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### UNITED STATES OF AMERICA

+ + + + +

DEPARTMENT OF ENERGY

+ + + + +

ENERGY EFFICIENCY AND RENEWABLE ENERGY OFFICE OF BUILDING TECHNOLOGIES

+ + + + +

PRELIMINARY ANALYSIS PUBLIC MEETING FOR RESIDENTIAL CENTRAL AIR CONDITIONERS & HEA T PUMPS

+ + + + +

WEDNESDAY MAY 5, 2010

+ + + + +NEAL R. GROSS

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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

................................ .. 222NEAL R. GROSS

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### P R O C E E D I N G S 1



### (time not provided) 2



### MR. BROOKMAN: Okay. So good 3



### morning everybody and welcome. This is the 4



### U.S. Department of Energy's Preliminary 5



### Analysis Public Meeting for Residential 6



### Central Air Conditioners and Heat Pumps. 7



### My name is Doug Brookman from 8



### Public Solutions in Baltimore. Appreciate you 9



### al l being here on time so we can get a good 10



### start on this day. The Department is making 11



### every effort to make these meetings efficient 12



### and shorter. And so I appreciate you being 13



### here on time. That will help with this. 14



### We're going to start off by doing 15



### in troductions around the room. And then I'm 16



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



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



### the table. And then around the perimeter. 19



### Please say your name and 20



### organizational affiliation. 21



### MR. GEE: Talbot Gee, Heating, Air 22NEAL R. GROSS

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### Conditioning, and Refrigeration Distributors 1



### International. 2



### MR. ECKMAN: Tom Eckman, Northwest 3



### Power & Conservation Council. 4



### MS. TROMBLEY

- McCANN: Molly 5



### Trombley

- McCann, Energy Solutions for PG&E. 6



### MR. STANGA: Mark Stanga for 7



### Daikin AIR CONDITION (Americas). 8



### MS. HOWARD: Kate Howard, Natural 9



### Resources Defense Council. 10



### PARTICIPANT: (Inaudible), 11



### Justice. 12



### MR. ROSENSTOCK: Steve Rosenstock, 13



### Edison Electric Institute. 14



### MR. BRESHAW: Jim Breshaw 15



### (phonetic), Ingersoll Rand Trane. 16



### MR. M ANDYCK: John Mandyck, 17



### Carrier Corporation. 18



### MR. NICHOLS: Jeff Nichols, 19



### Johnson Controls. 20



### MS. MEYERS: Karen Meyers, Rheem. 21



### PARTICIPANT: (Inaudible), Air 22NEAL R. GROSS

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### Conditioning, Heating, and Refrigeration 1



### International. 2



### MR. SACHS: Harvey Sachs, American 3



### Co uncil for an Energy

- Efficient Economy. 4



### MR. BRUNDADGE: Don Brundadge, 5



### Southern Company. 6



### MS. TIEDEMAN: Jennifer Tiedeman, 7



### DOE, Office of General Counsel. 8



### MS. KOHL: Betsy Kohl, DOE GC. 9



### MR. SABOWSKI: John Sabowski 10



### (phonetic), DOE Appliance Standard s. 11



### MR. WES ANDERSON: Wes Anderson, 12



### DOE Appliance Standards. 13



### MR. MILLARD: Matt Millard, 14



### Navigant Consulting. 15



### MR. WEBER: Collin Weber, Navigant 16



### Consulting. 17



### MR. CARMICHAEL: Rob Carmichael, 18



### Navigant Consulting. 19



### MR. ROSENQUIST: Greg Rosenquist, 20



### L awrence Berkeley National Laboratory. 21



### MR. SENTINO: Glen Sentino 22NEAL R. GROSS

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### (phonetic), Navigant Consulting. 1



### MR. ERIC ANDERSON: Eric Anderson, 2



### Pacific Northwest National Laboratory. 3



### MR. WINIARSKI: David Winiarski, 4



### Pacific Northwest National Laboratory. 5



### MR. SCOTT: Michael Scott, Pacific 6



### Northwest National Laboratory. 7



### MS. WILLIAMSON: Jennifer 8



### Williamson, Pacific Northwest National 9



### Laboratory. 10



### MR. SMALL: Terry Small, Mortex 11



### Products, Inc. 12



### MR. CARR: Chris Carr (phonetic), 13



### Lennox International. 14



### MS. MA UER: Joanna Mauer, 15



### Appliance Standards Awareness Project. 16



### MR. RAYMOND: Michael Raymond, DOE 17



### Appliance Standards. 18



### MR. KHAN: Mohammed Khan, DOE. 19



### MR. LEKOV: Alex Lekov, Lawrence 20



### Berkeley National Laboratory. 21



### MR. INDIG: Harry Indig, DOE. 22NEAL R. GROSS

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### MR. JAM ES: Brian James 1



### (phonetic), Southern California Edison. 2



### MR. HARRIS: Jeff Harris, Alliance 3



### to Save Energy. 4



### MR. COMSTOCK: Owen Comstock, 5



### Energy Information Administration. 6



### MR. BROOKMAN: Okay. Thanks to 7



### all of you. Did everybody get a chance to 8



### in troduce him or herself? Good. 9



### I think all of you registered or 10



### should have registered at the front desk as 11



### you entered the Department of Energy today. 12



### And so the Department will supply at the end 13



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



### today, a listi ng of all those present. 15



### And we don't have a court reporter 16



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



### audio recording of this that will then be 18



### transcribed as the Department's official 19



### record of this meeting. 20



### So it is all the more important 21



### that we use the microphones today when we 22NEAL R. GROSS

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### speak. We need to really be disciplined about 1



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



### as a standard. 3



### John, would you like to make 4



### welcoming remarks? 5



### MR. WES ANDERSON: Sure. As Doug 6



### just mentioned, since we d on't have a court 7



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



### to submit written comments. So in case the 9



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



### written comment as well. 11



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



### least on my part, to make these meetings more 13



### focused and more time efficient for everybody. 14



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



### best served if we could keep the comments and 16



### our presentations more focused. 17



### And so with that, I would ask if 18



### you make a comment, you don't need to make i t 19



### more than once. I think last week we were 20



### able to do the fluorescent ballast, both the 21



### test procedures and the standards in one day. 22NEAL R. GROSS

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### Seventy percent of the attendees 1



### had positive feedback from doing that. And I 2



### think one of the things I noticed as we went 3



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



### comment box, there was one person in 5



### particular who felt that he had to make a 6



### comment. And most of his comments started 7



### with I said this before but. If we could 8



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



### efficient. 10



### So with that, welcome. And let's 11



### have an efficient meeting. 12



### MR. BROOKMAN: Thank you. Always 13



### strive for that. 14



### I think all of you received a 15



### packet as you registered. In that was a copy 16



### of the agenda, the Federal Register notice, 17



### an d also the focal point for today's meeting, 18



### which are these PowerPoint slides. I hope all 19



### of you have a copy of that. 20



### If you'll take a quick peek at the 21



### agenda, I'm just going to run through this 22NEAL R. GROSS

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### briefly. 1



### Follow this agenda review, we're 2



### going to have brief opening remarks by Wes 3



### Anderson. And there is an opportunity for 4



### anybody that wishes to do so to make very 5



### brief summary remarks about key issues and 6



### concerns that they might have. 7



### Following that we'll have a 8



### rulemaking overview, regional standar ds 9



### background, consensus agreement, and combined 10



### rulemaking presentation, followed by an 11



### opportunity for comment for all of you. And 12



### then a market and technology assessment, 13



### screening analysis, and engineering analysis. 14



### We'll take a break mid

- morning. 15



### Following the mid

- morning break, 16



### markups for equipment price determination, 17



### energy use characterization, life cycle cost 18



### and payback period analysis. 19



### And then following those 20



### presentations followed by opportunity for 21



### discussion and follow up, shipments analysis, 22NEAL R. GROSS

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### national impact analysis, and then preliminary 1



### manufacturing analysis, next steps, and 2



### closing. 3



### There's typically another 4



### opportunity at the end of the meeting for you 5



### to make any additional comments you feel you 6



### would like to make to inform th e Department's 7



### process. 8



### As you can see, you're looking at 9



### the agenda, we intend to finish today around 10



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



### everything to try and adhere to that time 12



### frame. A few people have already told me they 13



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



### best we can. 15



### That's the overview on the agenda. 16



### Questions and comments on that? 17



### (No response.) 18



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



### ask for your consideration. Please speak one 20



### at a time. And today it is especially 21



### necessar y to speak into the microphone. The 22NEAL R. GROSS

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### little green LED light is on and if it's not 1



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



### a lot. 3



### Please say your name for the 4



### record. There will be a complete transcript 5



### of this meeting made available. And it will 6



### be posted on the EERE website in the span of 7



### say a week or ten days or so. 8



### I'm going to be queuing people as 9



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



### encourage follow on. 11



### Are we all set? Yes? 12



### Wes, speak to this gentleman. I 13



### also wish to encoura ge follow

- on remarks. 14



### Sometimes it is very helpful to have the back 15



### and forth or supportive comments based on the 16



### original commenter's ideas. 17



### So please say your name each time 18



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



### organizational affiliation, just your name. 20



### And please be concise. Share the 21



### air time. There is a lot to be said on this 22NEAL R. GROSS

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### subject matter if you keep the focus here 1



### during the course of the meeting today. 2



### Please turn off your cells phones 3



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



### have a sidebar conversation with the person 5



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



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



### fine. And it will keep it focused here. 8



### So that's the overview. Questions 9



### or comments before we proceed? 10



### (No response.) 11



### MR. BROOKMAN: Okay. Then let's 12



### follow on. We need Wes. 13



### Wes, you're up. Wes Anderson. 14



### MR. WES ANDERSON: Hello 15



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



### Anderson with the Department of Energy. 17



### And this slide is here

-- I'm here 18



### to introduce where we are in the process. 19



### We've had the framework and currently this is 20



### the preliminary analysis public meeting. 21



### And we're here to get your oral 22NEAL R. GROSS

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### comments and written comments on the Federal 1



### Register notice, technical support document, 2



### and analytical sprea dsheets that will be 3



### presented today. And we will be requesting 4



### data inputs from manufacturers and other 5



### interested parties. The data inputs is

-- 6



### emphasis on data inputs from manufacturers. 7



### And the issue boxes look like 8



### this. Everyone should be fami liar with. So 9



### in the Notice of Public Meeting and 10



### Availability of Preliminary Technical Support 11



### document, the NOCOM (phonetic), DOE welcomes 12



### comment. 13



### Throughout this presentation, 14



### specific issues will be raised for discussion 15



### on slides such as this with identifying item 16



### numbers corresponding to those in the 17



### Executive Summary. Nonetheless, comments 18



### concerning any part of the document or 19



### presentation are welcome at this time. 20



### For your submission of comments, 21



### we would

-- please follow these rules

-- the 22NEAL R. GROSS

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### first three bullet points on this overhead

-- 1



### to have the title of the rule, Energy 2



### Conservation Standards for Resident CAC and 3



### Heat Pumps, docket number, and the regulatory 4



### identification number. 5



### And emails through this

-- the 6



### email address and to Brend a Edwards (phonetic) 7



### for postal mails going through the Forrestal 8



### (phonetic) and personal carriers to the 950 9



### L'Enfant address. 10



### The comment period closes May 11



### 10th. 12



### At this time, we'd like to get 13



### opening remarks. 14



### MR. BROOKMAN: An opportunity for 15



### brie f summary remarks about issues and 16



### concerns that you might have here at the 17



### outset. 18



### It looks like Harvey Sachs is 19



### ready. 20



### MR. SACHS: Wes, this is Harvey 21



### Sachs at ACEEE. 22NEAL R. GROSS

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### And I'm appalled that the 1



### Department would propose to close the public 2



### comments t hree business days after this 3



### meeting. 4



### MR. WES ANDERSON: Thank you. 5



### Other comments here at the outset? 6



### Don Brundage? 7



### MR. BRUNDAGE: I agree with Mr. 8



### Sachs. If we knew this was going to

-- if the 9



### proposed settlement was going to be accepted, 10



### it do esn't take real long to write I endorse 11



### the proposed settlement. 12



### But we have to assume it is going 13



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



### very important phase. 15



### If it is going to go through that 16



### process, we need to dig into the details to 17



### provide meaningful input to the Department. 18



### And five calendar days, three business days, 19



### is just not acceptable. 20



### Thank you. 21



### MR. BROOKMAN: So how much would 22NEAL R. GROSS

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### you suggest the Department try to supply? 1



### MR. BRUNDADGE: Two weeks would be 2



### a lot better. 3



### MR. BR OOKMAN: Okay. Thank you. 4



### Steven Rosenstock? 5



### MR. ROSENSTOCK: Steve Rosenstock, 6



### Edison Electric Institute. We've also come 7



### out in favor of the consensus agreement. 8



### And for our previous comments that 9



### we made for the furnace rulemaking rules, it 10



### was basically kind of a

-- I'll say a 11



### bifurcated comment saying we endorsed the 12



### agreement but since we had no idea if DOE was 13



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



### was going to go through the full rulemaking 15



### process. 16



### We find ourselves in the same 17



### sit uation today where we do endorse the 18



### agreement but we have to assume that lacking 19



### further input from the Department of Energy, 20



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



### full rulemaking process, a full detailed 22NEAL R. GROSS

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### rulemaking process. 1



### So, again, we're goin g to only get 2



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



### point from the Edison Electric Institute. 4



### It would be helpful, again, if the 5



### Department was able to say number one, has the 6



### Department made a decision or, number two, 7



### provide a timeline to stakeh olders as to when 8



### they are going to make a final decision. 9



### As I recall, the Department was 10



### presented with this last October so that was 11



### over six months ago. And it would

-- I think 12



### it would be helpful to everybody just to get 13



### an indication if it is a ye s or a no with a 14



### consensus agreement so we really know

-- can 15



### really provide the comments the Department is 16



### looking for. 17



### MR. BROOKMAN: Thank you. 18



### MR. ROSENSTOCK: Thank you very 19



### much. 20



### MS. TROMBLEY

- McCANN: Molly. 21



### MR. BROOKMAN: Molly, please. 22NEAL R. GROSS

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### MS . TROMBLEY

- McCANN: Molly 1



### Trombley

- McCann. I just wanted to echo what 2



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



### terms of timing. Three business days is 4



### completely impossible for us. 5



### And in addition, it would be 6



### helpful to have a timeline not just fo r a 7



### decision on the consensus agreement but also 8



### for a decision on whether or not this will be 9



### a combined rulemaking with furnaces and 10



### furnace fans. 11



### MR. BROOKMAN: Good comments. 12



### Karim? 13



### DR. AMRANE: Well, I have a more 14



### formal statement to make. Firs t of all, I 15



### concur with Harvey and others as far as the 16



### comment period. I think it is totally 17



### inappropriate to give just three business days 18



### for stakeholders to provide comments. 19



### But having said that, I would like 20



### to speak in favor, of course, of the co nsensus 21



### agreement. As you all know, HRI is a 22NEAL R. GROSS

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### signatory of the consensus agreement that was 1



### reached between HRI and several leading energy 2



### efficiency organizations last October. 3



### And of course, as a signatory, we 4



### strongly support the agreement and we urge the 5



### Department of Energy to adopt it in a direct 6



### final rule and without delay. 7



### We believe that the agreement has 8



### several benefits including an accelerated 9



### effective date. What we're proposing here for 10



### central air conditioning and heat pump will 11



### take ef fect in January of 2015, which is a 12



### year and a half ahead of the standard that 13



### will take effect if DOE goes through the 14



### normal rulemaking process. 15



### In addition, it will provide a 16



### significant amount of energy savings. We are 17



### estimating that the combined f urnace and 18



### central air conditioning and heat pump 19



### standard will save about three quads of 20



### primary energy by 2030. And this is very 21



### significant. 22NEAL R. GROSS

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### In addition, it will basically 1



### reduce about 18 million metric ton of CO2 2



### equivalent by the year 2030. 3



### It wi ll have a lot of economic 4



### benefits to consumers. We are estimating the 5



### net economic savings will be about 13 billion 6



### dollars by the year 2030. 7



### Now the Department of Energy has 8



### encouraged stakeholders in the past to 9



### consider informal discussions which co uld 10



### result in a consensus agreement. Furthermore, 11



### Congress in 2007 amended the Energy 12



### Conservation

-- the Energy Policy and 13



### Conservation Act to expedite rulemaking 14



### process by authorizing DOE to issue direct 15



### final rules, establishing new energy 16



### conservatio n standards upon receipt of joint 17



### stakeholder proposals. 18



### The consensus agreement satisfies 19



### the criteria of the law and the process 20



### improvement rule. Consequently, again we urge 21



### the Department to issue direct final rule, 22NEAL R. GROSS

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### adopting the consensus agreement as soon as 1



### possible. 2



### In the event that DOE cannot 3



### conduct a direct final rule, we would 4



### recommend that DOE adopt the agreement in an 5



### expedited rulemaking process. 6



### Thank you. 7



### MR. BROOKMAN: Thank you. Thank 8



### you. 9



### Other comments here at the outset? 10



### (No response.) 11



### MR. BROOKMAN: No additional 12



### comments? Okay. 13



### Then let's proceed with Harvey 14



### Sachs. 15



### MR. SACHS: Harvey Sachs, ACEEE. 16



### It goes without saying but it must 17



### be said that as a signatory to the consensus 18



### agreement, we endorse it fully. An d I'm sure 19



### that in that statement, I would be speaking 20



### for the other signatories who are here just to 21



### save time. 22NEAL R. GROSS

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### MR. BROOKMAN: Thank you. 1



### And the Department, I think, is 2



### well aware of who the signatories are. 3



### MR. SACHS: I guess we should then 4



### ask i f there is any signatory that wishes to 5



### recant. 6



### (Laughter.) 7



### PARTICIPANT: I'm sorry. Was that 8



### recant or repent. 9



### MR. BROOKMAN: Okay. So then no 10



### additional comments, we're going to proceed 11



### with the program and have a rulemaking 12



### overview with Wes And erson. 13



### MR. WES ANDERSON: We were brought 14



### here to

-- based on the requirements of the 15



### U.S. Code 62

-- 42695 AMV. The first review 16



### was done

-- was completed in August of 2004 17



### with technical amendment

-- the publication of 18



### a technical amendment. And the standard was 19



### determined in `01 as to be 13 SEER. 20



### Today, the second edition of this, 21



### the rulemaking will constitute a second review 22NEAL R. GROSS

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### for the amendment and the energy conservation 1



### standard. 2



### Also pursuant to this, there was a 3



### consent decree which requires us to publish a 4



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



### effective date of five years hence. DOE is 6



### looking for comment on the impact of the 7



### effective date occurring during the peak 8



### selling season for the regional central air 9



### conditioners and heat pumps rul e. 10



### MR. BROOKMAN: You can see the 11



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



### Comments related to this question? 13



### Yes, John Mandyck? 14



### MR. MANDYCK: John Mandyck with 15



### Carrier. 16



### As a manufacturer and distributor 17



### of residential central air conditioners and 18



### heat pump, I can confirm that a mid

- season 19



### implementation date would be very disruptive 20



### to the marketplace, which is why Carrier is a 21



### signatory to the consensus agreement because 22NEAL R. GROSS

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### we established that date as January 2015 to 1



### avoid, in part, part of the distr ibution mess 2



### and manufacturing complexity that would occur 3



### with a mid

- season implementation date. 4



### Thank you. 5



### MR. BROOKMAN: Thank you. And 6



### thanks for the specificity surrounding your 7



### proposed date. 8



### Talbot? 9



### MR. GEE: Yes, Talbot Gee with 10



### HARDI. I' d concur that the mid

- season would 11



### be a special problem, especially noting the 12



### complexity and the additional components 13



### necessary to launch the more efficient 14



### equipment. 15



### You'd be essentially creating 16



### multiple demand curves, multiple safety stocks 17



### in the middle of the cooling season. It would 18



### be a real problem. 19



### MR. BROOKMAN: Okay. Thank you. 20



### Are there other manufacturers that 21



### wish to comment on this point? 22NEAL R. GROSS

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### Yes, please? 1



### MR. NICHOLS: Only to reinforce

-- 2



### MR. BROOKMAN: Please say your 3



### name, Jef f. 4



### MR. NICHOLS: Jeff Nichols. Only 5



### to reinforce John Mandyck's comments

-- 6



### MR. BROOKMAN: Thanks, Jeff. 7



### MR. NICHOLS:

-- that it is very 8



### disruptive. 9



### MR. BROOKMAN: Yes, Tim? 10



### MR. BALIWORTH: Tim Baliworth 11



### (phonetic), Justice. 12



### Just wanted to st ate that I 13



### believe the Department's interpretation that 14



### it has to do an effective date five years 15



### after publication is incorrect. If the 16



### Department wants to adopt the standards in the 17



### consensus agreement, there is certainly 18



### flexibility in the statute for them to do 19



### that. 20



### And even if the Department rejects 21



### those levels, there is ample flexibility in 22NEAL R. GROSS

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### the statute. The Department actually had to 1



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



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



### that really matters, no t the five implicit 4



### years of lead time. 5



### MR. BROOKMAN: Tim, in your 6



### written comments, you'll provide some 7



### citations and the like. 8



### MR. BALIWORTH: Okay. 9



### MR. BROOKMAN: Yes, please? 10



### MS. HOWARD: This is Kate Howard 11



### from the Natural Resources Defense Council. 12



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



### will be following up with comments on that 14



### point, written comments. Thank you. 15



### MR. BROOKMAN: 16



### PARTICIPANT: Thank you. 17



### Additional comments on this first 18



### box before we move on? 19



### MR. WES ANDERS ON: Actually, since 20



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



### could maybe slow down a little bit because 22NEAL R. GROSS

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### we're going to have to transcribe this from a 1



### recording and speak

-- get closer to the 2



### microphone because I'm having trouble hearing 3



### some of the comments at this point at this 4



### lectern. 5



### MR. BROOKMAN: Okay. Thanks, Wes, 6



### okay. 7



### Additional comments before we move 8



### on? 9



### (No response.) 10



### MR. BROOKMAN: Okay. 11



### MR. WES ANDERSON: That's it? 12



### MR. BROOKMAN: Yes. 13



### MR. WES ANDERSON: The Energy 14



### Indepe ndence and Security Act 2007, which is 15



### effectively referred to as EISA 2007, issued 16



### three bullet points. Give an overview of what 17



### EISA has imposed on DOE. 18



### If they incorporate standby and 19



### off mode for a final rule published

-- any 20



### final rule published af ter July 1, 2010, 21



### permits DOE to establish up to two regional 22NEAL R. GROSS

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### standards in addition to its national 1



