioner doing that was 19.01, 19 

7 years. And for a heat pump, something 

8 slightly less, about 16.2 years say. And 

9 that's what was used in the analysis.

10 The details, again, are available 

11 in the technical support document.

12 Do you have questions on that? 

13 You can send them in and we'll wrap this up.

14 MR. BROOKMAN: Let's roll on to 

15 the next one.

16 MR. SACHS: Yes, a very quick 

17 comment. Harvey Sachs, referencing slide 68.

18 Again, I think this is a perfectly 

19 reasonable pair of survival curves under a 

20 business as usual model. But we have to think 

21 about a scenario model if we're going to think 

22 about the effects of the R22 phase out.
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1 MR. BROOKMAN: Right. Okay. I 

2 think the Department heard that. It's a 

3 question of what they can do.

4 Life cycle costs and payback 

5 period.

6 PARTICIPANT: (Inaudible.)

7 MR. BROOKMAN: Okay -- whichever 

8 one -- which one would be best.

9 MR. SCOTT: Actually I'm having a 

10 sidebar discussion here with Doug. What you 

11 see on the screen here is the preliminary 

12 results for the life cycle costs and payback 

13 period.

14 This is for the geography that we 

15 used in our study. We've actually run, in 

16 effect, our numbers against the geography used 

17 in the consensus agreement. So if you'd 

18 rather look at that, we can do that. Or we 

19 can look at both of them. It's a matter of 

20 time and your interest.

21 MR. BROOKMAN: Are there 

22 significant differences?
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1 MR. SCOTT: No.

2 MR. BROOKMAN: Then let's look at 

3 the consensus.

4 MR. WES ANDERSON: This is Wes 

5 Anderson with Department of Energy.

6 Given that the consensus agreement 

7 has not been accepted by DOE -- we have 

8 received it but we have not made a decision on 

9 it so I think we need to stick with the --

10 MR. SCOTT: Okay.

11 MR. WES ANDERSON: -- current 

12 analysis as we have it presented.

13 MR. BROOKMAN: So we're sticking 

14 with 69.

15 PARTICIPANT: All right.

16 MR. BROOKMAN: And you can see it 

17 is a lot of data. Just a brief overview, 

18 Mike.

19 MR. SCOTT: Yes. I'll just try to 

20 characterize what they're seeing here. And 

21 then I'll depart from the stage.

22 Okay. So what we have here is --
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1 as you might imagine, we've got life cycle 

2 cost savings associated with every level for 

3 every location for each product class. And we 

4 tried to come up with a way to summarize that.

5 And so what we've hit on here is 

6 the -- we're reporting the highest SEER and 

7 corresponding HSPF for which the mean LCC 

8 savings were positive if you replace the 

9 market base air conditioners or market base 

10 heat pumps with the one at this level.

11 And we're also showing the 

12 corresponding median payback in years.

13 So, for example, with the national 

14 standard, that is not a regional standard, the 

15 highest split system AIR CONDITION coil only 

16 LCC reported was for 13.5 SEER, that's the 

17 highest efficiency for which the LCC was 

18 positive.

19 For the hot, humid area, it was 

20 15. For hot, dry, 14.5. And for rest of 

21 country, 13, if you had regional standards. 

22 So that's the way to read that.
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1 MR. BROOKMAN: Mike, let's receive 

2 comments on this.

3 Steve Rosenstock?

4 MR. ROSENSTOCK: Steve Rosenstock, 

5 Edison Electric Institute.

6 Again, this is -- it is a very 

7 informative table. But one thing that, again, 

8 would be kind of -- it would be interesting 

9 for a lot of stakeholders and I'm sure it is 

10 in the technical support document, is the 

11 values where the life cycle cost savings are 

12 maximized.

13 You know this says where they're 

14 positive. So they could be, you know, plus 

15 two dollars or something. And that could be 

16 well, that's the highest where it got, you 

17 know, at least a little bit of positive for 

18 these classes.

19 But it is also of more interest to 

20 see where the maximum values are and the 

21 corresponding mean payback. Again, but this 

22 is still very instructive and very informative 
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1 in terms of how the numbers --

2 MR. BROOKMAN: Yes, Harvey Sachs.

3 MR. SACHS: Harvey Sachs.

4 Again, the qualification that 

5 slide 69 is still based on the fundamental 

6 Wasman Brandemule EER versus SEER assumptions 

7 of slide 50.

8 MR. SCOTT: Yes.

9 MR. SACHS: So it's just as good.

10 MR. SCOTT: Just as good.

11 MR. SACHS: Thank you.

12 MR. SCOTT: By the way, if you 

13 want the detail on all the LCC analyses, those 

14 are in the technical support document so you 

15 can look at which one had the maximum in each 

16 case.

17 MR. BROOKMAN: Jeff?

18 PARTICIPANT: And you explain the 

19 significant difference between the split 

20 system heat pump and everything else? And 

21 it's showing, I assume, 19.5 SEER and 10.3 

22 HSPF nationally?
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1 MR. SCOTT: Why it shows up the 

2 way it does?

3 PARTICIPANT: Yes. Why is it, you 

4 know, an order of magnitude different than 

5 everything else.

6 MR. SCOTT: Well, it is the 

7 consequence of where those heat pumps were 

8 located I believe was part of it. Dave and I 

9 had a discussion about that last night. He 

10 had looked at it in a little more detail than 

11 I did for that piece of it.

12 MR. BROOKMAN: Let's hear from 

13 Dave.

14 MR. WINIARSKI: Yes, so the 

15 question, I guess, is why the split system 

16 heat pumps look like they are significantly 

17 more cost effective at these high efficiency 

18 levels.

19 There's really two reasons. The 

20 first one is in the analysis of the heat pumps 

21 and in the cost curves for the heat pumps, it 

22 assumes that you are replacing the indoor 
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1 handling unit at the same time you are 

2 replacing the condensing unit. So you get 

3 some of those benefits.

4 So it looks like the split system 

5 AIR CONDITION blower coil curve in terms of 

6 what is actually being replaced in the 

7 analysis.

8 And then, of course, you are 

9 getting the benefits for the improvements on 

10 the heating side. And to the effect that that 

11 saves energy that is above and beyond what the 

12 AIR CONDITION saves.

13 MR. BROOKMAN: Jim?

14 MR. BRESHAW: Jim Breshaw.

15 It looks like you are saying to 

16 get a 10.3, you have to have a 19.5. And --

17 it looks like HSPF improvements are driving a 

18 lot of the payback. And you don't have to 

19 have a 19.5 to get a 10.3 necessarily. That 

20 need to be divided out some way or another.