### standard. 2



### And also DOE must consider the 3



### impacts on the distribution channel, the 4



### consumer, manufacturers, other marketing 5



### participants including the prod uct 6



### distributors, dealers, contractors, and 7



### installers. 8



### DOE seeks comment on the energy 9



### consumption of components during off mode and 10



### the potential to reduce the energy consumption 11



### of these components. 12



### DOE also seeks comment on the 13



### possibility of separ ate standards for off mode 14



### energy consumption. 15



### MR. BROOKMAN: Two issues related 16



### to off mode. 17



### Steve Rosenstock? 18



### MR. ROSENSTOCK: Steve Rosenstock, 19



### Edison Electric Institute. 20



### I thought for central air 21



### conditioners and heat pumps that the test 22NEAL R. GROSS

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### proced ures already incorporate the off mode 1



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



### separate standard since it is already 3



### incorporated into the annual energy efficiency 4



### metric. 5



### Thank you. 6



### MR. BROOKMAN: Thank you. 7



### Karim? 8



### DR. AMRANE: Karim Amrane and I 9



### will concur with what Steve just said. I urge 10



### DOE to review the test procedures because we 11



### believe that it is already accounted in the 12



### SEER calculations (inaudible). 13



### MR. BROOKMAN: Okay. Thanks. 14



### Other comments on these two 15



### issues? 16



### (No respons e.) 17



### MR. BROOKMAN: No additional 18



### comments? 19



### (No response.) 20



### MR. WES ANDERSON: Further 21



### clarification of what EISA requires of DOE for 22NEAL R. GROSS

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### the establishment of regional standards, two 1



### regional standards, in addition to a base 2



### national standard. The boundar ies are

-- of 3



### geographical regions must include contiguous 4



### states. Individual states cannot be bisected 5



### by the boundaries. 6



### The establishment of additional 7



### regional standards must result in significant 8



### energy savings. And the establishment of any 9



### additi onal regional standard must be 10



### economically justified. 11



### This is DOE's interpretation of a 12



### proposed regional layout with the rest of the 13



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



### southwest, and hot, humid in the southeast. 15



### We've listed the states in t he subsequent 16



### table for more detail. 17



### DOE seeks comment from interested 18



### parties regarding DOE's regional definitions 19



### for analysis of regional standards generally 20



### used. 21



### MR. BROOKMAN: Molly? 22NEAL R. GROSS

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### MS. TROMBLEY

- McCANN: Molly 1



### Trombley

- McCann. 2



### I just wanted to take a moment to 3



### plead the case of large states such as 4



### California who have climates that range from 5



### less than 1,000 heating degree days to over 6



### 5,000 heating degree days. 7



### The requirement for our state to 8



### be in only one climate zone and not to split 9



### states between climate zones is not very 10



### effective for efficiency in a state such as 11



### California. 12



### This is one of the reasons that 13



### we're a supporter of the consensus agreement. 14



### It includes requirements for disclosure of 15



### performance points that allow utili ties and 16



### other programs to set individual requirements 17



### within the state through efficiency rebates 18



### and other programs that this standard cannot 19



### effectively address. 20



### So I just wanted to put that out 21



### there. 22NEAL R. GROSS

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### MR. BROOKMAN: Okay. Thank you. 1



### Don Brundadg e? 2



### MR. BRUNDADGE: Don Brundadge, 3



### Southern Company. 4



### This is a different set of regions 5



### than in the consensus agreement. And I think 6



### I would prefer the consensus agreement 7



### boundaries to what's here. 8



### Thank you. 9



### MR. BROOKMAN: Thank you. 10



### Yes, Karim ? 11



### DR. AMRANE: Karim Amrane, AHRI. 12



### Yes, I mean it looks like DOE is 13



### using different regions that what is in the 14



### consensus agreement. I guess I'm asking the 15



### question to DOE is DOE looking at the 16



### consensus agreement and has DOE studied the 17



### consensus agr eement? 18



### MR. BROOKMAN: Wes? 19



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



### to that point in the next couple of slides. 21



### MR. BROOKMAN: Okay. 22NEAL R. GROSS

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### Andrew deLaski (phonetic)? 1



### MR. deLASKI: What was the 2



### criteria? How did you develop the

-- 3



### MR. WES ANDERSON: This is about

- 4



### - we generally

-- the boundary is around 5,000 5



### heating degree days and population base. 6



### We'll get into more detail later in the 7



### presentation with the specific analysis. 8



### So

-- but if you want to

-- can 9



### you hold your question until then? 10



### MR. d eLASKI: I guess I would 11



### respond that I believe, Karim, correct me if 12



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



### criteria was also 5,000 heating degree days. 14



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



### that at some point. 16



### MR. BROOKMAN: We're going t o 17



### proceed with this. 18



### Do you have a short answer, Dave? 19



### Find the microphone, Dave, Dave Winiarski. 20



### MR. WINIARSKI: Dave Winiarski, 21



### Pacific Northwest National Lab. 22NEAL R. GROSS

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### Yes, I will address that. But 1



### roughly the boundaries are close to 4,500. 2



### MR. BROOKMA N: It's slightly 3



### different, okay. 4



### So then we'll address this in 5



### greater detail as we're going along. 6



### Additional comments on this

-- 7



### these regions as established

-- as proposed by 8



### the Department? 9



### (No response.) 10



### MR. BROOKMAN: Okay, Wes. 11



### MR. WES A NDERSON: Okay. Now we 12



### will start discussion on enforcement plan by 13



### Rob Carmichael. 14



### MR. BROOKMAN: Robert Carmichael. 15



### MR. CARMICHAEL: Thanks, Wes. 16



### My name is Rob Carmichael. I'm 17



### with Navigant Consulting. 18



### I'm going to briefly go over two 19



### items wi th you today. The first are just 20



### talking about the considerations related to 21



### regional standards enforcement. And the 22NEAL R. GROSS

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### second is an overview of our preliminary 1



### analysis of the impacts on the distribution 2



### chain due to regional standards. 3



### But first here's the statutory 4



### obligations related to regional standards 5



### enforcement. So simply put, EISA requires DOE 6



### to start an enforcement plan rulemaking within 7



### 90 days of establishing

-- or issuing a final 8



### rule that establishes regional standards. And 9



### DOE must comp lete that enforcement rulemaking 10



### within 15 months. 11



### And so DOE has not yet determined 12



### an enforcement plan but does believe that an 13



### effective enforcement plan would include some 14



### of the following elements that are shown on 15



### this slide, including labeling, en forcement 16



### through building codes, fines for noncompliant 17



### installations, warranty or product 18



### registration, consumer education, and other 19



### competitively

- driven enforcement mechanisms. 20



### MR. BROOKMAN: Don Brundadge? 21



### MR. BRUNDADGE: If this is not the 22NEAL R. GROSS

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### right place to bring this up, I can defer it. 1



### I asked back in the furnace hearings a few 2



### weeks ago for some clarification on building 3



### codes on what states could and could not due 4



### on restricting the use of NACA products. 5



### It comes up a lot in the south 6



### where a product may be poorly suited for a 7



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



### states, in particular there has been some 9



### discussions in Florida, don't think they have 10



### the right to restrict any NACA

- approved 11



### products from being used. 12



### Is there any clarifi cation that we 13



### can get on that? 14



### MR. BROOKMAN: Wes? Wes Anderson? 15



### MR. WES ANDERSON: Wes Anderson, 16



### DOE. 17



### Please, can you put that in 18



### writing in your official comments to us so 19



### that we can officially respond to that? 20



### MR. deLASKI: Okay. Well, I had 21



### asked at the furnace hearing for general 22NEAL R. GROSS

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### counsel to try to be prepared for this when we 1



### got to this meeting so we could go ahead. 2



### It's really independent of this 3



### rulemaking because I think it is more of an 4



### issue coming up with people adopting the 2009 5



### I ECC, which drastically increases the 6



### insulation levels and changes in the south the 7



### latent sensible load on equipment. 8



### It's something that needed now and 9



### not when this rulemaking is put in place. 10



### MR. BROOKMAN: Betsy Kohl? 11



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



### Kohl, DOE General Counsel's Office. 13



### So it's really hard not knowing

-- 14



### MR. BROOKMAN: Betsy, get closer 15



### please. 16



### MS. KOHL: It's really hard not 17



### knowing the specifics of your question because 18



### the provisions in EPCA on preemption, 19



### particularly th ose dealing with building 20



### codes, are very complicated. 21



### So if you do have something that 22NEAL R. GROSS

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### you can submit in writing, if it is separate 1



### from this comment process, we can take a 2



### closer look. 3



### MR. deLASKI: Okay. Thank you. 4



### MR. BROOKMAN: Thank you. 5



### Yes , Steve Rosenstock? 6



### MR. ROSENSTOCK: Steve Rosenstock, 7



### Edison Electric Institute. 8



### I guess the other thing in terms 9



### of building codes is that you're

-- there are 10



### timing issues in that building codes are 11



### updated every three years. And then under 12



### federal law, DOE is supposed to do a 13



### determination. 14



### And then states have up to two 15



### years to update their codes to match or exceed 16



### the newly determined national code. 17



### So, you know, if ICC comes out 18



### with their code in 2012, and DOE does their 19



### determination in t he following year, they're 20



### supposed to do it within one year, and then 21



### states have two years, it might not be until 22NEAL R. GROSS

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### 2015 until many states adopt the 2012 codes, 1



### which may or may not have the new efficiency 2



### levels. 3



### So there is a time lag issue with 4



### relyin g on building codes in terms of an 5



### enforcement mechanism for new national or 6



### regional appliance efficiency standards. 7



### Also the fact that many states 8



### when they have home rule, different cities or 9



### counties can adopt different levels if they 10



### wanted to. 11



### So

-- thank you. 12



### MR. BROOKMAN: Thank you. 13



### John Mandyck? 14



### MR. MANDYCK: John Mandyck with 15



### Carrier. 16



### I'd like to make a comment on the 17



### labeling item on the slide, which we think is 18



### the least effective of all of the enforcement 19



### mechanisms. 20



### The AHRI dir ectory has some 21



### 600,000 combinations in it. And this comes 22NEAL R. GROSS

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### from a personal experience where I put an 1



### addition on to my house last year and the 2



### system or my condensing unit arrived with a 15 3



### SEER hang tag but it was being installed with 4



### a high efficiency i ndoor furnace with a 5



### variable speed fan, which combined together 6



### achieved a 16 SEER official rating. 7



### And so it is impossible to label 8



### products because systems are matched and they 9



### are shipped differently. And sometimes they 10



### are not even shipped by the s ame manufacturer. 11



### So labeling would have to account 12



### for the fact that there are 600,000 13



### combinations which achieve an official rating 14



### within the AHRI directory and would be nearly 15



### impossible to do. 16



### MR. BROOKMAN: Would you suggest 17



### an alternative to the Department? 18



### MR. MANDYCK: Well, we would 19



### suggest that we look at all the other issues 20



### on the chart, including enforcement at the 21



### local level by building inspectors. But I 22NEAL R. GROSS

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### guess my point today is that labeling should 1



### either be removed from the chart or should be 2



### the least preferable method because of its 3



### complexity and almost impossibility. 4



### MR. BROOKMAN: Thank you. 5



### Talbot? 6



### MR. GEE: Well, Talbot Gee with 7



### HARDI Air Conditioning Distributors. 8



### I would agree with John's 9



### comments. And we've seen thi s just even with 10



### efficiency programs where you have to require 11



### that you can certify that it is a properly 12



### installed matched system to achieve an 13



### incentive, which requires additional 14



### documentation that any single label on a piece 15



### of product wouldn't have ac hieved. 16



### I'd also point out that there is a 17



### few things here we again bring up that we did 18



### during the furnace rulemaking, that the 19



### warranty registration as an enforcement 20



### mechanism is probably not feasible because 21



### some states have consumer protection laws that 22NEAL R. GROSS

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### would prevent any type of mandate tied to 1



### warranty registrations. 2



### In general, for the wholesale 3



### distributor community, product registration, 4



### period, is not that effective. Most 5



### homeowners don't return that type of 6



### information. And it would be very , very 7



### costly for industry to try to do that. 8



### I would point on the consumer 9



### education on regional standards is not an 10



### enforcement mechanism, especially if it is in 11



### absence of an actual enforcement mechanism 12



### that might be in the marketplace, which drives 13



### down to the last point. 14



### Reiterate again that competitively 15



### driven enforcement works if there is actually 16



### an enforcement body that you would report to. 17



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



### experience. 19



### If we take, for example, EPA

-- 20



### (tape change, s ome audio missing) 21



### PARTICIPANT:

-- in the cold 22NEAL R. GROSS

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### climates and in the warmer states because the 1



### BIN temperature effect on the heat pump is 2



### fairly significant in that distribution. And 3



### the northern tier is really different than in 4



### the southern tier. And s o the performance is 5



### really different for the same ARI or AHRI 6



### writing in climate zone 4, which is where it 7



### gets rated. 8



### So we don't get the same 9



### performance, sometimes better, sometimes 10



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



### the simulation model o r BIN temperature 12



### approach to that to get the right answer. 13



### MR. CARMICHAEL: Okay. I'd like 14



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



### MR. BROOKMAN: Steve Rosenstock? 16



### MR. ROSENSTOCK: Steve Rosenstock 17



### EEI. 18



### And I think following up with Don 19



### Br undadge, if

-- and maybe if there is a trend 20



### in replacements towards I'll say more hybrid 21



### systems where a central air conditioner is 22NEAL R. GROSS

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### replaced with an air source heat pump along 1



### with the fossil fuel heating system as a back

2



### up (inaudible) or just preference d during the 3



### really cold weather, that is going to have an 4



### impact on the analysis. 5



### Especially if more and more 6



### households are doing that, that definitely has 7



### an impact on the life cycle cost analysis for 8



### the heat pumps. 9



### Thank you. 10



### MR. BROOKMAN: Tha nk you. 11



### MR. CARMICHAEL: So this is a 12



### basic diagram of the simplified residential 13



### energy use calculation. Over in the top 14



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



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



### the household and, where reported, the a ge of 17



### the air conditioner or heat pump in REXX. 18



### We use AHRI average shipment SEER 19



### ratings to generate an estimated SEER for each 20



### particular household observation. 21



### And then, as was alluded to in the 22NEAL R. GROSS

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### discussion, there is a basic scaling process 1



### where we take the stock unit energy 2



### consumption and multiple it by the ratio of 3



### the SEER estimate for the stock to the SEER 4



### estimate for a particular standard level that 5



### we're interested in. 6



### We do that for a baseline 7



### analysis, baseline being a 13

- SEER product was 8



### was used in the engineering analysis at least 9



### for those classes where that's appropriate. 10



### We also do it for each standard level that DOE 11



### is analyzing off to the right. 12



### We also, because we recognize that 13



### there is going to be a distribution of 14



### products s old into the market at different 15



### SEER levels, we develop for each household a

- 16



### - or we develop a general distribution of 17



### SEERs for the market and then for each 18



### household, we randomly sample from that 19



### distribution to estimate the SEERs for the 20



### market baseli ne. And I'll talk about that in 21



### a little bit. 22NEAL R. GROSS

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### The commercial process is a little 1



### more complicated but essentially we start with 2



### a small office building model. We used a 3



### reference building or a benchmark building 4



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



### square foot single

- story small office 6



### building. It kind of looks like that picture 7



### on the right. 8



### We simulated with 237 typical 9



### meteorological year locations. That's the 10



### TMY2 set. And we simulated for each product 11



### class four different efficiency levels, a 13, 12



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



### for that particular product class. 14



### And we actually simulated the coil 15



### only and the blower coil, pretending that 16



### they're two separate product classes for this 17



### analysis. 18



### Simulation was done in EnergyPlus. 19



### And from each simulation in each climate 20



### zone, we extract out the hourly annual 21



### cooling, heating, and fan use from the 22NEAL R. GROSS

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### simulation as well as the peak sizing that was 1



### established in EnergyPlus for that product. 2



### And then we normalized the ave rage 3



### energy use or average cooling, heating, and 4



### fan energy use for the building to reflect 5



### that for a three

- ton air conditioning unit so 6



### that we can fit it with the rest of the 7



### analysis work that's being done on the 8



### residential side. 9



### And, again, we deve lop a market 10



### baseline distribution and a standard level 11



### distribution because we explicitly simulated 12



### the 13 SEER that comes directly out of the 13



### analysis as the baseline energy use 14



### distribution. 15



### MR. BROOKMAN: Steve Rosenstock? 16



### MR. ROSENSTOCK: Steve Ro senstock, 17



### Edison Electric Institute. 18



### In this case, again obviously 19



### depending on what part of the country you're 20



### in, you just basically kind of took a zone 21



### approach that you said well, in the north it 22NEAL R. GROSS

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### might be two units of three tons each but in 1



### the sout h it might be four units three tons 2



### each, something like that? 3



### MR. CARMICHAEL: No, actually the 4



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



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



### building model, you have to define the zones 7



### and the systems directl y. 8



### So the small office building model 9



### is assumed to have five zones, four perimeters 10



### and a core zone appropriate to this

-- roughly 11



### appropriate to this size building. And then 12



### as the unit moves around the country, for each 13



### weather tape that you use, it will develop a 14



### different sizing of equipment for that. 15



### So you'll end up with, for 16



### instance in the south maybe it will be

-- I'm 17



### going to throw out a number here

-- like 12 18



### tons and maybe in the north it will be ten 19



### tons. 20



### MR. ROSENSTOCK: But, again, St eve 21



### Rosenstock, EEI, thanks. But following up on 22NEAL R. GROSS

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### that in terms of

-- but you still

-- the model 1



### assumed that

-- again, just to kind of match 2



### it

-- you didn't assume one ten

- ton unit or 3



### one 12

- ton unit did you? 4



### MR. CARMICHAEL: No. What you 5



### would end up with, if it is sized for

-- 6



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



### MR. ROSENSTOCK: It's five units, 8



### thank you. 9



### MR. CARMICHAEL: Yes, there's five 10



### units. And we just normalize it down to a 11



### single three

- ton unit. 12



### MR. BROOKMAN: (Inaudible)? 13



### PARTICI PANT: In the northern 14



### tier, how was the heat pump sized? 15



### MR. CARMICHAEL: Heat pump sized 16



### on cooling. 17



### PARTICIPANT: Good. Thank you 18



### very much. Just asking. Wrong but just 19



### asking. 20



### MR. CARMICHAEL: Yes. 21



### MR. BROOKMAN: John Mandyck? 22NEAL R. GROSS

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### MR. MANDYCK: Harvey, stay calm. 1



### MR. BROOKMAN: Let's let Harvey 2



### follow on. Harvey, go ahead. 3



### MR. SACHS: I'm conscious that Ron 4



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



### polite. 6



### I guess I really don't understand 7



### why it would be looking at northern heat pump s 8



### being sized for cooling rather than for 9



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



### what I'm buying the equipment for. 11



### And the consequences in terms of 12



### total energy use are rather extraordinary if I 13



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



### think ab out high bill complaints. 15



### MR. CARMICHAEL: Yes. But to 16



### follow up, you know, essentially on the 17



### cooling side, the heat pump, the compressor is 18



### effectively sized so that it can meet the 19



### cooling requirements for the building and 20



### operation around the countr y. 21



### Where that compressor cannot 22NEAL R. GROSS

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### provide the amount of heat under design load 1



### conditions, electric resistance backup was 2



### assumed. 3



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



### the recommended standard practice I would 5



### find, for example, in an ACCA manual for 6



### serving customer needs? I can't believe that 7



### best practices in this industry are still to 8



### size a Seattle heat pump for the cooling load. 9



### PARTICIPANT: Right. Seattle has 10



### 300 heating degree hours

-- hours. Not days. 11



### Sizing a heat

-- you get a one

- ton heat pum p 12



### in these zones instead of a three

- or four

13



### ton, which is

-- 14



### PARTICIPANT: This is a heat pump 15



### and air conditioner framework, isn't it? 16



### PARTICIPANT: No, it's 17



### preliminary. 18



### PARTICIPANT: I'm sorry. It is a 19



### -- 20



### PARTICIPANT: If we do the 21



### consensus a greement, we bypass this problem. 22NEAL R. GROSS

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### (Laughter.) 1



### PARTICIPANT: And if we don't, I 2



### would recommend suggesting comments on what is 3



### the appropriate sizing mechanism for heat 4



### pumps across the U.S. 5



### PARTICIPANT: I want to back up. 6



### You said 300 hours cooling

-- 7



### PARTICIPANT: Cooling load

-- 8



### PARTICIPANT: Thank you. 9



### PARTICIPANT:

-- cooling degree 10



### hours. 11



### MR. BROOKMAN: John Mandyck? 12



### MR. MANDYCK: John Mandyck with 13



### Carrier. 14



### I have several questions regarding 15



### the simulated levels. 16



### MR. CARMICHAEL: Yes. 17



### MR. MANDYCK: The first one is 18



### what was max tech that you evaluated for 19



### central air conditioners? 20



### MR. CARMICHAEL: What was max 21



### tech? Was it

-- 22, I think for the blower 22NEAL R. GROSS

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### coil. 1



### MR. MANDYCK: Okay. Did you use 2



### the same four simulated points for your 3



### residential analysis, too? 4



### MR. CARMICHAEL: We did not 5



### simulate the residential analysis. That was 6



### done using the REXX data. 7



### MR. MANDYCK: Okay. Great. 8



### And then on this, I'm curious as 9



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



### 16. Does that mean that 15 SEER is not 11



### considered a possible standard if you don't 12



### accept the consensus agreement? 13



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



### not what it means. Basically in using the 15



### EnergyPlus, we had lots of levels to simulate. 16



### And there's a lot of simu lations involved 17



### here. 18



### So what we did is we simulated 19



### these four levels for each product. Between 20



### those levels, the energy use is interpolated. 21



### And I'll go into that in the next slide if 22NEAL R. GROSS

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### that's all right. 1



### MR. BROOKMAN: Go to the next 2



### slide. 3



### Harvey ? 4



### MR. SACHS: Harvey Sachs, ACEEE. 5



### I guess I am surprised and stunned 6



### is probably not too strong a word that if I 7



### look back at slides like 45 on the markups, 8



### we're going to extraordinary measures to get 9



### estimates to the third decimal. 10



### And then when I look at how we're 11



### looking

-- setting up our models, setting up 12



### our fundamental assumptions, it sounds like 13



### we're not looking at climate zone

- specific 14



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



### northern climates for heat pumps, and these 16



### are things that a re on the other side of the 17



### decimal place. 18



### And it just is a very surprising 19



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



### some things. But at the level of the common 21



### sense engineering, understanding what a 22NEAL R. GROSS

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### practitioner would be expected to do, it seems 1



### a s though we're missing some things that might 2



### be pretty important. 3



### MR. BROOKMAN: Okay. Thank you. 4



### Keep going. 5



### MR. CARMICHAEL: Okay. So, again, 6



### we had to make

-- for anyone who has been 7



### involved or listened to people talk about how 8



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



### to make some assumptions, starting with the 10



### fact that once we have the building model 11



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



### effectively input what corresponds to a SEER 13



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



### engi neering analysis to get that information 15



### actually into the simulation. 16



### So to start with in that process, 17



### there was a multi

- step process. The first was 18



### converting the SEER and HSPF ratings, which 19



### cannot be directly simulated, to what we call 20



### a full load EER. It's a 95

- degree EER and a 21



### COP at 47 degrees heating. 22NEAL R. GROSS

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### That process utilized a paper 1



### that's been written by a couple of researchers 2



### who looked at AHRI data and developed this 3



### particular curve you see in the right

- hand 4



### corner, relating SEER and EER. 5



### Yes? 6



### MR. SACHS: Harvey Sachs, ACEEE. 7



### I'm not familiar with the Wasman 8



### Brandemule (phonetic) curve. But it has been 9



### our experience with a lot of other curves, 10



### Henderson, for example, that there is a break 11



### and we see two different families at 12



### interme diate SEER values depending on whether 13



### we have a step

- modulating or other modulating 14



### compressor so that EER has a different slope 15



### with SEER for a single

- stage unit than it has 16



### for a modulating unit. 17



### And without some measure of 18



### variance, I just can't beli eve this curve is 19



### looking like this quasi

- linear relationship 20



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



### sense from looking at data. 22NEAL R. GROSS

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### You're missing the story, I think. 1



### MR. BROOKMAN: Okay. Do you want 2



### to respond to that? 3



### MR. CARMICHAEL: Oh, sor ry, I 4



### thought Steve had his hand up. 5



### There are a couple of curves you 6



### do get that type of relationship. One of the 7



### issues, in particular, with the commercial 8



### building assumptions and the modeling of 9



### commercial buildings is exactly how you handle 10



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



### allowed to essentially go to a lower fan speed 12



### or not in the modeling. 13



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



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



### compressor. The fan issue we haven't gotten 16



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



### manufacturers can fill in, whether it goes up 18



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



### inverter technology or a single speed. 20



### And my SEER/EER relationship is 21



### very different depending on which of those 22NEAL R. GROSS

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### compressor choices I've made. Tha t's not 1



### reflected in this curve. 2



### MR. CARMICHAEL: Nor, in fact, is 3



### it clearly reflected in the standard that DOE 4



### would publish. DOE will publish

-- if it 5



### publishes a SEER, it does not explicitly say 6



### single speed or two

- speed equipment. This is 7



### reflecti on sort of a number of products that 8



### were available on the market. 9



### MR. SACHS: But this reflects the 10



### analysis because the energy use at different 11



### temperature bins will depend on which one of 12



### these units you're using in your model 13



### equipment. Maybe I'm mi ssing something but I 14



### think I'm on solid ground here. 15



### MR. BROOKMAN: Harvey, maybe you 16



### could send it in detailed comments. 17



### MR. SACHS: We published this 18



### several years ago in our analysis of regional 19



### standards. 20



### MR. BROOKMAN: Don Brundadge. 21



### MR. BRUN DADGE: I'm just amazed 22NEAL R. GROSS

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### I'm agreeing with Harvey so much today. 1



### (Laughter.) 2



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



### PARTICIPANT: It's proximity. 4



### MR. BRUNDADGE: I think if you 5



### just did SEER 16 and max tech as dual or 6



### variable speed, it would solve a lot of th ese 7



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



### me like you are assuming single speed all the 9



### way up through SEER 20. 10



### You need to have a change when you 11



### switch the technologies. And that's probably 12



### going to happen around SEER 16. And you are 13



### going to get a very differently looking EER 14



### slope on variable speed compressors. 15



### Thank you. 16



### MR. BROOKMAN: Thank you. 17



### Steve Rosenstock? 18



### MR. ROSENSTOCK: Steve Rosenstock, 19



### EEI. 20



### And I will also agree with Harvey 21



### and Don. Hopefully they don't faint over 22NEAL R. GROSS

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### th ere. 1



### But I also have to say the impact 2



### of using this nice linear curve where 3



### everything

-- EER always go up with SEER

-- is 4



### that especially on the commercial side, that 5



### regardless of what's actually happening with 6



### EER, that energy use always goes down an d peak 7



### demand always goes down. 8



### And, therefore, your economic 9



### analysis always looks better when that's not 10



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



### the testimony that's been heard earlier today. 12



### So I understand why you're doing 13



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



### Number one, in terms of the EER levels already 15



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



### convert the EER if the EER is already

-- there 17



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



### for conversion. Use the actual number in 19



### terms of some of simulation. 20



### And, again, it's probably 21



### bifurcated at the higher levels in terms of 22NEAL R. GROSS

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### very low EERs and pretty high EERs. But, 1



### again, using this will distort the eventual 2



### energy and life cycle costs and energy savings 3



### analysis. 4



### Thank you. 5



### MR . BROOKMAN: Okay. Thank you. 6



### Harvey? 7



### MR. SACHS: It's a little bit 8



### digressive but there's a piece of equipment in 9



### the hall manufactured by an outfit named 10



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



### hands of anyone in this room who has used such 12



### a pi ece of equipment. Thank you. 13



### It's a fundament piece of 14



### equipment for balancing the flow from air 15



### registers, one with which every contractor 16



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



### kinds of experience people have for doing 18



### these analyses. 19



### Thank y ou. End of rant. I'm 20



### sorry. 21



### MR. BROOKMAN: Thank you. 22NEAL R. GROSS

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### Jim? 1



### MR. BRESHAW: Jim Breshaw. 2



### I've just got to state that this

- 3



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



### appropriate if you go dig into the AHRI 5



### directory. I don't think you'll find 1 4, 15 6



### EERs on most of these equipment. It just 7



### doesn't look right to me. 8



### MR. BROOKMAN: Molly? 9



### MS. TROMBLEY

- McCANN: Having dug 10



### into the AHRI directory about a week ago, this 11



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



### not sure what the sources wer e for the paper. 13



### And I should probably look up the paper and 14



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



### But based on what's on the AHRI directory 16



### right now, this does not look accurate. 17



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



### the TSD, Dave, is it not? 19



### MR . WINIARSKI: The paper? 20



### MR. BROOKMAN: Your citations. 21



### MR. WINIARSKI: Oh, yes, yes, 22NEAL R. GROSS

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### that's in the TSD. This is actually a fairly 1



### well

- known paper for those who need to look at 2



### it. 3



### One of the things we can do is we 4



### can propose to show this along wi th results 5



### from the AHRI directory in comparison. 6



### MR. BROOKMAN: We need to keep 7



### moving along here, folks. 8



### Jeff first. And then to Andrew. 9



### PARTICIPANT: Just, you know, to 10



### reinforce some of the other statements. If 11



### you are analyzing different compr essor 12



### technologies, you have to take into account 13



### the fact that they are going to be different. 14



### Single stage is going to give you one EER at 15



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



### you a different EER in a 16 SEER. 17



### At the same SEER level, they're 18



### going to be different because the technologies 19



### are different. And that will have to be taken 20



### into account. 21



### MR. BROOKMAN: Okay. 22NEAL R. GROSS

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### Andrew? 1



### MR. deLASKI: So just to follow on 2



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



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



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



### are the fundamental parameters of the 6



### rulemaking. 7



### It is also going effect the 8



### utility impact analysis. And in central air 9



### conditioners, peak demand impacts is a 10



### critical concern for this docket. And, you 11



### know, my recollection of the last docket is, 12



### you know, we saw huge energy savings for

-- 13



### peak savings from the last central air 14



### conditioner standard. 15



### But that the Department in the 16



### last docket concluded that over SEER 13 or 14, 17



### the relationshi p between SEER and EER broke 18



### down. 19



### And it strikes me that, you know, 20



### in a market where you look at the market today 21



### and what Molly has observed

-- just said now 22NEAL R. GROSS

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### that she doesn't see a real relationship over 1



### SEER 14 is that, you know, that relationship 2



### ma y very well become more clear once a 3



### standard is set and as the market migrates to 4



### the lowest cost compliance path. 5



### And if that results in higher EER, 6



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



### have undermined the goal of the savings. So I 8



### think thi s really needs to be sorted out in a 9



### way that reflects what is the low cost 10



### compliance path. 11



### MR. BROOKMAN: Okay. So thanks 12



### for all those comments. 13



### Take final comments. You see a 14



### series of assumptions listed here and some of 15



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



### all have. Final comments on the assumptions 17



### listed on slide 50. 18



### Yes, Jim? 19



### PARTICIPANT: On the static 20



### pressure, is that the external static pressure 21



### that the blower system sees? Does that 22NEAL R. GROSS

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### include the coil pressure drops as well? 1



### MR. WINIARSKI: I was going to 2



### clarify that. The static pressure that you 3



### see there is used in the conversion between a 4



### -- effectively what the simulation model needs 5



### is it separates out the fan from the 6



### condensing unit. 7



### And so in order to come up wit h an 8



### effective cooling COP and heating COP for the 9



### condensing unit, you have to extract out the 10



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



### test conditions. 12



### At test conditions, we estimated 13



### that a typical static pressure

-- total static 14



### pressure for th e system was around this 1.1 15



### inches. The actual building model when it's 16



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



### PARTICIPANT: And you're assuming 18



### this is for residential equipment applied in a 19



### commercial building? 20



### MR. WINIARSKI: Exactly. A very 21



### s mall commercial building. 22NEAL R. GROSS

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### PARTICIPANT: But if you look 1



### through our application guide, you won't find 2



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



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



### and a half. 5



### MR. WINIARSKI: That's external 6



### static, right? 7



### PARTICIPANT: I thought that's 8



### what you just said but

-- 9



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



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



### static pressure. 12



### PARTICIPANT: This includes the 13



### pressure drop across the coil and the filter 14



### and the internal losses of the air handler? 15



### MR. WINIARSKI: Yes, the whole 16



### thing. 17



### PARTICIPANT: Okay. 18



### MR. WINIARSKI: Yes. 19



### MR. BROOKMAN: Okay. Jeff? 20



### PARTICIPANT: One last question. 21



### On the fan efficiency of .58 and .65, I assume 22NEAL R. GROSS

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### that's .58 for 13 and .65 for 14 is w hat 1



### you're modeling? 2



### MR. WINIARSKI: No. The fan 3



### efficiency, the efficiency of the actual fan 4



### itself, you know, brake horsepower

- type 5



### efficiency is assumed to be .58

-- 6



### PARTICIPANT: Okay. 7



### MR. WINIARSKI:

-- the blower 8



### motor

-- 9



### PARTICIPANT: I'm s orry. I 10



### apologize. I missed that. 11



### MR. WINIARSKI: Yes. 12



### MR. BROOKMAN: Okay. 13



### Harvey Sachs? 14



### MR. SACHS: First of all, thank 15



### you for using the total static pressure and 16



### for using realistic values instead of the 17



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



### confident that these motor efficiencies or 19



### combined efficiencies are realistic at these 20



### high ASPs for residential equipment. 21



### MR. BROOKMAN: Okay. 22NEAL R. GROSS

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### Tom Eckman? 1



### MR. ECKMAN: On the presumption 2



### that we move to a simulation of the heat pump 3



### on res idential as well as on commercial, I 4



### think

-- and we take at least some look at 5



### inverted ribbon technology, I think picking a 6



### single point COP temperature is probably wrong 7



### in trying to fit a curve through that because 8



### inverter

- driven technology has a whol ly 9



### different performance curve as temperatures go 10



### down relative to other technologies. 11



### And so if that's evaluated on the 12



### heat pump side, we need to look at the 13



### performance curves with that technology 14



### embedded in the system versus the non

- inverted 15



### ribbon compressors because they perform quite 16



### differently at lower temperatures relative to 17



### the standard rating points that we have right 18



### now available. 19



### MR. WINIARSKI: For what it's 20



### worth, let me respond to that. 21



### I believe that the simulation 22NEAL R. GROSS

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### tool, EnergyPlu s, allows for a single and a 1



### double stage model. Essentially there are 2



### performance curves that handle how the COP or 3



### condensing unit efficiency varies as a 4



### function of indoor wet bulb, outdoor dry bulb 5



### temperature. All these things. 6



### And so there's only a limited 7



### selection of curves currently available in 8



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



### is one of them. Just a general comment. 10



### MR. ECKMAN: That would be a 11



### limitation for evaluating that technology then 12



### I gather. 13



### MR. BROOKMAN: Thanks, T om. 14



### Okay, yes, Molly? 15



### MS. TROMBLEY

- McCANN: I just kind 16



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



### representative of a utility. The SEER rating 18



### as it is current designed is based on the 19



### performance at 82 degrees. 20



### And as you push harder to get a 21



### bette r SEER rating, you prioritize performance 22NEAL R. GROSS

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### at those lower temperatures over performance 1



### at much higher temperatures. 2



### What you end up seeing, at least 3



### in my experience with the equipment that's on 4



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



### EER at 95 and above actually goes down 6



### compared to lower SEER. 7



### And the reasons this is such an 8



### important issue for us is because that means 9



### that peak performance goes down as you 10



### nominally increase the efficiency of the 11



### equipment. 12



### For utilities in hot, dry areas 13



### th at have really high peak loads, this is 14



### potentially catastrophic. And it is one of 15



### the reasons that we are so emphatic about not 16



### using SEER as the only or even any efficiency 17



### metric in hot, dry regions. 18



### So if this curve is wrong, you 19



### could potentially m iss extremely important 20



### impacts to utilities and also to consumers. 21



### So it's not just that we're nitpicking about 22NEAL R. GROSS

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### whose study is right. It's really important. 1



### MR. BROOKMAN: Okay. Thanks for 2



### that summary. That's helpful. 3



### Karim? 4



### DR. AMRANE: Karim Amrane, AHRI. 5



### Just a comment here. I mean we're 6



### talking about what, seven percent of the 7



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



### not sure

-- we're spending a lot of time on 9



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



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



### analysis. That's my personal opinion. 12



### MR. BROOKMAN: Thank you. 13



### Don Brundadge? But we do need to 14



### keep moving along or we'll be here all 15



### afternoon. 16



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



### only seven percent. But part of the reason I 18



### th ink we're spending so much time is we'd 19



### really like something more similar to this 20



### done on the residential side because for all 21



### the flaws, this is still a better approach 22NEAL R. GROSS

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### than what you're doing on residential. 1



### Thank you. 2



### MR. BROOKMAN: Great. 3



### Harvey? 4



### MR. SACHS: Harvey Sachs, ACEEE. 5



### And, again, Mr. Brundadge took 6



### words out of my mouth. I'll quit

-- there was 7



### something else I wanted to say but he took the 8



### words out of my mouth on the first piece. 9



### MR. BROOKMAN: Okay. Thank you. 10



### Then we're goin g to move on then. 11



### MR. WINIARSKI: Okay. So this is 12



### essentially an estimate of the market baseline 13



### efficiency distributions for each product 14



### class. In the past, I think in past 15



### rulemakings this data was made available by 16



### the industry. It was not avail able for this 17



### rulemaking so DOE had to make some estimate 18



### for what the distributions looked like. 19



### Essentially the distributions are 20



### built around first establishing SEER bins off 21



### to the left, the SEER bins that

-- at the 22NEAL R. GROSS

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### center point for the most part, t he bins have 1



### one of the design efficiency levels from the 2



### engineering analysis. 3



### We then took some data, some 4



### industry trade press data that essentially 5



### suggested in the market in 2007, I believe, 6



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



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



### and above is another group. 9



### And then we developed 10



### distributions such that using that data, using 11



### the characteristic efficiencies for the bins, 12



### we could come up with weighted average SEERs 13



### that matched the weighted average statistical 14



### data that ARI had in 2007. 15



### These

-- so the values on the 16



### bottom basically reflect the AHRI

-- pardon 17



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



### things

-- I think one of the product classes, 19



### single packaged AIR CONDITIONERS, I think the 20



### 200 7 data actually suggested that the shipment 21



### weighted average efficiency was below 13. 22NEAL R. GROSS

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### I think that reflects

-- I'm not 1



### quite clear what that all reflects but we 2



### adjusted for that for the 2008 data and then 3



### developed the distribution shown here. 4



### Basicall y we would like any type of comment 5



### from the industry on whether these 6



### distributions look about right. 7



### MR. BROOKMAN: Steve Rosenstock? 8



### MR. ROSENSTOCK: Steve Rosenstock, 9



### EEI. 10



### Just a quick question. Again, 11



### this is going

-- looking at if there's any 12



### data for 2009 in terms of the impact of the 13



### federal tax credits because for those they 14



### were either

-- I think they were 15 or 16 15



### depending on the technology, 15 for heat pumps 16



### and 16 for central air conditioners. 17



### So, again, I don't know how 18



### recently you want to look but there might have 19



### been

-- those tax credits in effect for 2009 20



### and 2010 might have had an impact on some of 21



### this distribution. 22NEAL R. GROSS

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### And I know there are proposals to 1



### extend the tax credits for several years. I 2



### know that some just came up rece ntly. 3



### Thank you. 4



### MR. BROOKMAN: Talbot? 5



### MR. GEE: Well, yes, this is 6



### Talbot with HARDI. 7



### And I think it is a good point to 8



### consider what impact that may have had. And 9



### we talked about this a lot in our initial 10



### comments that I would recommend that th ere 11



### actually be an added analysis of the impact of 12



### efficiency programs on all of the deployment 13



### of these products because first of all, if you 14



### are going to say that okay, the mix has 15



### shifted to more high efficiency products but 16



### then you find that it is 90 percent due to 17



### some sort of an efficiency incentive, then I 18



### don't believe that justifies an increase in 19



### the minimum standard because if you increase 20



### the minimum standard, you are thereby probably 21



### undermining those efficiency programs, which 22NEAL R. GROSS

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### may not exist i n the long run. 1



### So in other words, you could hurt 2



### the product shift going forward. Now, again, 3



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



### experts in efficiency programs but we know 5



### that there is some cost effectiveness that has 6



### to be established in those t hings. 7



### And we think it would be well 8



### worth the DOE's time in this rulemaking and 9



### frankly other ones that apply to incentivized 10



### products to thoroughly study the impact of 11



### efficiency standards on any type of energy 12



### efficiency incentive program be it utilit y, 13



### state, federal. 14



### But also not falling into the trap 15



### to think because heavily incentivized products 16



### may have shifted a little bit of market shares 17



### that it therefore justifies that it would be 18



### an easy jump to just raise the standard to 19



### that level or one close to it. 20



### MR. BROOKMAN: Okay. Thank you. 21



### Don? 22NEAL R. GROSS

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### MR. BRUNDADGE: A general comment 1



### on data over the last few years. These have 2



### not been normal times. You've had near 3



### Depression era type conditions in 2008. You 4



### had a lot of incentives and tax cre dits thrown 5



### at things over the last year or two. 6



### It may be that rather than 7



### automatically using the most recent data you 8



### need to consider these impacts and make 9



### adjustments or drop back to earlier data. 10



### I mean we don't want to make long

11



### term projection s going forward based on the 12



### roller coaster of the last couple of years and 13



### where your snapshot happened to grab it. 14



### Thank you. 15



### MR. WINIARSKI: If I can make two 16



### other comments. One, one of the issues is 17



### obviously 2006, the 13

- SEER rule went in so 18



### the re is not a lot of earlier data to rely on 19



### for something like that. 20



### The other issue I want to bring 21



### forth is, again, we established these 22NEAL R. GROSS

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### distributions for 2008 based on the data that 1



### we were able to come up with. These actually 2



### also form the distributi ons in the LCC 3



### analysis that Mike Scott will address earlier 4



### -- or will address in a little bit. 5



### So they've essentially been held 6



### flat for that period from today through the 7



### start of the rule. 8



### MR. BROOKMAN: Andrew deLaski? 9



### MR. deLASKI: Dave, a ques tion for 10



### clarification. 11



### MR. WINIARSKI: Yes? 12



### MR. deLASKI: So in your table

-- 13



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



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



### about half the products are in that second 16



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



### won dering what you are observing or what you 18



### are finding. 19



### Is it that

-- you know, in 20



### shooting to meet the standard, maybe the 21



### manufacturers can answer this better than you 22NEAL R. GROSS

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### or I'm sure they can

-- but maybe they can't 1



### but maybe they will

-- but are manufactu rers 2



### shooting for a higher SEER to be assured of 3



### meeting the standard or is this market driven? 4



### You know why are we observing half 5



### the market

-- you know, because there are 6



### costs in being a little bit more efficient. 7



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



### level that's a little bit higher than the 9



### standard. 10



### MR. WINIARSKI: Okay. I can speak 11



### to the process used for developing this, we 12



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



### distributions that would actually get us to 14



### those weighted average S EER numbers that we 15



### had with the AHRI data. 16



### And it was difficult using the 17



### limited trade press data we had. And, in 18



### fact, in some cases

-- in the case of the 19



### split system AIR CONDITION, given, you know, 20



### this limited accuracy of the trade press data 21



### whic h basically said, you know, we know we 22NEAL R. GROSS

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### have X percent of the market at between 14 and 1



### 15 to, you know, one significant digit. 2



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



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



### achieve that weighted average SEER of 13.77 5



### without ass uming that a significant fraction 6



### were slightly above 13. 7



### So, you know, that was our 8



### analytical process. We certainly welcome data 9



### from the industry on, as you pointed out, 10



### whether they shoot for a little higher than 11



### 13. 12



### MR. BROOKMAN: Karim? 13



### DR. AM RANE: Karim Amrane, AHRI. 14



### We don't capture, as far as 15



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



### or .5. I mean it's either

-- by bins from 13 17



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



### data. 19



### So we have no

-- at least at AHRI, 20



### we cannot estimate, yo u know, what is the 21



### percentage at 13.25. 22NEAL R. GROSS

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### MR. BROOKMAN: Molly? 1



### MS. TROMBLEY

- McCANN: Molly 2



### Trombley

- McCann. 3



### As a clarification, you were 4



### trying to match 13.77, which was the AHRI 5



### weighted SEER based on model availability? 6



### MR. WINIARSKI: That's shi pment. 7



### MS. TROMBLEY

- McCANN: That's 8



### shipment weighted, okay. 9



### MR. BROOKMAN: Andrew? 10



### MR. deLASKI: Just to make sure I 11



### understand the methodology here. 12



### The weighted average SEERs in the 13



### bottom of the table are what AHRI provided to 14



### you? 15



### MR. WINIAR SKI: 16



### MR. SACHS: That's correct. 17



### MR. deLASKI: Okay. 18



### MR. BROOKMAN: Thank you, Andrew. 19



### Dave, keep going. 20



### MR. WINIARSKI: Yes. Okay, we 21



### talked a little bit about the standard regions 22NEAL R. GROSS

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### that were developed for this analysis. Those 1