21 MR. BROOKMAN: Dave Winiarski?

22 MR. WINIARSKI: Yes. That has to 
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1 do with the engineering curves that are 

2 generated where the SEER values from those 

3 engineering curves are correlated with the 

4 HSPF values that are typical for that product.

5 So you are absolutely right. They 

6 don't reflect that fact that a SEER of 19.5 

7 could have a variation in the HSPF.

8 The other aspect that I want to 

9 bring up real quickly is when you look at the 

10 distribution of the REXX observations, you'll 

11 find that -- I'll get the numbers approximate 

12 here -- that the -- I think 50 percent of the 

13 air conditioners are installed in the northern 

14 part of that U.S. map.

15 With heat pumps, I think it is 

16 closer to about 38 percent. So when you look 

17 at the nation as a whole, the heat pumps tend 

18 to be clustered more in the southern region. 

19 And that effects what is cost effective 

20 nationally.

21 MR. BROOKMAN: Let's keep going 

22 folks. We've moving on to shipments analysis 
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1 and national impact analysis with Greg 

2 Rosenquist.

3 MR. ROSENQUIST: Yes --

4 MR. WES ANDERSON: This is Wes, 

5 DOE.

6 Just before we left that chart, we 

7 have the consensus agreement analysis included 

8 in the background information. So if you want 

9 to see it, you can look at it.

10 MR. BROOKMAN: In the backup 

11 slides.

12 MR. WES ANDERSON: In the backup 

13 slides.

14 MR. BROOKMAN: Yes. Thank you, 

15 Wes.

16 Okay, Greg.

17 MR. ROSENQUIST: Okay. Thanks. 

18 Again, I'm Gregory Rosenquist from Lawrence 

19 Berkeley National Laboratory.

20 I'll be carrying you through the 

21 next two steps of the analyses that were 

22 conducted for the preliminary analysis 
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1 rulemaking stage. That's the shipments 

2 analysis and the national impact analysis.

3 First, discussing the shipments 

4 analysis, it's purpose is to estimate central 

5 air conditioner and heat pumps shipments under 

6 the base case -- that's the case without 

7 standards -- in each of the standards cases 

8 that were considered.

9 The method relies on developing a 

10 shipments model that uses an accounting 

11 methodology to track the shipments of central 

12 air conditioners in the heat pumps and the 

13 residential commercial building sectors.

14 The total product stock is 

15 desegrated according to product class and 

16 you've seen the product classes described 

17 earlier in this presentation. Just want to 

18 emphasize that split system central air 

19 conditioners were divided into blower coil 

20 units and coil only units.

21 This is disaggregated according to 

22 market sector, whether it is residential 
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1 housing or commercial buildings. And it is 

2 also disaggregated according to the repair 

3 status, whether it is a normal repair or an 

4 extended repair. And I'll talk about the 

5 extended repairs a little bit later.

6 Each market sector is further 

7 disaggregated into three product channels. 

8 One, new construction, two, existing owners, 

9 that's where replacements go, and three, new 

10 owners, that's existing buildings that don't 

11 already own the piece of equipment.

12 Each channel is modeled to respond 

13 to new efficiency standards differently. For 

14 the new construction market, it was assumed 

15 that they would not be effected by any 

16 standards increases. In other words, the base 

17 case shipments for new construction would be 

18 equivalent to the standards case shipments.

19 For existing owners, standards 

20 were assumed to effect the repair versus 

21 replacement decision for some consumers. That 

22 is some consumers would decide to an extended 
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1 repair rather than replacement the equipment 

2 when it failed.

3 And then finally, for new owners, 

4 it was assumed that standards would effect the 

5 purchase decision for some consumers. For 

6 central air conditioner owners, it was assumed 

7 that some consumers would purchase a room air 

8 conditioner instead of a central air 

9 conditioner. And for heat pump owners, they 

10 would chose to purchase a combination warm air 

11 electric furnace and a central air 

12 conditioner.

13 Now there are many, many inputs to 

14 this shipments analysis. I'll try to go over 

15 them quickly here.

16 First and foremost are the 

17 historical shipments. These are used to build 

18 up the stock of central air conditioning and 

19 heat pump equipment in both the residential 

20 and commercial building sectors. This 

21 shipments data was provided AHRI and it 

22 spanned the period of 1972 to 2007.
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1 Split system central air 

2 conditioners were divided into blower coil and 

3 coil only units. It was assumed that 90 

4 percent of annual shipments went to coil only 

5 units. And then the remaining ten percent to 

6 blower coil.

7 And then it was also assumed, as 

8 you've heard before, that 93 percent of annual 

9 shipments went to the residential sector while 

10 the remaining seven percent went to the 

11 commercial sector.

12 The key input for determining 

13 replacement shipments is the product lifetime 

14 or survival function. And the shipments 

15 analysis used the same survival function as 

16 was developed in the life cycle costs and 

17 payback period analysis.

18 For new construction shipments, 

19 the key inputs there are new construction 

20 starts and the saturation of equipment in that 

21 new construction. For residential and 

22 commercial building starts, that came from the 
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1 annual energy outlook.

2 The 2009 version was used for the 

3 preliminary analysis. We'll update that for 

4 the next phase of the rulemaking.

5 The residential saturations were 

6 developed from the census's characteristics of 

7 new housing. And commercial saturations were 

8 developed from DOE's commercial building 

9 energy consumption survey.

10 New owner shipments, at least 

11 historical values, were developed from the 

12 difference between the sum of the replacement 

13 shipments and new construction shipments and 

14 historical shipments. That is when you add up 

15 the replacement shipments and new construction 

16 shipments, they don't add up to the historical 

17 shipments. And so that residual was 

18 attributed to new owner purchases.

19 To forecast this out into the 

20 future, the average value of the 1990 to 2007 

21 time period was averaged and fixed. And fixed 

22 for future years.
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1 The decision model to figure out 

2 how new owners and existing owners would be 

3 effected by new standards, that key input 

4 there was the purchase price elasticity. 

5 This, again, forecasts how standards are going 

6 to impact shipments under these standards 

7 cases.

8 The elasticity was developed from 

9 primarily data for the home appliance market 

10 after looking at how new owner historical 

11 central air conditioner and heat pump 

12 purchases correlated with purchase prices 

13 through the purchase price index, operating 

14 costs through the use of the shipment weighted 

15 efficiencies from AHRI, and household income.

16 This particular purchase price 

17 elasticity showed that the purchase price, in 

18 fact, effects dominate that rather than 

19 operating costs or household income. And the 

20 model also assumed that over time consumers 

21 become less sensitive to that purchase price 

22 and that was determined from literature for 
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1 how consumers purchase automobiles.