### standard region s were actually developed prior 2



### to the consensus agreement. 3



### Here is the map that Wes showed 4



### you earlier. I want to talk a little bit 5



### about how they were developed. 6



### Essentially we looked at the 7



### cooling load hours map that has been available 8



### from AHRI f or years now. A picture of it is 9



### off to the right. 10



### Essentially with the assumption 11



### that the standard SEER rating is based on 12



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



### that a hotter climate would be those with 14



### greater than 1,000 cooling load hours. 15



### That 1,000 cooling load hour line 16



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



### in the country. It goes up

-- it take some of 18



### Kentucky, it goes below Virginia. 19



### What we actually did is we looked 20



### at that issue, we looked at the relative 21



### humidity from a b unch of weather data for I 22NEAL R. GROSS

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### think it was 1,000 sites, the TMY3 data. 1



### During those cooling load hours, 2



### we looked at cooling degree day data in terms 3



### of establishing that. And we also considered 4



### the EISA requirements for contiguous regions 5



### and whole states within each region. 6



### When you get, as was alluded to 7



### earlier, when you get out to the western 8



### states, there are huge variations in cooling 9



### degree days. It's really hard to characterize 10



### anything as necessarily hot from a geographic 11



### perspective. And you can see that kind of the 12



### cooling load hour map, the compressed lines 13



### off to the left here around California and 14



### into Arizona. 15



### So we took a lot of this into 16



### account in trying to come up with a boundary 17



### for our map that I showed you earlier. Really 18



### the di fferences here between this and the 19



### consensus region are I think you've got

-- the 20



### states of Virginia, Kentucky, Delaware, and 21



### Maryland in this analysis were put into the 22NEAL R. GROSS

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### rest of the country, the northern region. I 1



### think the consensus agreement puts those into 2



### the southern region. 3



### And as we were developing this, we 4



### also consulted with people with the furnace 5



### rulemaking trying to establish where we 6



### thought OPRI ORI (phonetic) would be the 7



### benefits to improving furnace standards or 8



### improving the air condit ioning standards in 9



### trying to establish this initial map. 10



### Let's see here. We talked about 11



### the wide variation in temperatures. The 12



### regions in this map, obviously one of the 13



### issues is that the REXX data is aggregated at 14



### the census division level. And an y climate 15



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



### So we have to allocate certain REXX 17



### observations to one side or the other of a 18



### boundary. 19



### And in addition, the DOE, an 20



### appendix of the PSE talks about the 21



### development of a possible SEER hot, dry 22NEAL R. GROSS

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### met ric, a separate metric for the hot, dry 1



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



### done the analysis. That we're looking really 3



### toward feedback on whether that is a viable 4



### approach. 5



### MR. BROOKMAN: So you can see the 6



### comment box there. The Department seeks 7



### comment on introduction of regional SEER, the 8



### use of bin method, and the calculation of 9



### cooling load and hours, bins for determining 10



### the regional SEER and also the use of SEER for 11



### establishing cooling efficiency standards in 12



### hot, dry region of the co untry. 13



### Let's take comments on these. 14



### Steve Rosenstock? 15



### MR. ROSENSTOCK: Steve Rosenstock, 16



### Edison Electric Institute. 17



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



### You'll have to forgive me here. 19



### In terms of the SEER hot, dry 20



### metric, is DOE looking at basica lly a separate 21



### test procedure for that part of the country? 22NEAL R. GROSS

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### And if so, if you're looking at a SEER HD and 1



### the numbers are different, would you have to 2



### redo some of this analysis as well if the SEER 3



### HD results are, you know, different. 4



### It's, you know, th e rest of the 5



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



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



### think of the implications of this in terms of, 8



### you know, number one changing the test 9



### procedure, and then number two, redoing this 10



### analysis based on the new metric for that part 11



### of the country. 12



### MR. BROOKMAN: Molly, you want to 13



### go ahead? 14



### MS. TROMBLEY

- McCANN: No. 15



### MR. BROOKMAN: Okay. Then Karim? 16



### Oh, Dave, go ahead. 17



### MR. WINIARSKI: I was going to let 18



### Wes answer something. 19



### (Laughter.) 20



### MR. WES A NDERSON: No, I was going 21



### to say the test procedures currently being 22NEAL R. GROSS

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### rewritten now

-- this is Wes, DOE, and there 1



### will be a public meeting on that to address 2



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



### speak to the test procedure right now until 4



### it's si gned by the Secretary. It's going to 5



### be

-- 6



### MR. ROSENSTOCK: This is Steven 7



### Rosenstock. Thank you very much. 8



### But, again, if

-- and, again, I 9



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



### test procedure for the hot, humid climates, 11



### which in a way makes mo re sense, but then 12



### again, if these new test procedures are 13



### established, this could have quite the impact 14



### on numbers in this. And it would have to 15



### impact the candidate standard levels. 16



### If you're doing a separate test 17



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



### numbers I would guess. And that would change 19



### a lot of the

-- possibly change the economics 20



### and it changes everything in terms of an 21



### efficiency standard. 22NEAL R. GROSS

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### MR. BROOKMAN: Harvey Sachs? 1



### MR. SACHS: Harvey Sachs, ACEEE. 2



### To my mind as an advocate, try ing 3



### to think about putting myself in the other 4



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



### a different regional boundary for air 6



### conditioning versus heating products, if 7



### nothing else because the heat pump bridges 8



### that gap. 9



### So my question is whether the 10



### Department and its contractors sat down and 11



### did at least a back of the envelope 12



### calculation on the 4,500 bases it has 13



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



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



### of effort in the development of the consens us 16



### agreement thinking about what made sense in 17



### terms of energy savings and the market. 18



### So I'm curious about the process 19



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



### 5,000. 21



### MR. WINIARSKI: Well, going back 22NEAL R. GROSS

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### to the development, 4,500 is roughly an 1



### outcome. It's not the input to developing 2



### this process. So bear that in mind. 3



### The other thing I want to say is 4



### that if you consider the issues that DOE had 5



### to deal with, as you move that line farther 6



### south and you are considering regional 7



### standards, obviously y ou start to get hotter 8



### and hotter climates and the SEER level that 9



### can be cost justified obviously goes up. 10



### As you move the line

-- and at the 11



### expense of on the furnace side, if you

-- and 12



### DOE was considering consistent boundaries when 13



### we looked at this, the furnace efficiency that 14



### you justify is now for warmer climates and 15



### appears to be going down. 16



### So there is a choice here in terms 17



### of what

-- there is an effective outline. I 18



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



### analysis on air conditioners and heat pumps, 20



### that change is very, very minor in the 21



### resulting positive LCC. 22NEAL R. GROSS

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### MR. SACHS: But, Dave, my 1



### underlying question was trying to get inside 2



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



### guys talk together about where the line ought 4



### to be? 5



### MR. WINIARSKI: Yes. We have 6



### meetings about that. 7



### MR. SACHS: Thank you. 8



### I have another statement if I 9



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



### our publication was the first to propose a 11



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



### was to be based on u sing bin hour 13



### distributions appropriate. And, in fact, the 14



### economic value of the electricity used at high 15



### temperatures as (inaudible) bin hour 16



### distributions. 17



### We did that and I assume you did 18



### as well on the assumption that the 19



### Department's theology would not allow using 20



### dual metrics. We've heard this morning from 21



### Kate and I believe from Tim as well, that 22NEAL R. GROSS

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### there is good precedent for using both an EER 1



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



### more discussion of that. 3



### And partly in support of the 4



### consen sus, I want to say that to me SEER sub 5



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



### the terms that Steve has suggested for 7



### marketing, that it is a really bad third 8



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



### MR. BROOKMAN: Okay. 10



### MR. SACHS: Thank you. 11



### M R. BROOKMAN: Thank you. 12



### Let's go to Karim first. 13



### DR. AMRANE: Karim Amrane, AHRI. 14



### I'd like to agree with Harvey. 15



### (Laughter.) 16



### MR. SACHS: I'm becoming a frame 17



### of reference. 18



### DR. AMRANE: And I think if you 19



### look at the consensus agreement, you kn ow, we 20



### came up with an EER metric as well for the 21



### southwest and to address this hot and dry 22NEAL R. GROSS

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### climate issue. So I think it is taken care of 1



### in the consensus agreement. And that's why 2



### DOE should be adopting it. 3



### MR. BROOKMAN: Thank you. 4



### Let's go to Kate and then to 5



### Molly. 6



### MS. HOWARD: Dave, in your 7



### opinion, what is the difference? Or what is 8



### the advantage I suppose? Or actually just 9



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



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



### the technical stuff as we ll as many of the 12



### others in the room. 13



### But I'm just wondering in your 14



### mind what you feel is the relative difference 15



### or if you could offer a quick comparison, that 16



### would be great. Thank you. 17



### MR. WINIARSKI: Yes. I can speak 18



### to that a little quick. 19



### Ap pendix 7C describes the 20



### methodology. The methodology was based on bin 21



### hour data for

-- I believe we used 20 KMY 22NEAL R. GROSS

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### sites that we had population weights for that 1



### covered I think it was like 98 percent of the 2



### population of that region. 3



### It is heavily weighted by 4



### California, as you might guess. And the 5



### result, we essentially used a load line that 6



### looked very similar. In other words, assuming 7



### that cooling starts at 65 degrees and sort of 8



### -- and moves up from there for the climates 9



### within that region. 10



### The res ult is a slightly different 11



### bin hour distribution. It tends to be more 12



### heavily weighted both on the cooling or the 13



### lower part of the scale in terms of 14



### temperature as well as on the higher. So it 15



### is kind of a flatter load profile versus the 16



### current SEER p rofile tends to be more mounded 17



### around 82 degrees. 18



### MS. HOWARD: I'm more concerned 19



### about the difference between SEER HD and EER 20



### than SEER HD and SEER. 21



### MR. WINIARSKI: Right, right. 22NEAL R. GROSS

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### MS. HOWARD: Okay. Thanks. 1



### MR. WINIARSKI: So the SEER HD 2



### that was discussed here, basically one of the 3



### outcomes was that the weighted average cooling 4



### temperature, outdoor temperature, isn't that 5



### much different than the 82 degrees that you 6



### come up with with the current bin hour method. 7



### So you really don't capture that 8



### high end performance that you get with EER or 9



### even, you know, if you were looking for 10



### specific temperature ratings for equipment. 11



### MR. BROOKMAN: Molly. And then 12



### back to Harvey. 13



### MS. TROMBLEY

- McCANN: So first I 14



### want to say thank you because we did subm it 15



### comments in the framework stage strongly 16



### advocating for a SEER HD. And you are 17



### responding to us. And I appreciate that. 18



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



### tell you that I want you to do something 20



### really different. 21



### (Laughter.) 22NEAL R. GROSS

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### MS. TROMBLEY

- McCANN : So I do want 1



### to acknowledge that this was something we 2



### asked for. But as Harvey said, it was 3



### something we asked for on the assumption that 4



### we couldn't get what we really wanted. 5



### And what we really want is 6



### specific information about performance at 7



### spe cific temperature points about 90 degrees. 8



### So for me the biggest difference between a 9



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



### seasonal average. It does not give you 11



### information about a specific performance at a 12



### specific temperature. 13



### And, you know , averages, while 14



### very useful especially for things like 15



### statewide standards, cannot give you 16



### information about performance in individual 17



### climate areas. So one of the reasons that 18



### more information, in terms of like an EER as 19



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



### helps us to unpack how is that unit actually 21



### performing at each of the different 22NEAL R. GROSS

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### temperature points because in reality, 1



### performance of an air conditioner is a curve 2



### that varies with outdoor temperature 3



### continuously. So it is not a single va lue. 4



### So for us, as a state, being able 5



### to have access to more information so that we 6



### can set incentive programs in other 7



### requirements that are individually climate

8



### specific is really helpful. 9



### So that's one of the reasons that 10



### a SEER and an EER is prefe rable and also one 11



### of the reasons that for us the consensus 12



### agreement is very important because it 13



### includes a provision that manufacturers will 14



### disclose performance at a number of different 15



### temperature points, which is very helpful for 16



### us. 17



### MR. BROOKMAN: Thank you. 18



### Harvey? 19



### MR. SACHS: Harvey Sachs. If you 20



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



### you steal from 20, it's research. 22NEAL R. GROSS

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### One of the diagrams in our initial 1



### paper on regional standards was shamelessly 2



### taken from earlier work by Horowitz and 3



### others. But it shows that the cost of air 4



### conditioning seasonal energy

-- that 30 5



### percent

-- 35 percent of the cost of seasonal 6



### air conditioning energy in the hot, dry 7



### climate is characteristically at temperatures 8



### above 95, both because EER falls off so 9



### quickly and because of the value of high 10



### temperature electricity to capacity 11



### constrained utilities. 12



### So simply say that SEER HD is 13



### shifted a few degrees, say to 87 instead of 14



### 82, fails to capture the enormous importance 15



### of that relatively small number of very high 16



### valued hours when the air conditioners are not 17



### working as well when the temperature is above 18



### 95 degrees. 19



### This is a major conceptual defect 20



### in a simple shift with a modest min 21



### displacement, which is what I'm hearing not 22NEAL R. GROSS

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### having read 7C in any det ail yet. 1



### Thank you. 2



### MR. BROOKMAN: Thank you. 3



### I'm thinking we're starting to get 4



### redundant here. And I'm also thinking that 5



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



### soon. 7



### Don? 8



### MR. BRUNDADGE: Well, just a quick 9



### comment on this. I think giv en that you've 10



### got EER in the consensus agreement and 11



### assuming that you find a way to stick EER in 12



### the hot, dry states in an eventual rule, 13



### whether the consensus agreement happens or 14



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



### western utilities, correct me on this, is to 16



### provide an estimate of energy use for 17



### consumers. It's more something that ought to 18



### appear on the yellow label rather than be part 19



### of the standard if you are going to actually 20



### require EER. 21



### MR. BROOKMAN: Okay. 22NEAL R. GROSS

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### MR. BRUNDADGE: I think it does 1



### have value though. 2



### MR. BROOKMAN: Let's take final 3



### comments on this comment box because we're 4



### almost at a pausing point here. 5



### Final comments on this before we 6



### move on? 7



### (No response.) 8



### MR. BROOKMAN: Okay. 9



### MR. WINIARSKI: Okay. And the 10



### las t slide is just some results here by 11



### efficiency level for the energy use in each 12



### climate. 13



### As you can see, hot and humid 14



### tends to have more energy use both at the 15



### baseline when you compare it to the other 16



### climates compared to

-- down at the higher 17



### efficie ncy levels, the same trend exists. 18



### One of the interesting things is 19



### that the hot, dry number is actually fairly 20



### close to the national number, maybe slightly 21



### below that, the national being for the nation 22NEAL R. GROSS

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### as a whole. Rest of country is relatively low 1



### here

. 2



### This is for one product class. 3



### The results for the other product classes are 4



### in the TSD. 5



### And that's it. 6



### MR. BROOKMAN: Comments on this 7



### table? 8



### Harvey Sachs? 9



### MR. SACHS: Harvey Sachs. 10



### Thank you very much for this 11



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



### based? 13



### MR. WINIARSKI: This includes the 14



### results of both the residential and the 15



### commercial modeling. 16



### MR. SACHS: But so it is REXX 17



### dominated. What I feel the need to emphasize, 18



### although the utility representatives can do it 19



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



### climates tend, in most cases, to be climates 21



### with fairly large downhill swings. 22NEAL R. GROSS

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### So some people are moderating 1



### their air conditioning use with evening 2



### cooling from ambient. And, again, the key 3



### issue in the hot, dry climates i s the 4



### consumption of electricity at the same time 5



### that everybody else wants it, in the 6



### afternoon. 7



### It's not just the total kilowatt 8



### hours. And this is why California has gone to 9



### the extraordinarily complex and sophisticated 10



### time

- dependent valuation metho ds that have 11



### been used so extensively there for screening 12



### resources. 13



### This is a simplification that is 14



### instructive but it is hardly complete in terms 15



### of the economic analysis. 16



### MR. BROOKMAN: Thank you. 17



### Steve Rosenstock? 18



### MR. ROSENSTOCK: Steve Rosens tock, 19



### EEI. 20



### I guess

-- and, again, it falls 21



### into that fact is, you know, especially at the 22NEAL R. GROSS

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### higher SEER level, we don't know where EER is 1



### going. And then for some of those climates, 2



### you know, it looks like a constant energy 3



### reduction. 4



### As you go up the S EER level, you 5



### are always getting like a certain percentage 6



### of energy usage reduction. And personally I 7



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



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



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



### above some of the

-- I just

-- I don't see 11



### that relationship. 12



### Just seeing, again, it looks like 13



### it is a perfect line going downhill. And I 14



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



### hot, dry climates, especially if the EERs go 16



### down as SEERs go up. 17



### Thank you. 18



### MR . BROOKMAN: Okay. Thank you. 19



### Final comments on this table? 20



### (No response.) 21



### MR. BROOKMAN: Okay. We're at a 22NEAL R. GROSS

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### break point. And based on the agenda, as 1



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



### And we probably have at least

-- probably 3



### close to another hour to complete this 4



### content. 5



### So I'm going to suggest we take a 6



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



### to do lunch in less than an hour in this 8



### building. So I'd like to

-- 9



### PARTICIPANT: Is it not possible 10



### to wage on John? 11



### MR. BROOKMAN : To what? 12



### PARTICIPANT: To wage John. 13



### MR. BROOKMAN: I think it's 14



### possible if people are up for it. If they 15



### want to keep pressing on, we can keep pressing 16



### on. How many people would like to keep 17



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



### How m any of you will be seriously 19



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



### try it then. Okay? 21



### And if anybody needs a comfort 22NEAL R. GROSS

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### break, you can leave and come back quickly. 1



### Let's press on. 2



### MR. SCOTT: Okay, Mike Scott 3



### again. 4



### Life cycle cost, payback pe riod 5



### analysis. When you get to this stage, having 6



### heard all of the discussion beforehand, you 7



### wonder why am I even here talking about 8



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



### MR. BROOKMAN: Do it quickly. 10



### MR. SCOTT: I will do. 11



### Okay. So what we're going to be 12



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



### discussion methodology. Those of you who have 14



### been involved in more than one rulemaking, 15



### we're doing it basically the same

-- pretty 16



### much the same way we always do. 17



### Life cycle cost equals t he product 18



### installed price, that is including 19



### installation. It includes the annual energy, 20



### maintenance, and repair costs associated with 21



### the equipment. And anything that happens 22NEAL R. GROSS

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### after the first year is discounted to a 1



### particular base year. 2



### The analysis is done from a 3



### consumer perspective, using consumer discount 4



### rates, not federal rates. 5



### It's done with an Excel 6



### spreadsheet. It is implemented in uncertainty 7



### mode using a Monte Carlo implementation tool, 8



### which is a way of saying that we sample from 9



### dist ributions for the values that we do for 10



### any particular run. 11



### We do 10,000 runs through the 12



### spreadsheet and report the summary statistics. 13



### In addition, we do do a simple 14



### payback period, the number of years required 15



### to offset any differences in the produc t 16



### installed price from increases in efficiency 17



### that are gained from changes in the annual 18



### operating costs. 19



### The Monte Carlo analysis, as I 20



### said before, allows DOE to consider end user 21



### variability and variability across regions, 22NEAL R. GROSS

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### and to conduct sensitivity analysis. 1



### Energy use, as you've seen from 2



### the residential analysis in particular, varies 3



### across individuals because we were using the 4



### REXX data. There are variations in 5



### installation repair and installation costs

-- 6



### I'm sorry, repair and maintenance cost s. 7



### We, in these analyses, select 8



### either from the commercial or residential body 9



### of data for individual observations. We 10



### correlate inputs where necessary. For 11



### example, electricity price and sector would 12



### correlate as well as location and electricity 13



### pric e. 14



### The results wind up being 15



### distributions of life cycle cost and payback 16



### period by product class, region, and 17



### efficiency level. 18



### The flowchart that you see in your 19



### packet corresponds to what I just told you. 20



### Factors that vary by region, we've 21



### already talked about this a little bit, 22NEAL R. GROSS

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### markups, especially sales taxes, installation 1



### costs, electricity consumption for cooling and 2



### heating, electricity prices. 3



### The factors that vary over time 4



### include electricity prices and we're talking 5



### about this in real ter ms, that is in constant 6



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



### varying over time, not in real terms anyway. 8



### What factors vary by individual 9



### consumer? Well, the product efficiency will, 10



### particularly in the market baseline 11



### distribution. Dave was sh owing you what those 12



### were in the preliminary analysis, the market 13



### baseline, energy consumption therefore varies. 14



### Product lifetime varies by individual. 15



### Observation, we sample the product 16



### lifetime for any particular observation from a 17



### distribution that a llows for equipment to 18



### progressively fail at longer and longer 19



### lifetime periods. 20



### Discount rates vary by individual. 21



### Those are, again, sampled. And electricity 22NEAL R. GROSS

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### prices observed by an individual vary by 1



### individual. People have different changes of 2



### being located in particular utility service 3



### areas. 4



### The electricity prices, the 5



### residential, in view of the time available, 6



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



### 8 of the technical support document and a copy 8



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



### s ense of the detail that was gone into in 10



### order to basically come up with marginal 11



### prices for electricity at the time the 12



### electricity is saved. 13



### Those are based on electricity 14



### tariffs from 90 utilities across the country. 15



### The difference

-- there is an imp ortant 16



### difference between the residential and the 17



### commercial. For residential, we did not use 18



### time of use tariffs. There are no mandatory 19



### time of use tariffs at the time we did the 20



### analysis at least for residential customers. 21



### That may have changed since . And that may be 22NEAL R. GROSS

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### updated. 1



### The market penetration, at least 2



### in the data we were looking at for residential 3



### customers taking advantage of voluntarily time 4



### of use tariffs was less than one percent of 5



### residential customers, deemed to be small. 6



### And there was no significant 7



### difference on average between the default 8



### price

-- or default marginal tariff and what 9



### you would have gotten had you used time of use 10



### prices at the points of time that the savings 11



### occurred, where the kilowatt hour savings 12



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



### to the document. 14



### Yes, sir? 15



### MR. SACHS: Harvey Sachs, ACEEE. 16



### And I really want to object to 17



### this approach. The Department of Energy, 18



### headquartered in this building, is trying to 19



### steer tens of billions of dollars into t he 20



### Smart Grid. 21



### The mostly likely expression of 22NEAL R. GROSS

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### the Smart Grid for a residential consumer will 1



### be ubiquitous residential tariffs, residential 2



### time of use tariffs. 3



### Mr. Brundadge is shaking his head 4



### affirmatively on that. 5



### For the Department, for this ti me 6



### period, to not at least simulate what that 7



### would look like in terms of costs for 8



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



### EER, you don't care. 10



### But this is just penny wise, pound 11



### foolish. And it is just totally unrealistic 12



### in terms of the directio n of public policy 13



### that is being implemented today over the 14



### period in which this set of standards would be 15



### in force. 16



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



### But it just stuns me. 18



### MR. BROOKMAN: That's okay. 19



### You've been articulate. 20



### Molly? 21



### MS. TROMBLEY

- Mc CANN: For all the 22NEAL R. GROSS

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### reasons that Harvey just cited, I don't think 1



### any of those three bullets will be true in 2



### 2015 when these standards go into effect. I 3



### think time of use tariffs are going to be 4



### present and important in the impact of this 5



### standard. And yo u should analyze it. 6



### MR. BROOKMAN: Thank you. 7



### So the Department would benefit 8



### from your thought processes, your projections 9



### about how this might happen because they are 10



### going to have to rely on something to

-- if 11



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



### rely on something to do that analysis. 13



### Don Brundadge? 14



### MR. BRUNDADGE: The only comment I 15



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



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



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



### And I'm not really cle ar on 19



### whether the reason they're doing this

-- and 20



### you could respond to it

-- is because REXX 21



### doesn't register time of use so you can't use 22NEAL R. GROSS

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### REXX and do time of use with it. Is that why 1



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



### REXX data in this way? 3



### MR. BROOKMAN: Greg? 4



### MR. ROSENQUIST: Greg Rosenquist 5



### from LBNL. 6



### You know we looked at the time of 7



### use tariffs and to see what sort of impact 8



### they would have on electricity prices. And it 9



### does vary widely by region. 10



### On a national average, it doesn 't 11



### change that much compared to the default 12



### tariffs. But, again, places like California, 13



### the time of use tariff is higher. 14



### And in places

-- there's actually 15



### 60 percent of the utilities of the sample that 16



### we had actually offered voluntary time of use 17



### tar iffs. And in many of those regions, the 18



### actual time of use tariff was lower than the 19



### default tariff price. 20



### So we did an analysis to see

-- to 21



### do that comparison and determined based upon 22NEAL R. GROSS

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### that analysis, it was worthwhile at that point 1



### only to proceed wit h the default tariffs. 2



### PARTICIPANT: I think one of my 3



### comments, and I may disagree with my 4



### colleagues on this is given that you are 5



### dealing with REXX, which is backward

- looking 6



### data and a relatively smaller percentage of 7



### customers were on time of use ta riffs at the 8



### time your data was collected, then in that 9



### case, for using this backward

- looking data, 10



### not time of use might be a reasonable 11



### assumption. 12



### But you need to find some way to 13



### adjust it for forward looking. 14



### MR. BROOKMAN: Steve Rosenstock? 15



### MR. ROSENSTOCK: Steve Rosenstock, 16



### EEI. 17



### Just to follow on to Mr. 18



### Brundadge. Again, forward looking for

-- 19



### again, just thinking about the future as more 20



### smart meters get in place, I believe some 21



### estimates say by 2019, there will be at least 22NEAL R. GROSS

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### 58 million elect ric smart meters deployed in 1



### the United States, the analysis is going to be 2



### quite widely variable. 3



### And again, this is looking 4



### forward, the Department is going to have to 5



### realize that there are probably going to be 6



### default rates with varying prices. But also 7



### there could be multiple rates that the 8



### customers can choose from. 9



### Instead of just having a default 10



### rate and a time use rate, there could multiple 11



### choices for those customers depending on their 12



### situation, depending on the type of equipment 13



### they are u sing, depending on how aggressive 14



### they want to be in terms of either demand 15



### response or energy efficiency. 16



### It's probably going to make the 17



### analysis much harder. But, again, going 18



### forward, that is going to be the situation. 19



### And especially with seasonal equipment, that's 20



### going to make things even more interesting. 21



### Thank you. 22NEAL R. GROSS

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### MR. BROOKMAN: Other comments on 1



### these electricity pricing issues? 2



### (No response.) 3



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



### MR. SCOTT: Okay. The good news 5



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



### rates. 7



### (Applause.) 8



### MR. SCOTT: And that included 9



### demand charges, block rates, seasonal rates, 10



### and any mandatory time of use rates where they 11



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



### in there. 13



### All right. I offer this with som e 14



### trepidation. The regional averages of 15



### residential annual average and seasonal 16



### marginal prices, this is intended as an 17



### indicator only because what we're really doing 18



### is in each individual case, in the case of 19



### REXX, or in the case of each individual 20



### build ing, you know, on the commercial side, 21



### we're actually using whatever price applies at 22NEAL R. GROSS

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### the appropriate hour of the year, you know, 1



### given the constraints that we've already 2



### talked about, for energy savings. 3



### So what these really are is the 4



### difference in ene rgy

-- difference in annual 5



### energy bill divided by the difference in 6



### energy savings. 7



### MR. BROOKMAN: Steve Rosenstock? 8



### MR. ROSENSTOCK: Steve Rosenstock, 9



### Edison Electric Institute. 10



### And, again, having not dug through 11



### this part of the technical support document 12



### yet, in terms of some of these

-- again, 13



### because in the previous slide it was talking 14



### about you got data from 90 utilities on their 15



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



### and commercial. 17



### But now with REXX, you had the 18



### 1,854 data points fo r air conditioners and 339 19



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



### to match those 1,854 with the 90 utilities 21



### where you could and the 339 with the 90. And 22NEAL R. GROSS

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### then you came up with these values. 1



### Is that

-- am I correct in that's 2



### how the approach was done? Because then I 3



### have a follow

- up question. 4



### MR. SCOTT: That's roughly it, 5



### yes. 6



### MR. BROOKMAN: Greg Rosenquist. 7



### MR. SCOTT: Yes, mapping the 8



### utilities

-- 9



### MR. ROSENSTOCK: Okay. 10



### MR. SCOTT:

-- to each one of the 11



### REXX households. 12



### MR. ROSENST OCK: So, again

-- and 13



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



### sure why

-- and I'll say especially in July

-- 15



### the marginal prices would be different for air 16



### conditioners and heat pumps since they have 17



### the same operation unless it's just a matter 18



### of the weighting of just the sheer numbers of 19



### air conditioners. There's 1,854

-- 1,800 air 20



### conditioners with 90 utilities versus 339 heat 21



### pumps and 30 utilities. And that's the reason 22NEAL R. GROSS

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### for the difference in these marginal prices? 1



### MR. SCOTT: It's due to the 2



### lo cation of the heat pumps, all right? 3



### MR. ROSENSTOCK: Okay. 4



### MR. SCOTT: So

-- 5



### MR. ROSENSTOCK: Because, again, 6



### when you think about it, the tariff for air 7



### conditioners and heat pumps are not going to 8



### be different in the summertime. So

-- and, 9



### again, this will effect the impact. Now in 10



### some cases, it helps and in other cases it 11



### might hurt. 12



### But, again, looking at the July 13



### marginal price, using the July marginal price 14



### for the air conditioner, July marginal price 15



### for the heat pumps would not be totall y 16



### inaccurate I would say because the tariffs are 17



### going to be the same. 18



### MR. BROOKMAN: Steve Rosenstock 19



### back to Greg. 20



### MR. ROSENSTOCK: Yes, for a 21



### household that's located in the same place 22NEAL R. GROSS

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### with the same utility, right, it's going to 1



### see the same margina l price regardless of 2



### whether it is an air conditioner or a heat 3



### pump. 4



### What you're seeing here are these 5



### weighted average numbers, right, based upon 6



### where those air conditioners and heat pumps 7



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



### with a differen t weighted average price, 9



### again, based upon where those air conditioners 10



### are mostly located and based upon where most 11



### of those heat pumps are located. 12



### So it just so happens for air 13



### conditioners, you know, where they are located 14



### results in a higher weight ed average marginal 15



### price than where the heat pumps are located. 16



### MR. ECKMAN: Right. Because the 17



### heat pumps are in the northern tier and

-- 18



### MR. BROOKMAN: Tom Eckman. 19



### MR. ECKMAN: Tom Eckman

-- the 20



### heat pumps are in the northern tier or in 21



### southeast and the air conditioners, by and 22NEAL R. GROSS

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### large, are in California. 1



### MR. ROSENQUIST: Yes, but Steve is 2



### looking specifically at the hot, dry region, 3



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



### MR. BROOKMAN: Okay. And so that 5



### was Tom and then back to Greg Rosenqu ist. 6



### Tom Eckman? 7



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



### limitation of the REXX data but the deployment 9



### of air conditioning and heat pump as we go 10



### forward in time may or may not match the 11



### current geographical distribution of that 12



### equipment. 13



### And so I don't know how you deal 14



### with it. But clearly looking at some trends 15



### in terms of where the population is employing 16



### those devices rather than just a point in 17



### time, so maybe looking backwards to the prior 18



### REXX to see whether there is a growth in the 19



### application o f those technologies in various 20



### regions to see whether you could adjust on a 21



### going

- forward basis because right now you've 22NEAL R. GROSS

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### got a single point in time estimate of where 1



### heat pumps are being used and where air 2



### conditioning is being used and the rates 3



### associat ed with those. 4



### And I'm not quite certain that 5



### that long

- term trend or that current picture 6



### matches where the long

- term trend of 7



### population growth and system

-- 8



### MR. BROOKMAN: Greg Rosenquist. 9



### MR. ROSENQUIST: Right. For the 10



### purposes of the LCC analy sis, what you are 11



### saying is true. But we tried to capture that 12



### to some extent in the national impact analysis 13



### which will be described later because we're 14



### doing things at the regional level. 15



### MR. ECKMAN: Can you

-- 16



### MR. ROSENQUIST: And so, you know 17



### cons truction starts, for example, and 18



### saturations of equipment in those starts will 19



### change over time based upon the data that we 20



### had. 21



### MR. ECKMAN: Is there any way

-- 22NEAL R. GROSS

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### this is Tom Eckman

-- is there any way to 1



### connect the dots between the NES and the life 2



### cyc le costs so that you get consistent 3



### treatment? 4



### MR. ROSENQUIST: The way the life 5



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



### hypothetical where every single household or 7



### commercial building gets its equipment 8



### replaced in the year that the standard bec omes 9



### effective, which is, you know

-- it gives you 10



### a close approximation of what you might get 11



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



### no. 13



### MR. BROOKMAN: Thanks, Greg. 14



### Andrew deLaski? 15



### MR. deLASKI: This is a follow on 16



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



### not hitting on a point that was already 18



### covered. 19



### But, Greg, I recall from the last 20



### analysis for the 2001 final rule that the 21



### Department found on that docket that marginal 22NEAL R. GROSS

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### prices were lower than average prices. And 1



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



### large marginal prices are now higher than 3



### average prices at least for the national as a 4



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



### expect given the trans

- electricity pricing. 6



### But I'm still curious about what's 7



### happening, for example, in the hot, humid 8



### region where we see marginal prices lower than 9



### average prices. What's driving that? 10



### MR. BROOKMAN: Greg Rosenquist? 11



### MR. ROSENQUIST: Yes, hi. Some of 12



### those tariffs still have declining block 13



### rates. That was certainly the c ase ten years 14



### ago. I think that trend is reversing itself. 15



### Maybe Don or this other company can add to 16



### that. 17



### But that's mostly the case there 18



### that as you use more energy, you are actually 19



### charged less. 20



### MR. deLASKI: For residential. 21



### MR. ROSENQUIST: For residential. 22NEAL R. GROSS

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### MR. BRUNDADGE: Don Brundadge. 1



### That

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



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



### prices for higher energy use in the summer and 4



### lower prices for higher energy use in the 5



### winter. 6



### One of the maj or differences 7



### between hot, humid and some of the other 8



### regions is many of our areas have nine or ten 9



### months of the year significant air 10



### conditioning usage. So you do have 11



### significant air conditioning usage during off 12



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



### marginal less than average issue. 14



### In a place like Florida, you are 15



### going to have over half the air conditioning 16



### energy use is going to be not in the summer 17



### season. 18



### MR. BROOKMAN: Okay. So let's 19



### keep moving on. 20



### Final comments or questions w ith 21



### respect to average and seasonal marginal 22NEAL R. GROSS

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### prices before we keep going. 1



### (No response.) 2



### MR. SCOTT: Okay. All right. The 3



### equivalent chart here for commercial is a 4



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



### census division basis. 6



### And the other thing that we've 7



### done here is rather than look at a single 8



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



### energy consumption varying by SEER level. And 10



### so we also have the effective marginal price 11



### varying by SEER level as well as location. 12



### There is a scaling fac tor reported 13



### in the right

- hand side of the column. It was 14



### deemed that because we had a relatively small 15



### number of commercial customers as opposed to 16



### residential customers, the

-- correct me if 17



### I'm wrong here, Greg

-- the effort in updated 18



### the commercial p rices for the number of 19



### utilities and the number of tariffs concerned 20



### made it sort of unworkable to update 21



### everything from 2004 to 2008 dollars directly. 22NEAL R. GROSS

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### So what we did was we applied a 1



### correction factor to the 2004 prices in order 2



### to have appropriate pr ices, correct? 3



### MR. BROOKMAN: He's nodding. 4



### Andrew? 5



### MR. deLASKI: Mike, can you 6



### explain why prices vary by SEER? 7



### MR. SCOTT: Not as well as Dave 8



### can. 9



### MR. BROOKMAN: Dave Winiarski? 10



### Find a microphone, Dave. Dave Winiarski. 11



### MR. WINIARSKI: Yes, I can try to 12



### explain that. 13



### Essentially the simulation model 14



### made certain assumptions for what was assumed 15



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



### tech. And so basically what we actually 17



### recorded out of the simulations were the 18



### hourly loads. 19



### Those were converted into annual 20



### bills, taking into account all of the 21



### different tariff structures that were used. 22NEAL R. GROSS

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### Then when the effective marginal 1



### prices here are effectively dividing the 2



### annual bill by the energy savings to come up 3



### with an effective marginal price, and 4



### depending on whether you achieve that by 5



### improving, for instance, a higher EER 6



### effecting maybe the peaks a little bit or 7



### whether the major gain in efficiency was due 8



### to fan changes, that reflects itself in slight 9



### variations in the marginal pric ing. 10



### MR. BROOKMAN: Doug? 11



### PARTICIPANT: (Inaudible.) 12



### MR. WINIARSKI: Yes. Within a 13



### given census division within those 14



### observations, I think, and between 14 and like 15



### 19, you see a couple big drops. 16



### PARTICIPANT: The disconnect of 17



### what you said is t hat this is connecting back 18



### to your assumption, for example, about what 19



### the EER is for a given region. 20



### MR. WINIARSKI: Exactly. And the 21



### actual commercial modeling assumptions. 22NEAL R. GROSS

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### PARTICIPANT: Then your 1



### relationship (inaudible) 2



### MR. WINIARSKI: It's act ually not 3



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



### it's that curve. 5



### MR. BROOKMAN: Tom Eckman and then 6



### to Steve. 7



### MR. ECKMAN: That was my point. I 8



### think that we have the same concern that 9



### Harvey and others raised about the linearity 10



### or the high corr elation

-- I won't call it 11



### linear

-- but the high correlation between 12



### improving SEER and EER. 13



### And the fact that it may or may 14



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



### to be in practice what the consumer sees 16



### because they don't get the EER benefit th at is 17



### being forecast here. 18



### MR. BROOKMAN: Steve Rosenstock? 19



### MR. ROSENSTOCK: Steve Rosenstock, 20



### Edison Electric Institute. 21



### In terms of some of the numbers, 22NEAL R. GROSS

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### were you using some of the SEBX (phonetic) 1



### data for

-- as a starting point for some of 2



### these

-- for some of the costs? 3



### I know you were using utility 4



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



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



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



### the actual cooling costs? 8



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



### compared any of these back to the SEBX for any 10



### given region. You could look at it

-- you'd 11



### have to look at the actual whole building 12



### energy use and SEBX doesn't record it 13



### marginally. 14



### MR. ROSENSTOCK: Okay. And the 15



### second thing I want to say

-- and I said this 16



### ten years ago

-- the approach, the annual bill 17



### savings divided by the energy savings to get 18



### the marginal costs for commercial customers is 19



### not really appropriate for the fact of, you 20



### know, demand charges for commercial customers 21



### can be ten, to 30, to 40 percent of their 22NEAL R. GROSS

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### bill. 1



### And with SEER EER curve, if EERs 2



### go down, that means the peak demands are 3



### actually going to go up. That means that your 4



### bill savings are going to be a lot less than 5



### what you are probably projecting in the 6



### simulation. 7



### I'm not sure exactly how it 8



### effects your marginal prices but it would be a 9



### very significant impact on the life cycle cost 10



### analysis and on these marginal prices. 11



### I guess I am a little baffled, 12



### again, that

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



### model

-- that all the ma rginal prices go up as 14



### you go to SEER 19 because I would guess with 15



### the curve that we've seen, it would always

-- 16



### I would assume the marginal prices would go 17



### down. 18



### I'm surprised there is that kind 19



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



### data and ev erything. And I also, you know, 21



### especially when you say something like 32 22NEAL R. GROSS

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### cents per kilowatt hour, in census division 1



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



### know prices are high in New England. 3



### But, again, it is a matter of you 4



### are mixing and matc hing energy and demand and 5



### you are getting a number that is not really 6



### reflective of what the customer is really 7



### seeing or paying. 8



### MR. BROOKMAN: Dave Winiarski, 9



### please let's everybody say your name before 10



### you speak. 11



### MR. WINIARSKI: Yes, Dave 12



### Winiarski

. 13



### And, again, in responding to that, 14



### these are effective or back

- calculated 15



### marginal prices. They are actually not used 16



### in the analysis. 17



### The analysis relies on the actual 18



### energy bills' savings going between levels for 19



### the building. So to the extent that you can 20



### compare these marginal prices with say the 21



### last block on the tariff, it's not the same 22NEAL R. GROSS

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### thing. 1



### MR. ROSENSTOCK: That does help. 2



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



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



### used in terms of some of the analysis. That 5



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



### But, again, the way it is 7



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



### you are using in terms of how you are 9



### calculating the savings and eventually going 10



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



### presentation. 12



### MR. BROOKMAN: Harvey Sachs. 13



### Let's leave that microphone turned on. Harvey 14



### Sachs? 15



### MR. SACHS: This one or that one? 16



### MR. BROOKMAN: Both of them. 17



### MR. SACHS: Harvey Sachs, ACEEE. 18



### I'm very impressed with the 19



### sophisticatio n of this analysis for the 20



### relatively small number of commercial 21



### buildings in the analysis. 22NEAL R. GROSS

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### On the other hand

-- and the 1



### scaling factor seems to be a reasonable 2



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



### sure would like to get

-- a physical 4



### explanatio n would help me understand why in 5



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



### at all but a minimum at SEER 16 with higher 7



### reported marginal prices at both SEER 14 and 8



### SEER 19. 9



### And that seems to be true for both 10



### heat pumps and central air conditioners. I'm 11



### just not getting it. 12



### MR. BROOKMAN: Dave Winiarski. 13



### MR. WINIARSKI: Yes, I think 14



### actually a large portion of that goes back to 15



### those assumptions built into actually how you 16



### model the equipment. 17



### In general, between 13 and 14, the 18



### savings come fro m improving the condenser 19



### performance because we held the fan power 20



### assumption constant. 21



### As you move between 14 and 16, you 22NEAL R. GROSS

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### are moving to get to those higher SEER values 1



### by improving the fan efficiency, going to an 2



### ECM motor, which has an impact on energ y 3



### savings throughout the year because the fan is 4



### running all the time in a commercial building. 5



### But actually it doesn't have that big impact 6



### on the peak monthly demand. 7



### MR. SACHS: Wait a minute, Dave. 8



### This is Harvey Sachs again. 9



### You just said someth ing really 10



### important. You said the fan is running all 11



### the time. 12



### But this is residential equipment 13



### used commercially. This is not commercial 14



### equipment equipped potentially with 15



### ventilation capabilities and economizers. 16



### MR. WINIARSKI: That is true. I t 17



### is running to provide circulation air in the 18



### building. 19



### MR. SACHS: I do not believe that 20



### that

-- I think we need some empirical data to 21



### show that that's the predominant mode of 22NEAL R. GROSS

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### operation in these very small commercial 1



### buildings that are running residen tial 2



### equipment. 3



### Thank you. 4



### MR. BROOKMAN: Thank you. 5



### Final comments on this segment? 6



### (No response.) 7



### MR. BROOKMAN: Let's keep going. 8



### MR. SCOTT: Okay. Price 9



### escalation is, as in previous rulemakings, is 10



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



### and reference cases. The information is also 12



### in the chapter. 13



### The

-- it's actually not 14



### displaying very well on the screen. I just 15



### noticed that. 16



### In any event, we have a 17



### significant amount of spread between the 18



### cases. And we will update this for annual 19



### energy outlook 2010 at the NOPR stage. 20



### Repair, maintenance, and 21



### installation costs, major repairs, we based 22NEAL R. GROSS

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### that on a base system compressor replacement. 1



### We found data in a series of websites, 2



### primarily in the literature showing a range of 3



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



### base system compressor replacement. 5



### We assumed that the probability of 6



### replacing the compressor sometime during the 7



### lifetime of the overall system would be 0.5. 8



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



### on av erage, once. 10



### We increased the cost of the 11



### compressor replacement with the index of the 12



### product price, that is with the efficiency 13



### level. 14



### We varied it regionally. And we 15



### annualized it so that we basically had an 16



### annualized average repair cost that we c ould 17



### apply. 18



### Annual maintenance costs, we found 19



### numbers up to 120 dollars for a full

- service 20



### contract on a residential system. We needed a 21



### lower bound. We put in an assumed value of 20 22NEAL R. GROSS

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### dollars. This also

-- all of this also 1



### increased with product price or efficiency 2



### level and varied regionally. 3



### And finally, we were cognizant of 4



### the fact that installation costs likely varied 5



### between product class so we had those from 6



### RSMeans (phonetic) database. And we also were 7



### able to vary it regionally based on RSM eans, 8



### primarily because labor costs varied by 9



### region. 10



### We did do a bit of reality check 11



### here, a small amount of verification about 12



### whether installation costs would vary with 13



### efficiency level. And our contacts said that 14



### except for perhaps very high effici ency units, 15



### they did not. 16



### So, we're seeking additional data 17



### on maintenance installation repair costs. 18



### It's pretty sketchy at the moment. 19



### And we would like to know how they 20



### might vary with the efficiency level. And we 21



### also are seeking comments on any additional 22NEAL R. GROSS

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### sources that could be considered for those 1