2 Now the shipments model first of 

3 all was developed for the nation as a whole. 

4 But as we've heard, we've have to develop 

5 shipments at a regional level. And this was 

6 DOE basically by regionalizing all the various 

7 inputs that go into the shipments model.

8 This includes per until total 

9 installed costs, per unit product operating 

10 costs, historical shipments, new construction 

11 starts in stock, and new construction product 

12 saturations.

13 MR. WES ANDERSON: Greg, I'm sorry 

14 to break your flow.

15 MR. ROSENQUIST: Yes?

16 MR. WES ANDERSON: But this 

17 announcement -- I just want to make this 

18 announcement before everybody leaves, this 

19 doesn't have to do with his presentation. I'm 

20 Wes, DOE.

21 Unfortunately this morning we had 

22 problems with the court reporter not showing 
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1 up. So we had to try to supplement that a 

2 tape recording in the back.

3 Unfortunately the individual once 

4 he left the room, the recorder was unplugged. 

5 So consequently --

6 PARTICIPANT: Is it EnergyStar?

7 MR. WES ANDERSON: I'm sorry. So 

8 consequently I want to reiterate that written 

9 comments really need to be submitted. I want 

10 to harp on that.

11 And I want to let everybody know, 

12 we'll send out an email and post it on the web 

13 page as well when the transcript is finally 

14 ready.

15 PARTICIPANT: Wes, earlier we 

16 heard from individuals that were wanting to 

17 have more than the time that you stated before 

18 the comments were due. Can you respond to 

19 that?

20 MR. WES ANDERSON: Yes, we are 

21 looking to extend the comment period for you. 

22 That paperwork is going through the system 
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1 now. And I will also notify everyone by email 

2 and put it on the webpage for the extension. 

3 But there will be an extension.

4 But please try to get your 

5 comments in as soon as possible because the 

6 overall comment period was 45 days. And it is 

7 sort of limited at this point. And we want to 

8 go ahead and start with our analysis. And we 

9 can't really do that until the comment period 

10 is officially over.

11 So we will extend it probably to 

12 the end of the following week or something 

13 like that. So you do have time to get your 

14 comments together.

15 PARTICIPANT: All right. Thank 

16 you.

17 MR. BROOKMAN: We're going to 

18 continue with the presentation.

19 I will note that Brenda is 

20 starting to hand out the photocopies of 

21 individual's business cards so you've got a 

22 record of who is here.
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1 Keep going, Greg.

2 PARTICIPANT: Excuse me, 

3 clarification?

4 MR. BROOKMAN: Yes, please, Harvey 

5 Sachs.

6 MR. SACHS: Thank you, Wes. I 

7 appreciate this. This is Harvey Sachs.

8 But I don't understand. What are 

9 we going to construct a transcript from if the 

10 tape stopped?

11 MR. WES ANDERSON: We have --

12 there will be a gap and we'll let you know 

13 what that -- right now it is pretty 

14 significant for the morning. But officially I 

15 don't know how long the gap is. But 

16 significant parts of the morning discussion 

17 was not recorded. We'll have to see.

18 MR. SACHS: Second question as 

19 long as we're at this process digression. 

20 When will we know whether or not the consensus 

21 is going to be accepted as opposed to 

22 continuing this process?
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1 MR. WES ANDERSON: Wes at DOE.

2 I cannot answer that at this point 

3 but we will --

4 MR. BROOKMAN: Steve Rosenstock, 

5 go ahead.

6 MR. ROSENSTOCK: Did Wes have 

7 something more to say? I didn't want to 

8 interrupt. I'm sorry.

9 MR. WES ANDERSON: I'm done. 

10 Thanks.

11 MR. ROSENSTOCK: Steve Rosenstock, 

12 EEI.

13 In terms of shipments, I'm just 

14 kind of curious. Have you looked back on what 

15 the projections were for the last rulemaking 

16 in terms of what the shipments were going to 

17 be post-2006? And how the projections 

18 differed from the reality? And I discussed 

19 heat pumps.

20 And I'm sure -- I'm just kind of 

21 curious how that -- how -- if you had a chance 

22 to look back in terms of impacts because 
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1 obviously you're, you know, you're doing these 

2 models and I'm just kind of curious.

3 What was the -- if you had a 

4 chance to look, what was the percentage you 

5 projected, X million per year, and the actual 

6 was X million. And, you know, just doing kind 

7 of a looking back and seeing how accurate the 

8 model was previously.

9 MR. ROSENQUIST: Haven't done 

10 that. Haven't done that retrospective.

11 MR. ROSENSTOCK: Thank you.

12 MR. BROOKMAN: Greg, let's keep 

13 moving.

14 MR. ROSENQUIST: Okay. What I was 

15 saying before is that many of the inputs were 

16 regionalized in order to develop this regional 

17 model to get shipments down to the hot and 

18 dry, hot, humid, and the rest of country 

19 regions.

20 Two of those inputs do not vary by 

21 region over the product lifetimes and the 

22 relative purchase price elasticities.
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1 For the variables that do vary by 

2 region, starting with the per unit total 

3 installed costs and per unit product operating 

4 costs, those come from the life cycle costs 

5 and payback period analysis.

6 To allocate shipments to the three 

7 regions, allocation factors were developed 

8 through a trial and error process, by figuring 

9 out or calculating the stock for each of the 

10 three regions and comparing it to historical 

11 values from the American Housing Survey.

12 And those charts to the right here 

13 demonstrate that. The blue lines are the 

14 calculated values. The red lines are the 

15 values from the American Housing Survey. And 

16 I actually can't read the print that well on 

17 my screen here. But I believe this is hot,

18 dry, this is hot, humid, this is rest of 

19 country, and this is the total U.S.

20 So the regional model does a 

21 fairly good job at matching those historical 

22 saturations.
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1 For regional new construction 

2 starts, that was -- those are developed from a 

3 combination of the AEO which provide things at 

4 the census division level in combination with 

5 population factors to aggregate that up to the 

6 three climatic regions.

7 For regional new construction 

8 saturations for the residential sector, that 

9 was developed through a combination of the 

10 characteristics of new housing data, which 

11 provides it at the census region level, in 

12 combination with these population factors to 

13 aggregate that up to the regional level.

14 And for the commercial sector, 

15 combination of SEBX data, which provides 

16 saturations at the census division level, in 

17 combination with population factors, which are 

18 used to get these saturations at the regional 

19 level.

20 MR. BROOKMAN: Don Brundadge?

21 MR. BRUNDADGE: Just to comment --

22 repeat a comment from earlier. The potential 
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1 early replace due to R22 phase out will have a 

2 huge potential impact on the shipments 

3 analysis. And I highly recommend you look at 

4 that in detail.

5 MR. BROOKMAN: Thank you.

6 Additional comments on the 

7 regional model?

8 MR. WES ANDERSON: This is Wes at 

9 DOE.

10 If you have any insight on how to 

11 glean that information from a public available 

12 information or if you -- however you can 

13 access those projections, it would be helpful 

14 to submit that.

15 MR. BROOKMAN: So on to shipments 

16 results.

17 MR. ROSENQUIST: And these 

18 shipments results are for one particular case 

19 of central air conditioners split systems coil 

20 only units.

21 And so this top figure shows the 

22 base case shipments, that is the case without 
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1 standards. And you see the total figure there 

2 going up to over -- around seven -- I think 

3 five-and-a-half million shipments by 2046.

4 It's divided up into the three 

5 regions by color. The red represents the hot, 

6 dry region. The orange, the hot, humid 

7 region. And the blue, the rest of the 

8 country.

9 And each one of those regions, in 

10 turn, is divided up into the three product 

11 channels, new construction, replacements, and 

12 new owners. The biggest swath there is for 

13 replacements. The smallest swath is for new 

14 owners.

15 Then these figures on the bottom 

16 show how standards actually impact these base 

17 case shipments. And looking at the case here 

18 of 16.5 SEER, it's divided into these three 

19 product channels, replacements, new owner, and 

20 new construction.

21 So we can see how the standards 

22 impact shipments in each one of these product 
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1 channels. Starting with replacements -- I 

2 don't know if you can see it in your handout 

3 there -- but there is a slight decrease in 

4 shipments under the standards case.

5 There is a slight decrease 

6 represented by this dotted line from the 

7 standards in the year that the standards 

8 become effective.

9 And that's due to the fact, again, 

10 for replacements, that some consumers are 

11 choosing to do an extended repair rather than 

12 a replacement. But that effect diminishes out 

13 over time as consumers become less sensitive 

14 to that purchase price increase.

15 So overall there isn't a terribly 

16 large effect due the standard on replacement 

17 shipments. And the same can be said for new 

18 owner shipments as well. 

19 There is a slight drop in the year 

20 that the standards take effect due to the fact 

21 that some consumers are purchasing room air 

22 conditioners instead of central air 
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1 conditioners. But it isn't all that great.

2 And in new construction, as I said 

3 before, the assumption there is that 

4 particular product channel would be 

5 unaffected.

6 MR. BROOKMAN: Steve Rosenstock?

7 MR. ROSENSTOCK: Steve Rosenstock, 

8 EEI.

9 I guess the handout wasn't 

10 synching because on our slides here it says 22 

11 SEER.

12 MR. ROSENQUIST: Right, right, 

13 that correction was made.

14 MR. ROSENSTOCK: Okay. Thank you. 

15 Okay.

16 Again, I have to say again based 

17 on the past experience over the last five 

18 years, I can't believe that the impact would 

19 not be even bigger.

20 When you talk about 16.5 SEER, 

21 which is another jump, you know, it's a 27 

22 percent increase over the current standard, 
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1 that it would have an almost minimal impact 

2 that the market would just go -- and that's 

3 just so -- if the last few years can be 

4 believed based on what's happened to 

5 shipments, I just find that very surprising.

6 I'm just very surprised at the --

7 again, I don't know how -- it just looks like 

8 a very, very minimal impact. And I'm just 

9 surprised.

10 Thank you.

11 MR. BROOKMAN: Don Brundadge?

12 MR. BRUNDADGE: I would agree --

13 Don Brundadge -- I would agree especially on 

14 the rest of country. I mean in hot, humid and 

15 hot, dry, you can't sell a house without an 

16 air conditioner.

17 But in rest of country where it is 

18 considered to be more of an option, to have 

19 almost no impact from a higher standards, it 

20 just doesn't seem right to me and it doesn't 

21 seem consistent with what happened when you 

22 went from SEER 10 to SEER 13 a few years ago, 
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1 which I'm not sure any of the manufacturers 

2 much are still here but they saw some 

3 significant drop in shipments.

4 Thank you.

5 MR. BROOKMAN: Okay. Thank you.

6 MR. ROSENSTOCK: Also, again, this 

7 is Steve Rosenstock.

8 Again, there is -- again follow up 

9 the substitution effect in terms of, you know, 

10 room air conditioners replacing central air 

11 conditioners. That is, especially in the 

12 northern parts of the country, there might 

13 have been some consumers who did that as well. 

14 So that's another possibility in terms of 

15 this shipment analysis that should be 

16 considered.

17 Thank you.

18 MR. ROSENQUIST: Okay, well, we'll 

19 forge ahead now into the national impact 

20 analysis. And its purpose is to determine the 

21 national energy savings and the national 

22 economic impacts, either a burden or a 
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1 benefit, from these various standards.

2 And this first flow diagram shows 

3 how the national energy savings are 

4 calculated. It starts out with the shipments 

5 analysis, which provides both base case and 

6 standards case projections of shipments.

7 Those shipments, again, are used 

8 to build up a stock of central air 

9 conditioning and heat pump equipment. And 

10 then when that is coupled with the per unit 

11 annual energy use values from the life cycle 

12 cost analysis, it allows the determination of 

13 the national annual energy consumption for 

14 each year of the forecast period out from 2016 

15 all the way out to 2046. This is done for 

16 both the base case and the standards case.

17 To determine national energy 

18 savings, the annual values are cumulated into 

19 a single value for both the base case and the 

20 standards case.

21 Site to source energy conversion 

22 factors are applied to convert that site 
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1 energy savings into source energy savings. 

2 And the difference between the base and 

3 standards case provides the national energy 

4 savings.

5 This next flow diagram provides 

6 the calculation process for determining the 

7 net present value, which is the measure of the 

8 economic impact, either a benefit or a burden, 

9 to the nation.

10 Again, it starts out with the 

11 shipments analysis, which provides both base 

12 case and standards case projections of 

13 shipments, which again are used to build up 

14 the stock of central air conditioning and heat 

15 pump equipment.

16 And then taking per unit energy 

17 costs and per unit maintenance repair costs 

18 and per unit product -- or total installed 

19 cost from the life cycle cost analysis, that's 

20 used to develop national energy costs, 

21 national maintenance and repair costs, 

22 national product costs annually over the 
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1 entire forecast period from 2016 to 2046. 

2 This is done for both, again, the base case 

3 and the standards case.

4 The operating cost savings is the 

5 difference between the cumulative values of 

6 energy and repair -- maintenance and repair 

7 costs for the base case compared to the 

8 cumulative energy maintenance and repair costs 

9 from the standards case.