### costs. 2



### MR. BROOKMAN: John Mandyck? 3



### MR. MANDYCK: John Mandyck with 4



### Carrier. 5



### On your last point on installation 6



### costs by efficiency level, I think you need to 7



### dig further into that from a size per spective 8



### because if you start to move from a one

- man to 9



### a two

- man job simply because of the size of 10



### the unit to move it and to physically adapt to 11



### it, obviously that will impact installation 12



### costs. 13



### MR. BROOKMAN: Thank you. 14



### Tom Eckman? 15



### MR. ECKMAN: T om Eckman. 16



### This is a question for Greg, I 17



### think, perhaps. 18



### In the life cycle cost analysis, 19



### since it is a Monte Carlo simulation, is there 20



### a correlation between the probability of 21



### expending money for replacement during the 22NEAL R. GROSS

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### life cycle and the annual main tenance contract 1



### cost? 2



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



### one in there right now. 4



### MR. ECKMAN: Well, it seems to me 5



### if you've got an annual maintenance contract 6



### cost running 120 dollars, your unit better not 7



### fail. 8



### MR. BROOKMAN: Okay. Thank you. 9



### H arvey Sacks? 10



### MR. ECKMAN: I think there is a 11



### correlation. 12



### MR. SACHS: I apologize for having 13



### missed on slide 64, the electricity price. My 14



### memory is that EIA has been pretty effective 15



### at looking at carbon containment cost impacts 16



### and strategies. Agai n, it has been a DOE 17



### policy issue. 18



### And the question is that these are 19



### low growth reference and high growth but they 20



### don't seem to have any policy scenarios that 21



### would impact electricity prices in the out 22NEAL R. GROSS

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### years when this has been part of national 1



### policy d iscussions. 2



### PARTICIPANT: Maybe I can ask our 3



### EIA representative if he's still here as to 4



### what carbon

-- carbon containment, is that 5



### what you asked about? Or other major 6



### policies? 7



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



### one that was here earlier. 9



### MR. SACH S: Well, again, the 10



### question is not to EIA but it is to the 11



### Department in terms of whether these analyses 12



### include policy cases that reflect active 13



### legislative consideration and active policy 14



### activities. Not that these would drive but 15



### these are alternativ es that help bound the 16



### reality. 17



### MR. BROOKMAN: Thank you. 18



### Get close. 19



### MS. KOHL: This is Betsy Kohl from 20



### DOE. 21



### When you are talking about 22NEAL R. GROSS

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### legislative initiatives, are you talking about 1



### proposed

-- I mean we don't really consider

-- 2



### we don't consider proposed legislation draft 3



### legislation in our analyses because it is 4



### speculative whether or in what form it would 5



### be passed. 6



### MR. BROOKMAN: Harvey Sachs. 7



### MR. SACHS: Thank you, Betsy. 8



### This is Harvey Sachs. And I very much 9



### appreciate that. 10



### But if I' m considering electricity 11



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



### that EIA did consider some scenarios for 13



### future electricity prices

-- 14



### MR. ROSENQUIST: Not in their 15



### reference case of low and high growth case. 16



### MR. SACHS: But in a policy case, 17



### didn' t they? 18



### MR. ROSENQUIST: Well, they've 19



### analyzed, you know

-- 20



### MR. BROOKMAN: That's Greg 21



### Rosenquist speaking. 22NEAL R. GROSS

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### MR. ROSENQUIST: I'm sorry. This 1



### is Greg Rosenquist from LBNL. 2



### They have analyzed like, for 3



### example, Liebman and Warner (phonetic) in the 4



### past. And they did try to get after the 5



### effect of carbon legislation on electricity 6



### prices. 7



### MR. SACHS: So this would seem to 8



### be a boundary value on the Department's 9



### analyses. It is a policy scenario. 10



### But to exclude it as a forcing 11



### factor on possible excursions of electricity 12



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



### good about detail but occasionally missing 14



### some very large influences that have some 15



### probability of having effect. 16



### MR. BROOKMAN: Don Brundadge. 17



### MR. BRUNDADGE: I'm very familiar 18



### wi th annual energy outlook assumptions. And 19



### there are a bunch of issues like that. But 20



### they are consistent. 21



### If it hasn't been issued into law 22NEAL R. GROSS

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### and it hasn't been issued as a final rule by 1



### DOE, it is not counted, which implicitly 2



### assumes no new efficiency standards to be 3



### issued from now until the end of time and no 4



### carbon legislation. That's a baseline to 5



### operate off of. 6



### But at the same time, you're not 7



### going to see the efficiency effects of lower 8



### growth from efficiency standards. There are a 9



### lot of oth er effects in here. 10



### And I don't know if we need to 11



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



### it is. 13



### MR. BROOKMAN: I'm eager to move 14



### back to repair maintenance installation costs 15



### on slide 65. 16



### Steve Rosenstock? 17



### MR. ROSENSTOCK: Yes, actually 18



### sli de 65

-- and slide actually 66, I was going 19



### to go ahead for you actually to Item 5. 20



### MR. BROOKMAN: Keep going. 21



### MR. ROSENSTOCK: Because it was 22NEAL R. GROSS

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### asking about comments on impact of increased 1



### efficiency standards on end user decisions 2



### about whether to repl ace existing installed 3



### units. 4



### I do know looking up numbers is 5



### that I know especially in the area of heat 6



### pumps, a shipment is according to AHRI and 7



### Appliance Magazine, have dropped every year 8



### since 2005

-- 2.13 million in 2005 down to 9



### 1.642 million in 20 09, again based on industry 10



### data. 11



### And I wanted to take the year

-- 12



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



### data before the big recession, okay, so how 14



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



### was consumer choice? 16



### I'm not sure. But when you see 17



### that specific trend over five years, including 18



### times of good economic times and not so good 19



### economic times, it might be that a certain 20



### percentage of consumers are deciding to repair 21



### and replace longer

-- repair rather than 22NEAL R. GROSS

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### replace. 1



### So yes, repair co sts might go up. 2



### But consumers are choosing that over higher 3



### initial costs of a new unit. 4



### MR. BROOKMAN: Don Brundadge. 5



### MR. BRUNDADGE: I think those are 6



### valid considerations. But I think there is an 7



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



### more important than that. And that's that 9



### your installed base of air conditioning and 10



### heat pump equipment is almost entirely R22 11



### equipment. 12



### And with the phase out of R22, 13



### there will be a limited amount available for 14



### serving between now and 2020. There will be 15



### no new virgin stocks available for servicing 16



### after 2020. And it really desperately needs a 17



### separate study of the impact on that because 18



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



### significantly faster replacement based on the 20



### equipment. 21



### I'm not sure EPA has really come 22NEAL R. GROSS

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### out with all the regulations yet on how they 1



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



### not sure you can even do a major replacement 3



### under their new rule and stick R22 into a 4



### compressor that is made after 2010. 5



### MR. BROOKMAN: Okay. 6



### MR. BRUNDADGE: It needs to

-- it 7



### really

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



### talking about today are sort of nitpicking. 9



### This is huge. And it really needs a separate 10



### study because I think you are going to see 11



### much faster replacement of the R22 units. 12



### MR. BROOKMAN: You're next. 13



### Please say your name. 14



### MR. BEATTEN: Warren Beatten 15



### (phonetic) with Emerson. 16



### Just two comments or questions. 17



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



### trying to validate your numbers here. They 19



### look about right. But I t hink another 20



### consideration ought to be that if the 21



### percentage of modulated equipment increases, 22NEAL R. GROSS

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### which it will, to a higher efficiency 1



### standard, the repairs will be more complicated 2



### and more expensive. 3



### So that is a

-- we'll try to 4



### provide some input on th at. But that's a 5



### factor. 6



### MR. BROOKMAN: You started off by 7



### saying you think these numbers

-- you're 8



### trying to validate these numbers. 9



### MR. BEATTEN: I'm trying to 10



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



### also expect that number to grow. 12



### MR. BROO KMAN: Okay. How much? 13



### MR. BEATTEN: We'll have to get 14



### back to you. 15



### MR. BROOKMAN: Okay. 16



### MR. BEATTEN: The other question 17



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



### in the prior efficiency analysis several years 19



### ago, there was attention not paid t o the 20



### refrigerant issue. 21



### I'm assuming that DOE has elected 22NEAL R. GROSS

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### not to look at any scenarios where 410A would 1



### be phased out and some other alternatives 2



### would be phased in in the time period due to 3



### Cap and Trade or legislation. Is that 4



### correct? 5



### MR. BROOKMAN : Matt? 6



### MR. MILLARD: Yes, this is Matt 7



### Millard with Navigant Consulting. 8



### We have considered looking at 9



### that. But the response that we received from 10



### industry

-- we considered looking at it as a 11



### sensitivity but the response that we received 12



### from indus try is that they don't really know 13



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



### difficult for us to assess those impacts 15



### without really knowing the path forward. 16



### PARTICIPANT: Nor do they describe 17



### the phase out. 18



### PARTICIPANT: Excuse me? 19



### MR. MILLARD: Y es, well the phase 20



### out, yes. 21



### MR. BROOKMAN: Okay. 22NEAL R. GROSS

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### Harvey Sachs? 1



### MR. SACHS: Harvey Sachs, ACEEE. 2



### Very quickly, I think what you're 3



### hearing in a number of respects here is a 4



### critique that the Department is doing lots and 5



### lots of very detailed analys es with 6



### continuously variable things like the LCC. 7



### And what we're not seeing is the 8



### potential that would be revealed in some 9



### scenario analysis. We're not seeing that 10



### perhaps lower probability, perhaps not, 11



### impacts the very large discontinuities like 12



### the refrigerant phase out, like the potential 13



### of a carbon price that would be enormously 14



### important to the policymakers who have to make 15



### these decisions. 16



### And I think that is a critique 17



### that effects a lot of these analyses. 18



### MR. BROOKMAN: John Mandyck? 19



### MR . MANDYCK: Well, back on the 20



### refrigerant issues. This is John Mandyck from 21



### Carrier. 22NEAL R. GROSS

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### It is possible to model the 1



### legislation that exists today. So you can 2



### take Waxman Markey (phonetic), understand 3



### where the reduction curve is, and understand 4



### that there will be shortage of refrigerant at 5



### the time that these standards go into effect, 6



### which actually require more refrigerant to be 7



### used. 8



### Higher SEER equipment is larger 9



### equipment with larger coils that requires more 10



### refrigerant charge. And so you have an 11



### i ntersection that is occurring here with 12



### public policies where you have climate 13



### policies that are going to restrict the use of 14



### HFCs and efficiency policies that are going to 15



### demand the greater use of HFCs at the same 16



### time. 17



### And it is critical in this 18



### analy sis, assuming the Department dispenses 19



### with the consensus agreement, that you 20



### understand the impact on cost of refrigerant 21



### because it is definitely related to this 22NEAL R. GROSS

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### rulemaking. 1



### MR. BROOKMAN: Okay. Thank you. 2



### We've now heard that several times. 3



### MR. BE ATTEN: Just a quick follow 4



### up. Not only that

-- 5



### MR. BROOKMAN: Say your name 6



### again. 7



### MR. BEATTEN: Warren Beatten with 8



### Emerson. 9



### The cost of those many additional 10



### pounds of refrigerant could be much, much 11



### higher than what is paid today. So there is 12



### going to be a leveraged effect potentially 13



### from Cap and Trade and higher efficiency 14



### standards and costs. 15



### MR. BROOKMAN: I hope the comments 16



### will be novel now, Don. 17



### MR. BRUNDADGE: One additional 18



### follow up on that. Even if you proceed to 19



### accept the con sensus agreement, you really 20



### need to do the study on R22 and accelerated 21



### phase out because that will hugely impact your 22NEAL R. GROSS

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### quads of energy savings if you have shorter 1



### lifetime for that existing equipment and it 2



### gets replaced faster. 3



### Thank you. 4



### MR. BROOKMA N: Thank you. 5



### On to discount rates. 6



### MR. SCOTT: Okay. Discount rates, 7



### the residential rates used again come from a 8



### distribution, the real rates. That is 9



### inflation adjusted rates, based on borrowing 10



### costs and opportunity costs for household 11



### investmen ts. 12



### There are a number of instruments 13



### ranging all the way from credit cards to 14



### potentially sales of parts of one's assets in 15



### order to replace existing units. Typically 16



### with a new construction situation, we would 17



### expect the equipment to be included in th e 18



### mortgage value of the house. And, therefore, 19



### it would be subject to the mortgage, average 20



### mortgage interest rate. 21



### The averages for those two 22NEAL R. GROSS

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### distributions are shown there on the slide, 1



### 4.8 percent as a mix of things for existing 2



### homeowners and three p ercent average when 3



### included in the mortgage. 4



### For commercial entities, the real 5



### rates, we based it on a weighted average cost 6



### of capital reported for 1,700 companies in the 7



### U.S. Those rates are

-- it's quite a broad 8



### distribution as you might expect. 9



### A nd the average real rate is shown 10



### on the screen at 5.66 percent average. I 11



### believe that was the beginning of last year. 12



### So those are the

-- that's what 13



### used for discount rates. 14



### For lifetimes, there was some 15



### fairly detailed analysis done of manufacturi ng 16



### shipments data that we received matched to the 17



### American Housing Survey stock data over time. 18



### And then finally matched against responses on 19



### the Residential Energy Consumption Survey on 20



### the age of the household's central air 21



### conditioner. 22NEAL R. GROSS

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### MR. BROOKMAN: Steve Rosenstock? 1



### MR. ROSENSTOCK: Sorry, going back 2



### to slide 67 on the discount rates. 3



### MR. SCOTT: Sure. 4



### MR. ROSENSTOCK: Especially on the 5



### residential side it says based on borrowing 6



### costs and opportunity costs for household 7



### investments. 8



### MR. SCO TT: Right. 9



### MR. ROSENSTOCK: On the new

-- I 10



### can

-- you're basically

-- for a homeowner, if 11



### you are assuming inflation is three percent, 12



### that the average

-- it's really about 7.8 13



### percent is either the borrowing costs or 14



### opportunity cost in terms of some of these 15



### decisions. 16



### And, again, we've had these 17



### discussions many times. And that just seems 18



### to be on the low side, especially in these 19



### days of much tighter credits. 20



### And especially there is such a

-- 21



### if you have a great credit rating, yes, you 22NEAL R. GROSS

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### might ge t certain low borrowing costs. But if 1



### your credit rating is less than perfect or 2



### stellar, your borrowing costs up quite 3



### dramatically, well above these numbers. 4



### MR. BROOKMAN: John Mandyck. 5



### MR. MANDYCK: John Mandyck from 6



### Carrier. 7



### The question is is the 4.8 percent 8



### for existing homeowners based on like a home 9



### improvement loan? 10



### MR. SCOTT: No completely. Go 11



### ahead, Greg. 12



### MR. ROSENQUIST: Greg Rosenquist. 13



### Portfolio. It's based upon data from Bureau 14



### of Economic Analysis Survey of Consumer 15



### Finances. So it is many, many respondents or 16



### many, many survey records that show basically 17



### what homeowners are doing in terms of 18



### borrowing money or saving money. 19



### So this analysis reflects the fact 20



### that some homeowners are using credit cards or 21



### using home equity lines of credit or are 22NEAL R. GROSS

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### taking money out of savings or bonds or mutual 1



### funds. So that's what this 4.8 percent 2



### represents. It's the weighted average of all 3



### that mix. 4



### MR. MANDYCK: Then I guess I would 5



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



### very low as well because if you think about it 7



### in this market, three

- quarters of the sales 8



### are for replacement applications, many of 9



### those of which are unplanned. 10



### And so if a consumer is going to 11



### finance that, I question whether they have the 12



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



### application or credit extension. 14



### I believe the more common way that 15



### this would be financed is under a credit card, 16



### which is going to have a much higher cost of 17



### borrowing than this. 18



### MR. BROOKMAN: Okay. Thank you. 19



### So then let's proc eed. 20



### MR. SCOTT: Okay. I was in the 21



### middle of talking about the lifetime of the 22NEAL R. GROSS

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### equipment. We've taken these three sets of 1



### data and matched them in order to pick up

-- 2



### to essentially fix survival functions, both on 3



### air conditioners and heat pumps, and the 4



### weighted average or the average lifetime of an 5



### air conditioner doing that was 19.01, 19 6



### years. And for a heat pump, something 7



### slightly less, about 16.2 years say. And 8



### that's what was used in the analysis. 9



### The details, again, are available 10



### in the te chnical support document. 11



### Do you have questions on that? 12



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



### MR. BROOKMAN: Let's roll on to 14



### the next one. 15



### MR. SACHS: Yes, a very quick 16



### comment. Harvey Sachs, referencing slide 68. 17



### Again, I think this is a perfectly 18



### reasonable pair of survival curves under a 19



### business as usual model. But we have to think 20



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



### about the effects of the R22 phase out. 22NEAL R. GROSS

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### MR. BROOKMAN: Right. Okay. I 1



### think the Department heard that. It's a 2



### question of what they can do. 3



### Life cycle costs and payback 4



### period. 5



### PARTICIPANT: (Inaudible.) 6



### MR. BROOKMAN: Okay

-- whichever 7



### one

-- which one would be best. 8



### MR. SCOTT: Actually I'm having a 9



### sidebar discussion here with Doug. What you 10



### se e on the screen here is the preliminary 11



### results for the life cycle costs and payback 12



### period. 13



### This is for the geography that we 14



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



### effect, our numbers against the geography used 16



### in the consensus agreement. So if yo u'd 17



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



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



### time and your interest. 20



### MR. BROOKMAN: Are there 21



### significant differences? 22NEAL R. GROSS

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### MR. SCOTT: No. 1



### MR. BROOKMAN: Then let's look at 2



### the consensus. 3



### MR. WES ANDERSON: This is Wes 4



### Anderson with Department of Energy. 5



### Given that the consensus agreement 6



### has not been accepted by DOE

-- we have 7



### received it but we have not made a decision on 8



### it so I think we need to stick with the

-- 9



### MR. SCOTT: Okay. 10



### MR. WES ANDERSON:

-- current 11



### analysis as we have it presented. 12



### MR. BROOKMAN: So we're sticking 13



### with 69. 14



### PARTICIPANT: All right. 15



### MR. BROOKMAN: And you can see it 16



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



### Mike. 18



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



### characterize what they're seeing here. And 20



### then I'll depart from the stage. 21



### Okay. So what we have here is

-- 22NEAL R. GROSS

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### as you might imagine, we've got life cycle 1



### cost savings associated with every level for 2



### every location for each product class. And we 3



### tried to come up with a w ay to summarize that. 4



### And so what we've hit on here is 5



### the

-- we're reporting the highest SEER and 6



### corresponding HSPF for which the mean LCC 7



### savings were positive if you replace the 8



### market base air conditioners or market base 9



### heat pumps with the one at t his level. 10



### And we're also showing the 11



### corresponding median payback in years. 12



### So, for example, with the national 13



### standard, that is not a regional standard, the 14



### highest split system AIR CONDITION coil only 15



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



### highe st efficiency for which the LCC was 17



### positive. 18



### For the hot, humid area, it was 19



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



### country, 13, if you had regional standards. 21



### So that's the way to read that. 22NEAL R. GROSS

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### MR. BROOKMAN: Mike, let's receive 1



### comments on this. 2



### Steve Rosenstock? 3



### MR. ROSENSTOCK: Steve Rosenstock, 4



### Edison Electric Institute. 5



### Again, this is

-- it is a very 6



### informative table. But one thing that, again, 7



### would be kind of

-- it would be interesting 8



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



### in th e technical support document, is the 10



### values where the life cycle cost savings are 11



### maximized. 12



### You know this says where they're 13



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



### two dollars or something. And that could be 15



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



### know, at least a little bit of positive for 17



### these classes. 18



### But it is also of more interest to 19



### see where the maximum values are and the 20



### corresponding mean payback. Again, but this 21



### is still very instructive and very informative 22NEAL R. GROSS

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### in terms of how the num bers

-- 1



### MR. BROOKMAN: Yes, Harvey Sachs. 2



### MR. SACHS: Harvey Sachs. 3



### Again, the qualification that 4



### slide 69 is still based on the fundamental 5



### Wasman Brandemule EER versus SEER assumptions 6



### of slide 50. 7



### MR. SCOTT: Yes. 8



### MR. SACHS: So it's jus t as good. 9



### MR. SCOTT: Just as good. 10



### MR. SACHS: Thank you. 11



### MR. SCOTT: By the way, if you 12



### want the detail on all the LCC analyses, those 13



### are in the technical support document so you 14



### can look at which one had the maximum in each 15



### case. 16



### MR. BROOKMAN: Jeff? 17



### PARTICIPANT: And you explain the 18



### significant difference between the split 19



### system heat pump and everything else? And 20



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



### HSPF nationally? 22NEAL R. GROSS

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### MR. SCOTT: Why it shows up the 1



### way it does? 2



### PARTICIPANT: Yes. Why is it, you 3



### know, an order of magnitude different than 4



### everything else. 5



### MR. SCOTT: Well, it is the 6



### consequence of where those heat pumps were 7



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



### had a discussion about that last night. He 9



### had looked at it in a little more detail than 10



### I did for that piece of it. 11



### MR. BROOKMAN: Let's hear from 12



### Dave. 13



### MR. WINIARSKI: Yes, so the 14



### question, I guess, is why the split system 15



### heat pumps look like they are significantly 16



### more cost effective at these high efficienc y 17



### levels. 18



### There's really two reasons. The 19



### first one is in the analysis of the heat pumps 20



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



### assumes that you are replacing the indoor 22NEAL R. GROSS

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### handling unit at the same time you are 1