10 And the total product cost 

11 increase is the same thing but on the product 

12 cost side, again taking that difference 

13 between the standards case and the base case.

14 Discount rates are applied to both 

15 the operating cost savings and the total 

16 product cost increases to bring that to a 

17 present value. And if the operating cost 

18 savings are greater than the product cost

19 increases, you have a net benefit to the 

20 country.

21 If it is the other way around 

22 where the cost increases are greater than the 
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1 cost savings, then you have a burden to the 

2 country from the particular standard.

3 So there are, again, several 

4 inputs to the national impact analysis. The 

5 first set of inputs, the per unit total 

6 installed cost, per unit repair and 

7 maintenance costs, per unit annual energy use 

8 come from the life cycle cost and payback 

9 period analysis.

10 All of these per unit values are 

11 dependent upon efficiency. So the next set of 

12 inputs, the base case and standards case, 

13 forecast the efficiencies are important to 

14 develop.

15 For the base case efficiency 

16 distributions that was described earlier by 

17 Dave Winiarski in the energy use analysis. So 

18 I'll be showing that again for a particular 

19 product class.

20 The standards case efficiencies in 

21 the year that the standards become effecting 

22 in 2016 was determined through the use of a 
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1 roll-up scenario. And then efficiencies over 

2 time were forecasted by looking at historical 

3 trends in efficiency.

4 Electricity prices, again, were 

5 taken from the life cycle costs and payback 

6 period analysis, the marginal prices for both 

7 the residential and commercial building 

8 sectors.

9 Future energy prices were 

10 forecasts using the price trends from the 

11 annual energy outlook.

12 Electricity site to source 

13 conversion factors are used to convert that 

14 site savings into source savings. They're 

15 also called marginal heat rates. They are 

16 taken from the national energy modeling system

17 or NEMS. And NEMS is used to generate the 

18 annual energy outlook. 

19 These factors or heat rates 

20 account for the losses due to generation, 

21 distribution, and transmission.

22 Discount rates are used to bring 
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1 back these costs -- these cost increases and 

2 operating cost savings to a present value as I 

3 said before. Seven percent and three percent 

4 real values are used based upon guidelines 

5 from the Office of Management and Budget. 

6 These are different discount rates than are 

7 used from the life cycles costs and payback 

8 period analysis.

9 And they are discounted to a 

10 present year. And for the preliminary 

11 analysis, the present year was chosen as 2009.

12 MR. BROOKMAN: Tom Eckman?

13 MR. ECKMAN: Tom Eckman.

14 I'll add my standard postscript to 

15 the national impact analysis. How many plants 

16 are we going to avoid? And what are the costs 

17 of avoiding those plants? Because this is 

18 really a capacity-driven savings.

19 And is that monetary cost of plant 

20 avoidance in the analysis in terms of net 

21 present value?

22 MR. ROSENQUIST: Not currently.
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1 MR. ECKMAN: Is it going to be?

2 MR. ROSENQUIST: It will be taken 

3 under consideration by DOE. Whether or not 

4 it's determined.

5 MR. ECKMAN: I mean the reason 

6 we're doing this is to avoid plant. Why don't 

7 we calculate the cost of plant avoidance and 

8 include it in the analysis?

9 MR. BROOKMAN: Thank you.

10 Additional comments?

11 (No response.)

12 MR. ROSENQUIST: Okay. As I said 

13 before, it is important to determine these 

14 base case and standards case efficiencies 

15 because the inputs from the LCC analysis are 

16 all dependent upon them.

17 And this table shows you the 

18 example of how these distributions of 

19 efficiencies were generated for the year that 

20 standards become effective for split system 

21 air conditioners coil only units.

22 The base case efficiency 
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1 distribution is what you've seen earlier in 

2 Dave Winiarski's presentation in the energy 

3 use section. That results in a shipment 

4 weighted efficiency of 13.65 SEER.

5 And then you can see how the roll 

6 up scenario effects these distributions. 

7 Looking at standards case three, which is 14.5 

8 SEER, you can see that all products below that 

9 standard level are rolled up to 14.5. And 

10 then all the market above that standard level 

11 is unaffected.

12 So you can see the shipment weight 

13 efficiency levels for all the different 

14 standards cases here.

15 Now it is also important --

16 MR. BROOKMAN: Don Brundadge?

17 MR. BRUNDADGE: I don't think it's 

18 -- Don Brundadge -- I don't think it is 

19 reasonable to assume efficiencies are going to 

20 stay frozen from 2008 to 2016. There has been 

21 a huge increase in utility incentive programs 

22 for higher efficiency units. You've had 
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1 stimulus programs. You've had lots of other 

2 things.

3 And I think in real life, there's 

4 some increase in the shipment weighted 

5 efficiency between 2008 and 2016.

6 MR. BROOKMAN: Thank you.

7 Andrew deLaski?

8 MR. deLASKI: And just to follow 

9 up on Don's point. You know I also think that 

10 in 2016 that those programs don't disappear so 

11 that there would need to be a distribution 

12 past 2016 that would reflect -- now, course, 

13 this depends somewhat what the standard level 

14 ultimately is chosen. If you chose, you know, 

15 a lower standard, then you'd have more of a 

16 distribution above that. The higher you go, 

17 the harder it is to have a distribution.

18 So I think the analysis has to be 

19 somewhat flexible to reflect how a different 

20 standard might impact the distribution post 

21 the standard. And I think the way it has been 

22 done in the past, in times has been to do 
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1 scenarios, a roll up and a ship scenario. And 

2 I think that is an appropriate approach.

3 MR. ROSENQUIST: Yes, this next 

4 slide sort of speaks to your point, Andrew, 

5 about how these distributions change over 

6 time.

7 This graph, this chart shows for 

8 the case of split AIR CONDITION coil only 

9 units how the shipment weight efficiencies 

10 change over time for the base case in each of 

11 the standards cases.

12 So --

13 MR. SACHS: Greg? Excuse me.

14 MR. ROSENQUIST: Yes?

15 MR. SACHS: This is Harvey Sachs 

16 again. Could we go back one? And could you 

17 just walk me through, for example, row three? 

18 I'm confused and it's past my nap time.

19 MR. ROSENQUIST: Okay. So 

20 actually you want to look at column three, not 

21 row three, column three.