### replacing the condensing unit. So yo u get 2



### some of those benefits. 3



### So it looks like the split system 4



### AIR CONDITION blower coil curve in terms of 5



### what is actually being replaced in the 6



### analysis. 7



### And then, of course, you are 8



### getting the benefits for the improvements on 9



### the heating side. An d to the effect that that 10



### saves energy that is above and beyond what the 11



### AIR CONDITION saves. 12



### MR. BROOKMAN: Jim? 13



### MR. BRESHAW: Jim Breshaw. 14



### It looks like you are saying to 15



### get a 10.3, you have to have a 19.5. And

-- 16



### it looks like HSPF improvements are driving a 17



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



### have a 19.5 to get a 10.3 necessarily. That 19



### need to be divided out some way or another. 20



### MR. BROOKMAN: Dave Winiarski? 21



### MR. WINIARSKI: Yes. That has to 22NEAL R. GROSS

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### do with the engineering curves that are 1



### g enerated where the SEER values from those 2



### engineering curves are correlated with the 3



### HSPF values that are typical for that product. 4



### So you are absolutely right. They 5



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



### could have a variation in the HSPF. 7



### The o ther aspect that I want to 8



### bring up real quickly is when you look at the 9



### distribution of the REXX observations, you'll 10



### find that

-- I'll get the numbers approximate 11



### here

-- that the

-- I think 50 percent of the 12



### air conditioners are installed in the norther n 13



### part of that U.S. map. 14



### With heat pumps, I think it is 15



### closer to about 38 percent. So when you look 16



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



### to be clustered more in the southern region. 18



### And that effects what is cost effective 19



### nationally. 20



### MR. BR OOKMAN: Let's keep going 21



### folks. We've moving on to shipments analysis 22NEAL R. GROSS

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### and national impact analysis with Greg 1



### Rosenquist. 2



### MR. ROSENQUIST: Yes

-- 3



### MR. WES ANDERSON: This is Wes, 4



### DOE. 5



### Just before we left that chart, we 6



### have the consensus agreement an alysis included 7



### in the background information. So if you want 8



### to see it, you can look at it. 9



### MR. BROOKMAN: In the backup 10



### slides. 11



### MR. WES ANDERSON: In the backup 12



### slides. 13



### MR. BROOKMAN: Yes. Thank you, 14



### Wes. 15



### Okay, Greg. 16



### MR. ROSENQUIST: Okay. T hanks. 17



### Again, I'm Gregory Rosenquist from Lawrence 18



### Berkeley National Laboratory. 19



### I'll be carrying you through the 20



### next two steps of the analyses that were 21



### conducted for the preliminary analysis 22NEAL R. GROSS

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### rulemaking stage. That's the shipments 1



### analysis and the na tional impact analysis. 2



### First, discussing the shipments 3



### analysis, it's purpose is to estimate central 4



### air conditioner and heat pumps shipments under 5



### the base case

-- that's the case without 6



### standards

-- in each of the standards cases 7



### that were considered

. 8



### The method relies on developing a 9



### shipments model that uses an accounting 10



### methodology to track the shipments of central 11



### air conditioners in the heat pumps and the 12



### residential commercial building sectors. 13



### The total product stock is 14



### desegrated accordin g to product class and 15



### you've seen the product classes described 16



### earlier in this presentation. Just want to 17



### emphasize that split system central air 18



### conditioners were divided into blower coil 19



### units and coil only units. 20



### This is disaggregated according to 21



### market sector, whether it is residential 22NEAL R. GROSS

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### housing or commercial buildings. And it is 1



### also disaggregated according to the repair 2



### status, whether it is a normal repair or an 3



### extended repair. And I'll talk about the 4



### extended repairs a little bit later. 5



### Eac h market sector is further 6



### disaggregated into three product channels. 7



### One, new construction, two, existing owners, 8



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



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



### already own the piece of equipment. 11



### Each channel is modeled to respond 12



### to new efficiency standards differently. For 13



### the new construction market, it was assumed 14



### that they would not be effected by any 15



### standards increases. In other words, the base 16



### case shipments for new construction would be 17



### equivalent t o the standards case shipments. 18



### For existing owners, standards 19



### were assumed to effect the repair versus 20



### replacement decision for some consumers. That 21



### is some consumers would decide to an extended 22NEAL R. GROSS

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### repair rather than replacement the equipment 1



### when it fail ed. 2



### And then finally, for new owners, 3



### it was assumed that standards would effect the 4



### purchase decision for some consumers. For 5



### central air conditioner owners, it was assumed 6



### that some consumers would purchase a room air 7



### conditioner instead of a central air 8



### conditioner. And for heat pump owners, they 9



### would chose to purchase a combination warm air 10



### electric furnace and a central air 11



### conditioner. 12



### Now there are many, many inputs to 13



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



### them quickly here. 15



### First a nd foremost are the 16



### historical shipments. These are used to build 17



### up the stock of central air conditioning and 18



### heat pump equipment in both the residential 19



### and commercial building sectors. This 20



### shipments data was provided AHRI and it 21



### spanned the period of 1972 to 2007. 22NEAL R. GROSS

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### Split system central air 1



### conditioners were divided into blower coil and 2



### coil only units. It was assumed that 90 3



### percent of annual shipments went to coil only 4



### units. And then the remaining ten percent to 5



### blower coil. 6



### And then it was als o assumed, as 7



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



### shipments went to the residential sector while 9



### the remaining seven percent went to the 10



### commercial sector. 11



### The key input for determining 12



### replacement shipments is the product lifetime 13



### or survival function. And the shipments 14



### analysis used the same survival function as 15



### was developed in the life cycle costs and 16



### payback period analysis. 17



### For new construction shipments, 18



### the key inputs there are new construction 19



### starts and the saturation of equipment in that 20



### new construction. For residential and 21



### commercial building starts, that came from the 22NEAL R. GROSS

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### annual energy outlook. 1



### The 2009 version was used for the 2



### preliminary analysis. We'll update that for 3



### the next phase of the rulemaking. 4



### The residential satura tions were 5



### developed from the census's characteristics of 6



### new housing. And commercial saturations were 7



### developed from DOE's commercial building 8



### energy consumption survey. 9



### New owner shipments, at least 10



### historical values, were developed from the 11



### differenc e between the sum of the replacement 12



### shipments and new construction shipments and 13



### historical shipments. That is when you add up 14



### the replacement shipments and new construction 15



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



### shipments. And so that residual was 17



### attributed to new owner purchases. 18



### To forecast this out into the 19



### future, the average value of the 1990 to 2007 20



### time period was averaged and fixed. And fixed 21



### for future years. 22NEAL R. GROSS

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### The decision model to figure out 1



### how new owners and existing owners woul d be 2



### effected by new standards, that key input 3



### there was the purchase price elasticity. 4



### This, again, forecasts how standards are going 5



### to impact shipments under these standards 6



### cases. 7



### The elasticity was developed from 8



### primarily data for the home applian ce market 9



### after looking at how new owner historical 10



### central air conditioner and heat pump 11



### purchases correlated with purchase prices 12



### through the purchase price index, operating 13



### costs through the use of the shipment weighted 14



### efficiencies from AHRI, and house hold income. 15



### This particular purchase price 16



### elasticity showed that the purchase price, in 17



### fact, effects dominate that rather than 18



### operating costs or household income. And the 19



### model also assumed that over time consumers 20



### become less sensitive to that purc hase price 21



### and that was determined from literature for 22NEAL R. GROSS

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### how consumers purchase automobiles. 1



### Now the shipments model first of 2



### all was developed for the nation as a whole. 3



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



### shipments at a regional level. And this w as 5



### DOE basically by regionalizing all the various 6



### inputs that go into the shipments model. 7



### This includes per until total 8



### installed costs, per unit product operating 9



### costs, historical shipments, new construction 10



### starts in stock, and new construction produ ct 11



### saturations. 12



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



### to break your flow. 14



### MR. ROSENQUIST: Yes? 15



### MR. WES ANDERSON: But this 16



### announcement

-- I just want to make this 17



### announcement before everybody leaves, this 18



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



### Wes, DOE. 20



### Unfortunately this morning we had 21



### problems with the court reporter not showing 22NEAL R. GROSS

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### up. So we had to try to supplement that a 1



### tape recording in the back. 2



### Unfortunately the individual once 3



### he left the room, the recorder was unplugged. 4



### So conseq uently

-- 5



### PARTICIPANT: Is it EnergyStar? 6



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



### consequently I want to reiterate that written 8



### comments really need to be submitted. I want 9



### to harp on that. 10



### And I want to let everybody know, 11



### we'll send out an email and pos t it on the web 12



### page as well when the transcript is finally 13



### ready. 14



### PARTICIPANT: Wes, earlier we 15



### heard from individuals that were wanting to 16



### have more than the time that you stated before 17



### the comments were due. Can you respond to 18



### that? 19



### MR. WES ANDERSO N: Yes, we are 20



### looking to extend the comment period for you. 21



### That paperwork is going through the system 22NEAL R. GROSS

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### now. And I will also notify everyone by email 1



### and put it on the webpage for the extension. 2



### But there will be an extension. 3



### But please try to get y our 4



### comments in as soon as possible because the 5



### overall comment period was 45 days. And it is 6



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



### go ahead and start with our analysis. And we 8



### can't really do that until the comment period 9



### is officially over. 10



### So we will extend it probably to 11



### the end of the following week or something 12



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



### comments together. 14



### PARTICIPANT: All right. Thank 15



### you. 16



### MR. BROOKMAN: We're going to 17



### continue with the presentation. 18



### I will note that Brenda is 19



### starting to hand out the photocopies of 20



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



### record of who is here. 22NEAL R. GROSS

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### Keep going, Greg. 1



### PARTICIPANT: Excuse me, 2



### clarification? 3



### MR. BROOKMAN: Yes, please, Harvey 4



### Sachs. 5



### MR. SACHS: Thank you, Wes . I 6



### appreciate this. This is Harvey Sachs. 7



### But I don't understand. What are 8



### we going to construct a transcript from if the 9



### tape stopped? 10



### MR. WES ANDERSON: We have

-- 11



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



### what that

-- right now it is pretty 13



### sig nificant for the morning. But officially I 14



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



### significant parts of the morning discussion 16



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



### MR. SACHS: Second question as 18



### long as we're at this process digression. 19



### When will we know whether or not the consensus 20



### is going to be accepted as opposed to 21



### continuing this process? 22NEAL R. GROSS

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### MR. WES ANDERSON: Wes at DOE. 1



### I cannot answer that at this point 2



### but we will

-- 3



### MR. BROOKMAN: Steve Rosenstock, 4



### go ahead. 5



### MR. ROSENSTOCK: Did Wes have 6



### s omething more to say? I didn't want to 7



### interrupt. I'm sorry. 8



### MR. WES ANDERSON: I'm done. 9



### Thanks. 10



### MR. ROSENSTOCK: Steve Rosenstock, 11



### EEI. 12



### In terms of shipments, I'm just 13



### kind of curious. Have you looked back on what 14



### the projections were for the l ast rulemaking 15



### in terms of what the shipments were going to 16



### be post

- 2006? And how the projections 17



### differed from the reality? And I discussed 18



### heat pumps. 19



### And I'm sure

-- I'm just kind of 20



### curious how that

-- how

-- if you had a chance 21



### to look back in ter ms of impacts because 22NEAL R. GROSS

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### obviously you're, you know, you're doing these 1



### models and I'm just kind of curious. 2



### What was the

-- if you had a 3



### chance to look, what was the percentage you 4



### projected, X million per year, and the actual 5



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



### of a looking back and seeing how accurate the 7



### model was previously. 8



### MR. ROSENQUIST: Haven't done 9



### that. Haven't done that retrospective. 10



### MR. ROSENSTOCK: Thank you. 11



### MR. BROOKMAN: Greg, let's keep 12



### moving. 13



### MR. ROSENQUIST: Okay. What I was 14



### saying before is that many of the inputs were 15



### regionalized in order to develop this regional 16



### model to get shipments down to the hot and 17



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



### regions. 19



### Two of those inputs do not vary by 20



### region over the produc t lifetimes and the 21



### relative purchase price elasticities. 22NEAL R. GROSS

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### For the variables that do vary by 1



### region, starting with the per unit total 2



### installed costs and per unit product operating 3



### costs, those come from the life cycle costs 4



### and payback period analysis. 5



### To allocate shipments to the three 6



### regions, allocation factors were developed 7



### through a trial and error process, by figuring 8



### out or calculating the stock for each of the 9



### three regions and comparing it to historical 10



### values from the American Housing Survey. 11



### And those charts to the right here 12



### demonstrate that. The blue lines are the 13



### calculated values. The red lines are the 14



### values from the American Housing Survey. And 15



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



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



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



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



### So the regional model does a 20



### fairly good job at matching those historical 21



### saturations. 22NEAL R. GROSS

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### For regional new construction 1



### starts, that was

-- those are developed from a 2



### combinatio n of the AEO which provide things at 3



### the census division level in combination with 4



### population factors to aggregate that up to the 5



### three climatic regions. 6



### For regional new construction 7



### saturations for the residential sector, that 8



### was developed through a c ombination of the 9



### characteristics of new housing data, which 10



### provides it at the census region level, in 11



### combination with these population factors to 12



### aggregate that up to the regional level. 13



### And for the commercial sector, 14



### combination of SEBX data, which p rovides 15



### saturations at the census division level, in 16



### combination with population factors, which are 17



### used to get these saturations at the regional 18



### level. 19



### MR. BROOKMAN: Don Brundadge? 20



### MR. BRUNDADGE: Just to comment

-- 21



### repeat a comment from earlier. Th e potential 22NEAL R. GROSS

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### early replace due to R22 phase out will have a 1



### huge potential impact on the shipments 2



### analysis. And I highly recommend you look at 3



### that in detail. 4



### MR. BROOKMAN: Thank you. 5



### Additional comments on the 6



### regional model? 7



### MR. WES ANDERSON: Th is is Wes at 8



### DOE. 9



### If you have any insight on how to 10



### glean that information from a public available 11



### information or if you

-- however you can 12



### access those projections, it would be helpful 13



### to submit that. 14



### MR. BROOKMAN: So on to shipments 15



### results. 16



### MR. R OSENQUIST: And these 17



### shipments results are for one particular case 18



### of central air conditioners split systems coil 19



### only units. 20



### And so this top figure shows the 21



### base case shipments, that is the case without 22NEAL R. GROSS

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### standards. And you see the total figure there 1



### g oing up to over

-- around seven

-- I think 2



### five

- and

- a

- half million shipments by 2046. 3



### It's divided up into the three 4



### regions by color. The red represents the hot, 5



### dry region. The orange, the hot, humid 6



### region. And the blue, the rest of the 7



### country. 8



### And each one of those regions, in 9



### turn, is divided up into the three product 10



### channels, new construction, replacements, and 11



### new owners. The biggest swath there is for 12



### replacements. The smallest swath is for new 13



### owners. 14



### Then these figures on the bottom 15



### s how how standards actually impact these base 16



### case shipments. And looking at the case here 17



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



### product channels, replacements, new owner, and 19



### new construction. 20



### So we can see how the standards 21



### impact shipments in ea ch one of these product 22NEAL R. GROSS

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### channels. Starting with replacements

-- I 1



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



### there

-- but there is a slight decrease in 3



### shipments under the standards case. 4



### There is a slight decrease 5



### represented by this dotted line from the 6



### standards in the year that the standards 7



### become effective. 8



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



### for replacements, that some consumers are 10



### choosing to do an extended repair rather than 11



### a replacement. But that effect diminishes out 12



### over time as consume rs become less sensitive 13



### to that purchase price increase. 14



### So overall there isn't a terribly 15



### large effect due the standard on replacement 16



### shipments. And the same can be said for new 17



### owner shipments as well. 18



### There is a slight drop in the year 19



### that the standards take effect due to the fact 20



### that some consumers are purchasing room air 21



### conditioners instead of central air 22NEAL R. GROSS

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### conditioners. But it isn't all that great. 1



### And in new construction, as I said 2



### before, the assumption there is that 3



### particular product c hannel would be 4



### unaffected. 5



### MR. BROOKMAN: Steve Rosenstock? 6



### MR. ROSENSTOCK: Steve Rosenstock, 7



### EEI. 8



### I guess the handout wasn't 9



### synching because on our slides here it says 22 10



### SEER. 11



### MR. ROSENQUIST: Right, right, 12



### that correction was made. 13



### MR. ROSE NSTOCK: Okay. Thank you. 14



### Okay. 15



### Again, I have to say again based 16



### on the past experience over the last five 17



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



### not be even bigger. 19



### When you talk about 16.5 SEER, 20



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



### perc ent increase over the current standard, 22NEAL R. GROSS

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### that it would have an almost minimal impact 1



### that the market would just go

-- and that's 2



### just so

-- if the last few years can be 3



### believed based on what's happened to 4



### shipments, I just find that very surprising. 5



### I'm just very surprised at the

-- 6



### again, I don't know how

-- it just looks like 7



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



### surprised. 9



### Thank you. 10



### MR. BROOKMAN: Don Brundadge? 11



### MR. BRUNDADGE: I would agree

-- 12



### Don Brundadge

-- I would agree especially on 13



### t he rest of country. I mean in hot, humid and 14



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



### air conditioner. 16



### But in rest of country where it is 17



### considered to be more of an option, to have 18



### almost no impact from a higher standards, it 19



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



### seem consistent with what happened when you 21



### went from SEER 10 to SEER 13 a few years ago, 22NEAL R. GROSS

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### which I'm not sure any of the manufacturers 1



### much are still here but they saw some 2



### significant drop in shipments. 3



### Thank you. 4



### MR. BROOKMAN: O kay. Thank you. 5



### MR. ROSENSTOCK: Also, again, this 6



### is Steve Rosenstock. 7



### Again, there is

-- again follow up 8



### the substitution effect in terms of, you know, 9



### room air conditioners replacing central air 10



### conditioners. That is, especially in the 11



### northern pa rts of the country, there might 12



### have been some consumers who did that as well. 13



### So that's another possibility in terms of 14



### this shipment analysis that should be 15



### considered. 16



### Thank you. 17



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



### forge ahead now into the national impact 19



### analysis. And its purpose is to determine the 20



### national energy savings and the national 21



### economic impacts, either a burden or a 22NEAL R. GROSS

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### benefit, from these various standards. 1



### And this first flow diagram shows 2



### how the national energy savings are 3



### calculated. It starts out with the shipments 4



### analysis, which provides both base case and 5



### standards case projections of shipments. 6



### Those shipments, again, are used 7



### to build up a stock of central air 8



### conditioning and heat pump equipment. And 9



### then when that is coupl ed with the per unit 10



### annual energy use values from the life cycle 11



### cost analysis, it allows the determination of 12



### the national annual energy consumption for 13



### each year of the forecast period out from 2016 14



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



### both the ba se case and the standards case. 16



### To determine national energy 17



### savings, the annual values are cumulated into 18



### a single value for both the base case and the 19



### standards case. 20



### Site to source energy conversion 21



### factors are applied to convert that site 22NEAL R. GROSS

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### energy sa vings into source energy savings. 1



### And the difference between the base and 2



### standards case provides the national energy 3



### savings. 4



### This next flow diagram provides 5



### the calculation process for determining the 6



### net present value, which is the measure of the 7



### eco nomic impact, either a benefit or a burden, 8



### to the nation. 9



### Again, it starts out with the 10



### shipments analysis, which provides both base 11



### case and standards case projections of 12



### shipments, which again are used to build up 13



### the stock of central air conditioning and heat 14



### pump equipment. 15



### And then taking per unit energy 16



### costs and per unit maintenance repair costs 17



### and per unit product

-- or total installed 18



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



### used to develop national energy costs, 20



### national maintenance an d repair costs, 21



### national product costs annually over the 22NEAL R. GROSS

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### entire forecast period from 2016 to 2046. 1



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



### and the standards case. 3



### The operating cost savings is the 4



### difference between the cumulative values of 5



### energy a nd repair

-- maintenance and repair 6



### costs for the base case compared to the 7



### cumulative energy maintenance and repair costs 8



### from the standards case. 9



### And the total product cost 10



### increase is the same thing but on the product 11



### cost side, again taking that diff erence 12



### between the standards case and the base case. 13



### Discount rates are applied to both 14



### the operating cost savings and the total 15



### product cost increases to bring that to a 16



### present value. And if the operating cost 17



### savings are greater than the product cost 18



### increases, you have a net benefit to the 19



### country. 20



### If it is the other way around 21



### where the cost increases are greater than the 22NEAL R. GROSS

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### cost savings, then you have a burden to the 1



### country from the particular standard. 2



### So there are, again, several 3



### inputs to the national impact analysis. The 4



### first set of inputs, the per unit total 5



### installed cost, per unit repair and 6



### maintenance costs, per unit annual energy use 7



### come from the life cycle cost and payback 8



### period analysis. 9



### All of these per unit values are 10



### dependent upon efficiency. So the next set of 11



### inputs, the base case and standards case, 12



### forecast the efficiencies are important to 13



### develop. 14



### For the base case efficiency 15



### distributions that was described earlier by 16



### Dave Winiarski in the energy use analysis. So 17



### I' ll be showing that again for a particular 18



### product class. 19



### The standards case efficiencies in 20



### the year that the standards become effecting 21



### in 2016 was determined through the use of a 22NEAL R. GROSS

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### roll

- up scenario. And then efficiencies over 1



### time were forecasted by loo king at historical 2



### trends in efficiency. 3



### Electricity prices, again, were 4



### taken from the life cycle costs and payback 5



### period analysis, the marginal prices for both 6



### the residential and commercial building 7



### sectors. 8



### Future energy prices were 9



### forecasts usin g the price trends from the 10



### annual energy outlook. 11



### Electricity site to source 12



### conversion factors are used to convert that 13



### site savings into source savings. They're 14



### also called marginal heat rates. They are 15



### taken from the national energy modeling system 16



### or NEMS. And NEMS is used to generate the 17



### annual energy outlook. 18



### These factors or heat rates 19



### account for the losses due to generation, 20



### distribution, and transmission. 21



### Discount rates are used to bring 22NEAL R. GROSS

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### back these costs

-- these cost increases and 1



### oper ating cost savings to a present value as I 2



### said before. Seven percent and three percent 3



### real values are used based upon guidelines 4



### from the Office of Management and Budget. 5



### These are different discount rates than are 6



### used from the life cycles costs and p ayback 7



### period analysis. 8



### And they are discounted to a 9



### present year. And for the preliminary 10



### analysis, the present year was chosen as 2009. 11



### MR. BROOKMAN: Tom Eckman? 12



### MR. ECKMAN: Tom Eckman. 13



### I'll add my standard postscript to 14



### the national impact an alysis. How many plants 15



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



### of avoiding those plants? Because this is 17



### really a capacity

- driven savings. 18



### And is that monetary cost of plant 19



### avoidance in the analysis in terms of net 20



### present value? 21



### MR. ROSENQU IST: Not currently. 22NEAL R. GROSS

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### MR. ECKMAN: Is it going to be? 1