22 So column three is the 
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1 distribution for standards case three or the 

2 standards case of 14.5 SEER minimum. So that 

3 product below that standard level of 14.5 is 

4 rolled up to 14.5. So --

5 MR. SACHS: Okay. Now it's clear. 

6 Thank you.

7 MR. ROSENQUIST: Okay.

8 MR. SACHS: I just had the row9 wise mind, I guess. Thank you.

10 MR. ROSENQUIST: Okay.

11 MR. deLASKI: So, if I could 

12 continue, this is Andrew deLaski again, so I'm 

13 having trouble, you know, reconciling this 

14 table with the table that Dave showed earlier, 

15 which showed that products didn't tend, in the 

16 base case, to cluster around exactly the SEER 

17 that was set but rather he showed a 

18 distribution between 13 and 14 SEER in the 

19 current marketplace.

20 MR. ROSENQUIST: Right.

21 MR. deLASKI: So it just strikes 

22 me that if that exists today, and I know there 
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1 is a question as to whether it does or not, 

2 but if that's your base case assumption, I 

3 think you need to carry that through to your 

4 standards case assumption --

5 MR. ROSENQUIST: Right.

6 MR. deLASKI: -- where you can see 

7 that same kind of reaction in the marketplace, 

8 which is why I asked the question earlier, you 

9 know, are manufacturers overshooting a little 

10 bit to certain of meeting the standard because 

11 if they're doing that today, then they'll do 

12 it in the future.

13 MR. ROSENQUIST: Yes. The 

14 analysis here assumes that in the year that 

15 standards become effective, you have a roll 

16 up. But what this chart tries to display is 

17 that after 2016, you continue to have an 

18 increase in the shipment weight efficiency. 

19 And that is you continue to have more products 

20 being sold beyond that minimum standard.

21 So the way I'm looking at it, it's 

22 like do a roll up in the year that standards 
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1 become effective. And then after that you 

2 gradually increase that efficiency trench 

3 where the distribution increases in time.

4 MR. deLASKI: Okay.

5 MR. ROSENQUIST: And so that's 

6 what the analysis did. And that's what this 

7 slide demonstrates is that over time, after 

8 2016, the analysis assumed that there would be 

9 efficiency growth in the base case equivalent 

10 to what was seen between 1992 and 2005.

11 MR. deLASKI: So thank you because 

12 we've been asking for that for a long time.

13 On that second point, though, I 

14 think we still haven't captured this other 

15 effect that I'm concerned about, which is, you 

16 know, if we have a base case that -- even in 

17 the base year are we capturing how 

18 manufacturers comply with the standards.

19 I think what we're seeing in the 

20 base case assumption is that they are 

21 complying by going about the standard by more 

22 than we would have expected.
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1 MR. ROSENQUIST: Right. And this 

2 shipment weighted efficiency trend through 

3 every year after 2016 reflects that as well.

4 MR. deLASKI: Okay.

5 MR. ROSENQUIST: There is still --

6 I mean it's basically stemming off that 

7 initial base case efficiency distribution, 

8 right? So --

9 MR. deLASKI: Thanks.

10 MR. BROOKMAN: Steve Rosenstock?

11 MR. ROSENSTOCK: Steve Rosenstock, 

12 Edison Electric Institute.

13 I mentioned this last time but in 

14 terms of impacts, we we saw in 2005, there was 

15 a surge of production of below 13 SEER units. 

16 And those were shipped out and sold well 

17 after January 2006 in the united States.

18 And those effects, those SEER --

19 I'll say SEER 10, SEER 11 units might have 

20 been sold through 2008 or even 2009 for all we 

21 know.

22 So that had an impact obviously on 
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1 the national energy savings as people were --

2 because they were produced before the deadline 

3 but sold after the deadline, people were still 

4 able to purchase them in the market as 

5 replacements or for new construction.

6 And, again, it looks like, again, 

7 that that, you know, I think it -- I don't 

8 know if it happened in 1992 but I think there 

9 is that possibility where, again, a surge of 

10 units at the lowest cost are produced to be 

11 sold, distributed, you know, warehoused 

12 afterwards.

13 And at least for the first few 

14 years, that is going to have an impact on the 

15 national energy savings.

16 I'm not exactly sure how to model 

17 it but I think we have, you know, basically 

18 there were two significant, you know, 

19 increases in the standards -- I'll say 1992 

20 and then 2006. I think we have some history 

21 in terms of what exactly happened and how long 

22 those sub-new efficiency levels were sold in 
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1 the market and had an impact.

2 Thank you.

3 MR. SACHS: Six months.

4 MR. deLASKI: Six months?

5 MR. SACHS: Harvey Sachs. Six 

6 months, okay.

7 MR. deLASKI: I've a couple of 

8 years myself, but --

9 MR. BROOKMAN: Okay.

10 MR. ROSENQUIST: So to continue on 

11 with this chart, I wanted to also talk about 

12 the standards case efficiency trends. They 

13 have a very similar growth to the base case 

14 efficiency trend but it's actually slightly 

15 lower.

16 That's because under the standards 

17 case situation, the per unit total installed 

18 cost between the base case and the standards 

19 case was held constant. So actually each one 

20 of these standards case efficiency trends 

21 slightly decreases over time relative to the 

22 base case efficiency trend.
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1 Of course, these trends continue 

2 in time until they hit the max tech level of 

3 16.5, at which point they flatten out because 

4 the assumption is that you can't go beyond the 

5 max tech level.

6 This next chart shows just an 

7 example of what the national total installed 

8 costs look like and the national operating 

9 cost savings look like for a particular 

10 standards case for a particular product class. 

11 So it's 14 SEER for a split system coil only 

12 units.

13 The purple bars represent the 

14 total installed costs to the nation on an 

15 annual basis. Those are represented as a 

16 negative.

17 The green bars are the operating 

18 cost savings. Those are expressed as a 

19 positive. The red line shows the net.

20 The analysis accounts for all 

21 shipments coming in to the stock up to the end 

22 of the forecast period -- up to 2046. That's 
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1 why you continue to see operating cost savings 

2 out to 2080 is because we're accounting for 

3 the operating cost savings for all those years 

4 that were installed before 2046 until they 

5 die.

6 And then finally, the last slide 

7 in the national impact analysis is just an 

8 example of the type of energy savings and NPV 

9 results you get for a particular product 

10 class. And this one, again, is split system 

11 central air conditioners.

12 Showing national regional savings 

13 here, the graph on the left is for coil only 

14 units. The graph on the right is for blower 

15 coil units. The scales are identical even 

16 though you may not be able to read them. They 

17 go from zero to 3.5 quads. Again, this is 

18 cumulative over the forecast period.

19 In the scale, on the X axis are 

20 the particular standards cases. For coil only 

21 units, again, the max tech is 16.5 but it kept 

22 the same scale as for blower coil units just 
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1 so you can easily compare things.