### MR. ROSENQUIST: It will be taken 2



### under consideration by DOE. Whether or not 3



### it's determined. 4



### MR. ECKMAN: I mean the reason 5



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



### we calculate the cost of plant avoidance and 7



### include it in the analysis? 8



### MR. BROOKMAN: Thank you. 9



### Additional comments? 10



### (No response.) 11



### MR. ROSENQUIST: Okay. As I said 12



### before, it is important to determine these 13



### base case and standards case efficiencies 14



### because the inputs from the LCC analysis are 15



### all dependent upon them. 16



### And this table shows you the 17



### example of how these distributions of 18



### efficiencies were generated for the year that 19



### standards become effective for split system 20



### air conditioners coil only units. 21



### The base case efficiency 22NEAL R. GROSS

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### distribution is what you've seen earlier in 1



### Dave Winiarski's presentation in the energy 2



### use section. That results in a shipment 3



### weighted efficiency of 13.65 SEER. 4



### And then you can see how the roll 5



### up scenario effects these distributions. 6



### Looking at standards case three, which is 14.5 7



### SEER, you can see that all products below that 8



### standard level are rolled up to 14.5. And 9



### then all the market above that standard level 10



### is unaffected. 11



### So you can see the shipment weight 12



### efficiency levels f or all the different 13



### standards cases here. 14



### Now it is also important

-- 15



### MR. BROOKMAN: Don Brundadge? 16



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



### -- Don Brundadge

-- I don't think it is 18



### reasonable to assume efficiencies are going to 19



### stay frozen from 2008 to 20 16. There has been 20



### a huge increase in utility incentive programs 21



### for higher efficiency units. You've had 22NEAL R. GROSS

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### stimulus programs. You've had lots of other 1



### things. 2



### And I think in real life, there's 3



### some increase in the shipment weighted 4



### efficiency between 20 08 and 2016. 5



### MR. BROOKMAN: Thank you. 6



### Andrew deLaski? 7



### MR. deLASKI: And just to follow 8



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



### in 2016 that those programs don't disappear so 10



### that there would need to be a distribution 11



### past 2016 that would refl ect

-- now, course, 12



### this depends somewhat what the standard level 13



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



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



### distribution above that. The higher you go, 16



### the harder it is to have a distribution. 17



### So I think the analysis has to be 18



### somewhat flexible to reflect how a different 19



### standard might impact the distribution post 20



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



### done in the past, in times has been to do 22NEAL R. GROSS

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### scenarios, a roll up and a ship scenario. And 1



### I think that is an appropriate approach. 2



### MR. ROSENQUIST: Yes, this next 3



### slide sort of speaks to your point, Andrew, 4



### about how these distributions change over 5



### time. 6



### This graph, this chart shows for 7



### the case of split AIR CONDITION coil only 8



### units how the shipme nt weight efficiencies 9



### change over time for the base case in each of 10



### the standards cases. 11



### So

-- 12



### MR. SACHS: Greg? Excuse me. 13



### MR. ROSENQUIST: Yes? 14



### MR. SACHS: This is Harvey Sachs 15



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



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



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



### MR. ROSENQUIST: Okay. So 19



### actually you want to look at column three, not 20



### row three, column three. 21



### So column three is the 22NEAL R. GROSS

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### distribution for standards case three or the 1



### standards case of 14 .5 SEER minimum. So that 2



### product below that standard level of 14.5 is 3



### rolled up to 14.5. So

-- 4



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



### Thank you. 6



### MR. ROSENQUIST: Okay. 7



### MR. SACHS: I just had the row

8



### wise mind, I guess. Thank you. 9



### MR. ROSENQUIST: O kay. 10



### MR. deLASKI: So, if I could 11



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



### having trouble, you know, reconciling this 13



### table with the table that Dave showed earlier, 14



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



### base case, to cluster around exactly the SEER 16



### that was set but rather he showed a 17



### distribution between 13 and 14 SEER in the 18



### current marketplace. 19



### MR. ROSENQUIST: Right. 20



### MR. deLASKI: So it just strikes 21



### me that if that exists today, and I know there 22NEAL R. GROSS

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### is a question as to whether it does or not, 1



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



### think you need to carry that through to your 3



### standards case assumption

-- 4



### MR. ROSENQUIST: Right. 5



### MR. deLASKI:

-- where you can see 6



### that same kind of reaction in the marketplace, 7



### which is why I asked th e question earlier, you 8



### know, are manufacturers overshooting a little 9



### bit to certain of meeting the standard because 10



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



### it in the future. 12



### MR. ROSENQUIST: Yes. The 13



### analysis here assumes that in the year that 14



### sta ndards become effective, you have a roll 15



### up. But what this chart tries to display is 16



### that after 2016, you continue to have an 17



### increase in the shipment weight efficiency. 18



### And that is you continue to have more products 19



### being sold beyond that minimum standa rd. 20



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



### like do a roll up in the year that standards 22NEAL R. GROSS

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### become effective. And then after that you 1



### gradually increase that efficiency trench 2



### where the distribution increases in time. 3



### MR. deLASKI: Okay. 4



### MR. ROSENQUIST: An d so that's 5



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



### slide demonstrates is that over time, after 7



### 2016, the analysis assumed that there would be 8



### efficiency growth in the base case equivalent 9



### to what was seen between 1992 and 2005. 10



### MR. deLASKI: So tha nk you because 11



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



### On that second point, though, I 13



### think we still haven't captured this other 14



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



### know, if we have a base case that

-- even in 16



### the base year are we capturi ng how 17



### manufacturers comply with the standards. 18



### I think what we're seeing in the 19



### base case assumption is that they are 20



### complying by going about the standard by more 21



### than we would have expected. 22NEAL R. GROSS

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### MR. ROSENQUIST: Right. And this 1



### shipment weighted effici ency trend through 2



### every year after 2016 reflects that as well. 3



### MR. deLASKI: Okay. 4



### MR. ROSENQUIST: There is still

-- 5



### I mean it's basically stemming off that 6



### initial base case efficiency distribution, 7



### right? So

-- 8



### MR. deLASKI: Thanks. 9



### MR. BROOKM AN: Steve Rosenstock? 10



### MR. ROSENSTOCK: Steve Rosenstock, 11



### Edison Electric Institute. 12



### I mentioned this last time but in 13



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



### a surge of production of below 13 SEER units. 15



### And those were shipped out and sold wel l 16



### after January 2006 in the united States. 17



### And those effects, those SEER

-- 18



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



### been sold through 2008 or even 2009 for all we 20



### know. 21



### So that had an impact obviously on 22NEAL R. GROSS

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### the national energy savings as people were

-- 1



### because they were produced before the deadline 2



### but sold after the deadline, people were still 3



### able to purchase them in the market as 4



### replacements or for new construction. 5



### And, again, it looks like, again, 6



### that that, you know, I think it

-- I don't 7



### know if it happened in 1992 but I think there 8



### is that possibility where, again, a surge of 9



### units at the lowest cost are produced to be 10



### sold, distributed, you know, warehoused 11



### afterwards. 12



### And at least for the first few 13



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



### national energy savings. 15



### I'm not exactly sure how to model 16



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



### there were two significant, you know, 18



### increases in the standards

-- I'll say 1992 19



### and then 2006. I think we have some history 20



### in terms of what ex actly happened and how long 21



### those sub

- new efficiency levels were sold in 22NEAL R. GROSS

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### the market and had an impact. 1



### Thank you. 2



### MR. SACHS: Six months. 3



### MR. deLASKI: Six months? 4



### MR. SACHS: Harvey Sachs. Six 5



### months, okay. 6



### MR. deLASKI: I've a couple of 7



### years myself, but

-- 8



### MR. BROOKMAN: Okay. 9



### MR. ROSENQUIST: So to continue on 10



### with this chart, I wanted to also talk about 11



### the standards case efficiency trends. They 12



### have a very similar growth to the base case 13



### efficiency trend but it's actually slightly 14



### lowe r. 15



### That's because under the standards 16



### case situation, the per unit total installed 17



### cost between the base case and the standards 18



### case was held constant. So actually each one 19



### of these standards case efficiency trends 20



### slightly decreases over time relative to the 21



### base case efficiency trend. 22NEAL R. GROSS

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### Of course, these trends continue 1



### in time until they hit the max tech level of 2



### 16.5, at which point they flatten out because 3



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



### max tech level. 5



### This next chart shows just an 6



### example of what the national total installed 7



### costs look like and the national operating 8



### cost savings look like for a particular 9



### standards case for a particular product class. 10



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



### units. 12



### The purple bars represent the 13



### total installed costs to the nation on an 14



### annual basis. Those are represented as a 15



### negative. 16



### The green bars are the operating 17



### cost savings. Those are expressed as a 18



### positive. The red line shows the net. 19



### The analysis accounts for all 20



### shipments co ming in to the stock up to the end 21



### of the forecast period

-- up to 2046. That's 22NEAL R. GROSS

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### why you continue to see operating cost savings 1



### out to 2080 is because we're accounting for 2



### the operating cost savings for all those years 3



### that were installed before 2046 until they 4



### die. 5



### And then finally, the last slide 6



### in the national impact analysis is just an 7



### example of the type of energy savings and NPV 8



### results you get for a particular product 9



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



### central air conditioners. 11



### Showing national regional savings 12



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



### units. The graph on the right is for blower 14



### coil units. The scales are identical even 15



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



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



### cumula tive over the forecast period. 18



### In the scale, on the X axis are 19



### the particular standards cases. For coil only 20



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



### the same scale as for blower coil units just 22NEAL R. GROSS

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### so you can easily compare things. 1



### And you can see that because 90 2



### percent of shipments are assumed to go to coil 3



### only units, most of the energy savings comes 4



### from the coil only units. 5



### The bottom two graphs show the 6



### national and regional NPVs. Again, the figure 7



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



### the right is for blower coil. 9



### These have different scales on the 10



### Y axis. So they're not equivalent. 11



### For coil only units, none of the 12



### standards cases produce a benefit to the 13



### country either at the national or regional 14



### level. There is a slight diffe rence there for 15



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



### hot, dry regions, there is a slight benefit 17



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



### around 16, 16.5 SEER for hot, dry. 19



### So if you don't have any more 20



### questions, I'll turn it over to Mat t Millard 21



### to talk about the preliminary manufacturing 22NEAL R. GROSS

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### impact analysis. 1



### MR. deLASKI: I did have one 2



### question. 3



### MR. ROSENQUIST: Okay. 4



### MR. deLASKI: I was surprised 5



### because I noticed what you just said, that for 6



### that example there was no

-- the NPV was 7



### negative yet the LCC was positive. And I 8



### couldn't reconcile those in the time that I 9



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



### MR. BROOKMAN: That was Andrew 11



### deLaski. And now Greg. 12



### MR. ROSENQUIST: Right, right. I 13



### think there were some positives at 13.5 SEER 14



### for example, under the coil only unit 15



### condition. And I can only explain that by the 16



### fact that when we are forecasting things out 17



### over time, also in addition with these 18



### efficiency trends, that drops down

-- what you 19



### would see as a positive LC C at 13.5 to a 20



### negative in the NIA. 21



### MR. deLASKI: Right. I mean it 22NEAL R. GROSS

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### just strikes me that they are both pretty 1



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



### conclude is that

-- 3



### MR. ROSENQUIST: Yes, that's 4



### really it. 5



### MR. deLASKI:

-- those numbers are 6



### b asically zero

-- 7



### MR. ROSENQUIST: Right. 8



### MR. deLASKI:

-- for all 9



### statistical purposes. 10



### MR. ROSENQUIST: Yes, for the coil 11



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



### can get higher in the southern regions. 13



### MR. deLASKI: Got it. Okay. 14



### Thanks. 15



### MR. MILLARD: Hello. My name is 16



### Matt Millard again. And I will be discussing 17



### the preliminary MIA and some of the next steps 18



### after the preliminary analysis. 19



### Here you can see that, as I 20



### mentioned earlier, the preliminary 21



### manufacturer impact

-- or the man ufacturer 22NEAL R. GROSS

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### impact analysis is fed by the engineering 1



### analysis. So the purpose of the manufacturer 2



### impact analysis is to identify the impacts of 3



### energy conservation standards on 4



### manufacturers. 5



### And this is done through three 6



### phases. In the first phase, DO E creates an 7



### industry profile to characterize the industry 8



### and identify important issues that will 9



### require consideration. 10



### In the second phase, DOE will 11



### prepare a cash flow model and an interview 12



### questionnaire to guide discussions with 13



### manufacturers. 14



### An d then in the third phase, these 15



### actual discussions will occur with 16



### manufacturers and DOE will assess the impacts 17



### on those manufacturers, both quantitatively 18



### through the government regulatory impact model 19



### and also qualitatively by looking at impacts 20



### on competition, manufacturing capacity, 21



### employment, and regulatory burden. 22NEAL R. GROSS

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### So following the framework 1



### document, DOE conducted some preliminary 2



### manufacturer impact analysis interviews with 3



### manufacturers. And you can see some of the 4



### issues that came up where, w hich are fairly 5



### standard at the early phase involving impacts 6



### on profitability regarding increased standards 7



### and how these could cut into profit margins, 8



### conversion costs, and that relationship to the 9



### diminishing returns on consumers, issues with 10



### product i nnovation and how increased equipment 11



### costs will

-- or the cost to remodel equipment 12



### to meet the current standard, would take away 13



### form the development of new products. 14



### And cumulative regulatory burdens 15



### and any example of one of those would be the 16



### new re gulations that were being worked on by 17



### DOE for residential furnaces as well as 18



### international standards. 19



### So at this point, we'd like to 20



### request comment on the possible impact of 21



### increased efficiency standards on domestic 22NEAL R. GROSS

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### manufacturers. 1



### MR. BROOKMAN: Ha rvey Sachs. 2



### MR. SACHS: Harvey Sachs, ACEEE. 3



### Two notes, one of them is I think 4



### the record should reflect that the 5



### manufacturers had another meeting. And there 6



### are no manufacturers in the meeting for the 7



### manufacturer impact analysis phase. And I 8



### think that should be in the record. 9



### If I'm wrong, would any 10



### manufacturers present please correct me. 11



### (No response.) 12



### MR. SACHS: Thank you. 13



### And the second thing is to note 14



### that these concerns have all been implicitly 15



### addressed in the consensus agreement, that 16



### among other things, the phasing of the 17



### furnaces and air conditioner/heat pump 18



### standards implementations in the consensus 19



### agreement reflects all of the concerns raised 20



### by the manufacturers to the extent that they 21



### felt they should be considered. 22NEAL R. GROSS

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### And I think they would have wanted 1



### to make that point if they were here. 2



### MR. BROOKMAN: Okay. Thank you. 3



### And, Dave, everybody has 4



### demonstrated that they are on the record. 5



### Everybody is on the record. 6



### PARTICIPANT: If we signed it, we 7



### signed it. 8



### MR. B ROOKMAN: Let me see, Tim? 9



### MR. BALORWORTH: Tim Balorworth, 10



### Justice. 11



### Just to raise something that we've 12



### raised before but as I still haven't yet 13



### gotten an answer on it, just to raise it 14



### again. 15



### Manufacturers of air conditioners 16



### and heat pumps, a lot o f them also produces 17



### furnaces. So if there is some substitution 18



### that occurs as the result of an increase in a 19



### standard, it is not necessarily going to be a 20



### completely adverse impact on those 21



### manufacturers. 22NEAL R. GROSS

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### MR. BROOKMAN: Okay. Thank you. 1



### Steve Rosens tock? 2



### MR. ROSENSTOCK: I'm Steve 3



### Rosenstock, EEI, again. 4



### Kind of looking back, I'm kind of 5



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



### of curious if there is some record about the 7



### impact of the last jump in standards on the 8



### air conditioning and heat pump manufacturers 9



### in terms of jobs and everything and/or 10



### especially just

-- or loss of domestic jobs

-- 11



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



### kind of curious if there is any data out 13



### there. 14



### MR. MILLARD: We have received 15



### some very limited data fr om manufacturers. 16



### And we're trying to look forward with this 17



### standard as opposed to looking backwards. But 18



### we received the same comment from a lot of 19



### manufacturers as far as looking at the impacts 20



### of the last standard and how it compares to 21



### what was expe cted. So we can look into that. 22NEAL R. GROSS

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### MR. ROSENSTOCK: Okay. Just a 1



### quick question. If you had some of that

-- a 2



### quick follow up, were there job losses 3



### associated with the last standard? Domestic 4



### job losses? 5



### PARTICIPANT: Constantine 6



### (inaudible) of Navig ant Consulting. 7



### I think the answer is very 8



### difficult

-- it is a very difficult answer 9



### because you are looking at a wonderful 10



### confluence between an economic meltdown and 11



### the standard at the same time. 12



### So I think even if you are a 13



### manufacturer, to disagg regate the two events 14



### from each other would be nearly impossible. 15



### But I mean obviously we would have to wait for 16



### manufacturers to give us their own individual 17



### answers. 18



### MR. ROSENSTOCK: Steve Rosenstock, 19



### EEI. 20



### The meltdown really started, 21



### according the National Economic Council, in 22NEAL R. GROSS

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### late 2007. And the standard took effect in 1



### January 2006. So

-- and the standard was 2



### basically finalized in 2004 after all the 3



### things. So

-- 4



### PARTICIPANT: Right. 5



### MR. ROSENSTOCK:

-- you know, 6



### there is some disaggregation in my view. 7



### PARTICIPANT: Well, I would tend 8



### to agree with you if you had a complete 9



### depletion of existing pre

- 2006 stock in the 10



### time coming up to the meltdown. 11



### And I think the meltdown started 12



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



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



### you disaggregate the two events from each 15



### other. 16



### MR. ROSENSTOCK: For new 17



### construction, I agree with, yes. 18



### MR. BROOKMAN: Harvey Sachs? 19



### MR. SACHS: Harvey Sachs, ACEEE. 20



### And I take umbrage at the remark 21



### that was j ust made in this proceeding that we 22NEAL R. GROSS

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### try to look forward instead of back. The 1



### historical record on the impacts of energy 2



### efficiency ratings is there. 3



### It's been treated in the referee 4



### literature to some extent. And several times 5



### today I've heard the rema rk from different 6



### people that it appears as though this 7



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



### developed without looking back at prior DOE 9



### rulemakings. 10



### And it is disturbing because there 11



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



### from the data that were developed then, and 13



### what was learned in the subsequent years. 14



### And if we're never going to 15



### calibrate, we'll have

-- if we do the same 16



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



### the same results. 18



### MR. BROOKMAN: Yes. Constantine? 19



### PARTICIP ANT: And if I can respond 20



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



### would have to consider in that context would 22NEAL R. GROSS

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### be that the technology has not marched on, 1



### that things haven't changed. 2



### And, you know, copper prices 3



### aren't where they are

-- where they w ere or 4



### where we projected them to be. And neither 5



### are energy prices. 6



### So the notion that, you know, back 7



### then we had perfect information looking 8



### forward and we should compare that information 9



### that we used to what actually happened and so 10



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



### fact, because so many factors, environmental 12



### factors have changed. 13



### MR. SACHS: Constantine, this is 14



### Harvey Sachs. 15



### I'm sorry, I really was

-- I was 16



### trying to be brief and was not more explicit. 17



### I'm not referring to the is sue that Mr. 18



### Rosenstock has raised about disentangling the 19



### post

- 2006. I'm talking about references to 20



### the rather abundant record from the prior 21



### rulemaking. It's a much broader issue. 22NEAL R. GROSS

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### MR. BROOKMAN: Harvey, we've heard 1



### that several times today. So than k you for 2



### bringing that back to us. 3



### Let's have the final slide. And 4



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



### submit their comments. 6



### MR. MILLARD: Okay. So in going 7



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



### Notice of Proposed Rulemaking. An d in the 9



### NOPR, we will revise our analyses for the 10



### preliminary analysis based on the comments 11



### that we receive and any new data that we may 12



### come across as well as

-- I won't go through 13



### and name off the remaining analyses but there 14



### will be a variety of addit ional analyses 15



### conducted for the NOPR. 16



### MR. BROOKMAN: In your packet, 17



### you'll see this final slide. 18



### Wes? 19



### MR. WES ANDERSON: Wes at DOE. 20



### We went over this earlier in the 21



### presentation. So I won't repeat it. 22NEAL R. GROSS

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### However, I would like to emphasize 1



### that e ven though the comment period was posted 2



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



### considering extending it. However, I would 4



### ask you to still get in your comments as soon 5



### as possible. 6



### MR. BROOKMAN: And there is one 7



### more element. Please fill out the evaluation 8



### form. It's also our tradition in these 9



### meeting to provide an opportunity for final 10



### comments on things that would be novel, things 11



### that haven't been said already that might need 12



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



### already today. 14



### So any ad ditional and final 15



### comments before we adjourn? 16



### Steve Rosenstock? 17



### MR. ROSENSTOCK: Steve Rosenstock, 18



### Edison Electric Institute. 19



### A lot have been covered. And I 20



### just was actually looking through the 21



### background slides again. 22NEAL R. GROSS

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### And there is, again, the 1



### m onetization of emissions reductions. We said 2



### this during the furnace rulemaking. We'd like 3



### to reiterate again. We're concerned about 4



### this social cost of carbon. 5



### I know it had developed via 6



### interagency review. I'm concerned about how 7



### it is going to be used in current and future 8



### rulemakings. 9



### I'm also worried about how it is 10



### going to be used in terms of justifying new 11



### rulemakings and also the impact of double 12



### counting if there are regulations on carbon 13



### emissions, that there is a very high 14



### likelihood of double counting the benefits 15



### because a lot of the costs of carbon reduction 16



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



### gas or electric or fuel oil, et cetera. 18



### Thank you. 19



### MR. BROOKMAN: Thank you. 20



### Other final comments that we 21



### haven't covered alrea dy? 22NEAL R. GROSS

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- 4433 WASHINGTON, D.C. 20005

- 3701 www.nealrgross.com 222



### MR. WES ANDERSON: One last point. 1



### Please make sure you submit your comments due 2



### to the technical difficulties we had this 3



### morning. 4



### And I would personally like to 5



### thank you for coming out. And thank those who 6



### stuck through this full presentation without 7



### the benefit of a lunch break. 8



### So thank you for your comments and 9



### also

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



### that we need to get everything in writing, you 11



### know. And there will be an email and 12



### something posted on the webpage to notify 13



### those who are not here. 14



### Thank you. 15



### (Whereupon, the above

- entitled 16



### meeting was concluded.) 17

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