2 And you can see that because 90 

3 percent of shipments are assumed to go to coil 

4 only units, most of the energy savings comes 

5 from the coil only units.

6 The bottom two graphs show the 

7 national and regional NPVs. Again, the figure 

8 on the left is for coil only. The figure on 

9 the right is for blower coil.

10 These have different scales on the 

11 Y axis. So they're not equivalent.

12 For coil only units, none of the 

13 standards cases produce a benefit to the 

14 country either at the national or regional 

15 level. There is a slight difference there for 

16 the blower coil units. For the hot, humid and 

17 hot, dry regions, there is a slight benefit 

18 going out to around 18 SEER for hot, humid and 

19 around 16, 16.5 SEER for hot, dry.

20 So if you don't have any more 

21 questions, I'll turn it over to Matt Millard 

22 to talk about the preliminary manufacturing 
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1 impact analysis.

2 MR. deLASKI: I did have one 

3 question.

4 MR. ROSENQUIST: Okay.

5 MR. deLASKI: I was surprised 

6 because I noticed what you just said, that for 

7 that example there was no -- the NPV was

8 negative yet the LCC was positive. And I 

9 couldn't reconcile those in the time that I 

10 had. And I wonder if you have been able to.

11 MR. BROOKMAN: That was Andrew 

12 deLaski. And now Greg.

13 MR. ROSENQUIST: Right, right. I 

14 think there were some positives at 13.5 SEER 

15 for example, under the coil only unit 

16 condition. And I can only explain that by the 

17 fact that when we are forecasting things out 

18 over time, also in addition with these 

19 efficiency trends, that drops down -- what you 

20 would see as a positive LCC at 13.5 to a 

21 negative in the NIA.

22 MR. deLASKI: Right. I mean it 
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1 just strikes me that they are both pretty 

2 close, around zero, I guess is what I would 

3 conclude is that --

4 MR. ROSENQUIST: Yes, that's 

5 really it.

6 MR. deLASKI: -- those numbers are 

7 basically zero --

8 MR. ROSENQUIST: Right.

9 MR. deLASKI: -- for all 

10 statistical purposes.

11 MR. ROSENQUIST: Yes, for the coil 

12 only units. For the blower coil, again, you 

13 can get higher in the southern regions.

14 MR. deLASKI: Got it. Okay. 

15 Thanks.

16 MR. MILLARD: Hello. My name is 

17 Matt Millard again. And I will be discussing 

18 the preliminary MIA and some of the next steps 

19 after the preliminary analysis.

20 Here you can see that, as I 

21 mentioned earlier, the preliminary 

22 manufacturer impact -- or the manufacturer 
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1 impact analysis is fed by the engineering 

2 analysis. So the purpose of the manufacturer 

3 impact analysis is to identify the impacts of 

4 energy conservation standards on 

5 manufacturers.

6 And this is done through three 

7 phases. In the first phase, DOE creates an 

8 industry profile to characterize the industry 

9 and identify important issues that will 

10 require consideration.

11 In the second phase, DOE will 

12 prepare a cash flow model and an interview 

13 questionnaire to guide discussions with 

14 manufacturers.

15 And then in the third phase, these 

16 actual discussions will occur with 

17 manufacturers and DOE will assess the impacts 

18 on those manufacturers, both quantitatively 

19 through the government regulatory impact model 

20 and also qualitatively by looking at impacts 

21 on competition, manufacturing capacity, 

22 employment, and regulatory burden.
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1 So following the framework 

2 document, DOE conducted some preliminary 

3 manufacturer impact analysis interviews with 

4 manufacturers. And you can see some of the 

5 issues that came up where, which are fairly 

6 standard at the early phase involving impacts 

7 on profitability regarding increased standards 

8 and how these could cut into profit margins, 

9 conversion costs, and that relationship to the 

10 diminishing returns on consumers, issues with 

11 product innovation and how increased equipment 

12 costs will -- or the cost to remodel equipment 

13 to meet the current standard, would take away 

14 form the development of new products.

15 And cumulative regulatory burdens 

16 and any example of one of those would be the 

17 new regulations that were being worked on by 

18 DOE for residential furnaces as well as 

19 international standards.

20 So at this point, we'd like to 

21 request comment on the possible impact of 

22 increased efficiency standards on domestic 
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1 manufacturers.

2 MR. BROOKMAN: Harvey Sachs.

3 MR. SACHS: Harvey Sachs, ACEEE.

4 Two notes, one of them is I think 

5 the record should reflect that the 

6 manufacturers had another meeting. And there 

7 are no manufacturers in the meeting for the 

8 manufacturer impact analysis phase. And I 

9 think that should be in the record.

10 If I'm wrong, would any 

11 manufacturers present please correct me.

12 (No response.)

13 MR. SACHS: Thank you.

14 And the second thing is to note 

15 that these concerns have all been implicitly 

16 addressed in the consensus agreement, that 

17 among other things, the phasing of the 

18 furnaces and air conditioner/heat pump 

19 standards implementations in the consensus 

20 agreement reflects all of the concerns raised 

21 by the manufacturers to the extent that they 

22 felt they should be considered.
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1 And I think they would have wanted 

2 to make that point if they were here.

3 MR. BROOKMAN: Okay. Thank you.

4 And, Dave, everybody has 

5 demonstrated that they are on the record. 

6 Everybody is on the record.

7 PARTICIPANT: If we signed it, we 

8 signed it.

9 MR. BROOKMAN: Let me see, Tim?

10 MR. BALORWORTH: Tim Balorworth, 

11 Justice.

12 Just to raise something that we've 

13 raised before but as I still haven't yet 

14 gotten an answer on it, just to raise it 

15 again.

16 Manufacturers of air conditioners 

17 and heat pumps, a lot of them also produces 

18 furnaces. So if there is some substitution 

19 that occurs as the result of an increase in a 

20 standard, it is not necessarily going to be a 

21 completely adverse impact on those 

22 manufacturers.
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1 MR. BROOKMAN: Okay. Thank you.

2 Steve Rosenstock?

3 MR. ROSENSTOCK: I'm Steve 

4 Rosenstock, EEI, again.

5 Kind of looking back, I'm kind of 

6 curious, the last round of standards, I'm kind 

7 of curious if there is some record about the 

8 impact of the last jump in standards on the 

9 air conditioning and heat pump manufacturers 

10 in terms of jobs and everything and/or 

11 especially just -- or loss of domestic jobs --

12 and/or production moved overseas. I'm just 

13 kind of curious if there is any data out 

14 there.

15 MR. MILLARD: We have received 

16 some very limited data from manufacturers. 

17 And we're trying to look forward with this 

18 standard as opposed to looking backwards. But 

19 we received the same comment from a lot of 

20 manufacturers as far as looking at the impacts 

21 of the last standard and how it compares to 

22 what was expected. So we can look into that.
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1 MR. ROSENSTOCK: Okay. Just a 

2 quick question. If you had some of that -- a 

3 quick follow up, were there job losses 

4 associated with the last standard? Domestic 

5 job losses?

6 PARTICIPANT: Constantine 

7 (inaudible) of Navigant Consulting.

8 I think the answer is very 

9 difficult -- it is a very difficult answer 

10 because you are looking at a wonderful 

11 confluence between an economic meltdown and 

12 the standard at the same time.

13 So I think even if you are a 

14 manufacturer, to disaggregate the two events 

15 from each other would be nearly impossible. 

16 But I mean obviously we would have to wait for 

17 manufacturers to give us their own individual 

18 answers.

19 MR. ROSENSTOCK: Steve Rosenstock, 

20 EEI.

21 The meltdown really started, 

22 according the National Economic Council, in 
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1 late 2007. And the standard took effect in 

2 January 2006. So -- and the standard was 

3 basically finalized in 2004 after all the 

4 things. So --

5 PARTICIPANT: Right.

6 MR. ROSENSTOCK: -- you know, 

7 there is some disaggregation in my view.

8 PARTICIPANT: Well, I would tend 

9 to agree with you if you had a complete 

10 depletion of existing pre-2006 stock in the 

11 time coming up to the meltdown.

12 And I think the meltdown started 

13 well before, you know, the late 2007. I think 

14 it is just more a matter of, you know, how do 

15 you disaggregate the two events from each 

16 other.

17 MR. ROSENSTOCK: For new 

18 construction, I agree with, yes.

19 MR. BROOKMAN: Harvey Sachs?

20 MR. SACHS: Harvey Sachs, ACEEE.

21 And I take umbrage at the remark 

22 that was just made in this proceeding that we 
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1 try to look forward instead of back. The 

2 historical record on the impacts of energy 

3 efficiency ratings is there.

4 It's been treated in the referee 

5 literature to some extent. And several times 

6 today I've heard the remark from different 

7 people that it appears as though this 

8 framework, this point we're at today has been 

9 developed without looking back at prior DOE 

10 rulemakings.

11 And it is disturbing because there 

12 is much to be learned from what was said then, 

13 from the data that were developed then, and 

14 what was learned in the subsequent years.

15 And if we're never going to 

16 calibrate, we'll have -- if we do the same 

17 thing over and over again, we're going to get 

18 the same results.

19 MR. BROOKMAN: Yes. Constantine?

20 PARTICIPANT: And if I can respond 

21 to that, I think one of the issues that you 

22 would have to consider in that context would 
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1 be that the technology has not marched on, 

2 that things haven't changed.

3 And, you know, copper prices 

4 aren't where they are -- where they were or 

5 where we projected them to be. And neither 

6 are energy prices.

7 So the notion that, you know, back 

8 then we had perfect information looking 

9 forward and we should compare that information 

10 that we used to what actually happened and so 

11 on and so forth may or may not be possible, in 

12 fact, because so many factors, environmental 

13 factors have changed.

14 MR. SACHS: Constantine, this is 

15 Harvey Sachs.

16 I'm sorry, I really was -- I was 

17 trying to be brief and was not more explicit. 

18 I'm not referring to the issue that Mr. 

19 Rosenstock has raised about disentangling the 

20 post-2006. I'm talking about references to 

21 the rather abundant record from the prior 

22 rulemaking. It's a much broader issue.
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1 MR. BROOKMAN: Harvey, we've heard 

2 that several times today. So thank you for 

3 bringing that back to us.

4 Let's have the final slide. And 

5 then we're going to talk about how people can 

6 submit their comments.

7 MR. MILLARD: Okay. So in going 

8 forward, we will be moving on to the NOPR, the 

9 Notice of Proposed Rulemaking. And in the 

10 NOPR, we will revise our analyses for the 

11 preliminary analysis based on the comments 

12 that we receive and any new data that we may 

13 come across as well as -- I won't go through 

14 and name off the remaining analyses but there 

15 will be a variety of additional analyses 

16 conducted for the NOPR.

17 MR. BROOKMAN: In your packet, 

18 you'll see this final slide.

19 Wes?

20 MR. WES ANDERSON: Wes at DOE.

21 We went over this earlier in the 

22 presentation. So I won't repeat it.
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1 However, I would like to emphasize 

2 that even though the comment period was posted 

3 in the Federal Register as May 10th, we are 

4 considering extending it. However, I would 

5 ask you to still get in your comments as soon 

6 as possible.

7 MR. BROOKMAN: And there is one 

8 more element. Please fill out the evaluation 

9 form. It's also our tradition in these 

10 meeting to provide an opportunity for final 

11 comments on things that would be novel, things 

12 that haven't been said already that might need 

13 to be said now, that we haven't covered 

14 already today.

15 So any additional and final 

16 comments before we adjourn?

17 Steve Rosenstock?

18 MR. ROSENSTOCK: Steve Rosenstock, 

19 Edison Electric Institute.

20 A lot have been covered. And I 

21 just was actually looking through the 

22 background slides again.
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1 And there is, again, the 

2 monetization of emissions reductions. We said 

3 this during the furnace rulemaking. We'd like 

4 to reiterate again. We're concerned about 

5 this social cost of carbon.

6 I know it had developed via 

7 interagency review. I'm concerned about how 

8 it is going to be used in current and future 

9 rulemakings.

10 I'm also worried about how it is 

11 going to be used in terms of justifying new 

12 rulemakings and also the impact of double 

13 counting if there are regulations on carbon 

14 emissions, that there is a very high 

15 likelihood of double counting the benefits 

16 because a lot of the costs of carbon reduction 

17 will be built into energy rates, whether it's 

18 gas or electric or fuel oil, et cetera.

19 Thank you.

20 MR. BROOKMAN: Thank you.

21 Other final comments that we 

22 haven't covered already?
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1 MR. WES ANDERSON: One last point. 

2 Please make sure you submit your comments due 

3 to the technical difficulties we had this 

4 morning.

5 And I would personally like to 

6 thank you for coming out. And thank those who 

7 stuck through this full presentation without 

8 the benefit of a lunch break.

9 So thank you for your comments and 

10 also -- I'm sorry, I want to just emphasize 

11 that we need to get everything in writing, you 

12 know. And there will be an email and 

13 something posted on the webpage to notify 

14 those who are not here.

15 Thank you.

16 (Whereupon, the above-entitled 

17 meeting was concluded.)

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