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### U.S. Department of Energy 1

2

3

4


### Public Meeting on 5


### Energy Conservation Standards for 6


### Commercial Heating and Test Procedures for ASHRAE 7


### Equipment, Certain Industrial Equipment 8

9

10



### 1:02 to 2:01 p.m. 11


### Friday, February 6, 2015 12

13



### U.S. Department of Energy 14



### Room 8E

- 089 15


### 1000 Independence Avenue, S.W. 16


### Washington, D.C. 20585 17

18

19

20

21

222

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### Moderator: 1


### DOUG BROOKMAN, Public Solutions 2

3



### DOE Staff : 4



### J OHN CYMBALSKY , Program Manager, 5


### Appliance Standards 6



### RONALD MAJETTE , Project Lead 7



### ERIC STAS , Office of General Counsel 8



### ASH LEY ARMSTRONG 9

10



### Attendees: 11



### PAUL L. DOPPEL, Mitsubishi Electric 12



### DICK LORD, Carrier Corporation. 13



### NICK MISLAK , Air Conditioning, Heating, 14


### and Refrigeration Institute 15



### LOUIS STARR, NE E A 16



### MARSHALL HUNT , Pacific Gas and Electric Company 17



### RACHEL FEIN STEIN, Hearth, Patio, and Barbecue 18



### Association 19



### AMY SHEPHERD , Air Conditioning, Heating, 20



### and Refr igeration Institute 21


### RANDY PALM, Allied Air 223

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### Attendees: (continued) 1


### DAVE WINNINGHAM, Allied Air 2



### STEVE ROSENSTOCK , Edison Electric Institute 3



### JO ANNA MAUER, Appliance Standards Awareness 4


### Project 5



### LAURA G. PETRILLO

- GROH, AHRI 6


### ANIRUDDH ROY, Goodman Manufacturing 7


### ROBERT WHITWELL, Carrier Corporation 8

9



### Consultants: 10



### ED CUBERO, Lawrence Berkeley National 11


### Laboratory 12



### SEAN FALTERMEIER, Na vigant 13



### GREG ROSENQUIST, Lawrence Berkeley National 14


### Laboratory 15



### CHRIS LAU, Navigant 16



### ALISON WILLIAMS, Lawrence Berkeley National 17


### Laboratory 18


### SCOTT MORRIS, Pacific Northwest National 19


### Laboratory 20


### COLLIN WEBER, Navigant 21


### XING XU, Navigant 224

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### Al so Present: 1


### SARAH MEDEPALLI, ICF International 2


### GLENN HARRISON, Attorney, Department of Justice 3

4

5

6

7

8

9

10

11

12

13

14

15

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### C O N T E N T S 1



### PAGE 2



### Introduction and Overview, Determination 3


### of Scope 12 4



### Test Procedures 15 5


### Market Assessment; Engineering 17 6


### Markups; Energy Use; Life

- Cycle Cost and 7


### Payback Period Analysis 34 8


### Shipments; National Impact Analysis 55 9


### Emissions and Utility Impact Analyses 63 10


### Closing Remarks 64 11

12

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



### MR. BROOKMAN: Let's start then, if you 2


### would, please. Good afternoon. This is the 3


### Energy Conservation Standards Notice of Proposed 4


### Rulemaking meeting regardin g Energy Conservation 5



### Standards and Test Procedures for ASHRAE 6


### Equipment, Certain Industrial Equipment. 7


### Today is February 6th, 2015, here in the 8


### Forrestal Building, Washington, D.C. 9


### Welcome to all. My name is Doug 10


### Brookman, Public Solutions, Baltimor e. Good to 11


### see you here. 12


### We are going to start with welcoming 13


### remarks from Ashley Armstrong. 14


### MS. ARMSTRONG: I'd just like to welcome 15


### everyone to our public meeting on the test 16


### procedures

-- or the test procedure and the 17


### energy conservation standards fo r certain 18


### equipment in ASHRAE Standard 90.1. 19


### Obviously, the point of this meeting is 20


### to gather feedback on what DOE has put out in its 21


### proposed rule. So we strongly encourage you to 227

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### speak up whenever you have a comment or question 1


### about either our analys is or our regulatory 2


### proposal, and we appreciate you all coming here 3


### on this Friday afternoon in chilly Washington, 4



### D.C. 5


### MR. BROOKMAN: Thank you. 6


### We always start with introductions, and 7


### we will start to my immediate left. You can get 8


### used to turning th e microphone both on and off, 9


### and name and organizational affiliation. 10



### MR. WHITWELL: So I'm Bob Whitwell. I'm 11


### with Carrier Corporation. 12



### MR. LORD: Dick Lord with Carrier. 13



### MR. PETRILLO

- GROH: Laura Petrillo

- Groh, 14


### Air Conditioning, Heating, and Refriger ation 15



### Institute. 16


### MR. DOPPEL: Paul Doppel, Mitsubishi 17



### Electric. 18


### MR. STARR: Louis Starr, Northwest Energy 19


### Efficiency Alliance. 20



### MR. HUNT: Marshall Hunt, Pacific Gas and 21


### Electric Company and the California IOUs. 228

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### MR. PALM: Randy Palm, Allied Air. 1



### MR. B ROOKMAN: Oh, we missed someone. 2



### MS. FEINSTEIN: Rachel Feinstein, Hearth, 3


### Patio, and Barbecue Association. 4


### MR. BROOKMAN: Thank you, Rachel. 5


### Randy? 6


### MR. WINNINGHAM: Dave Winningham, Allied 7



### Air. 8



### MR. ROSENSTOCK: Steve Rosenstock, Edison 9



### Electric Insti tute. 10



### MS. MAUER: Joanna Mauer, Appliance 11


### Standards Awareness Project. 12


### MR. CYMBALSKY: John Cymbalsky, DOE

. 13


### MR. XU: Xing Xu, Navigant. 14



### MR. FALTERMEIER: Sean Faltermeier, 15


### Navigant. 16


### MR. CUBERO: Ed Cubero, Lawrence Berkeley 17


### National Laboratory. 18



### MS. WILLIAMS: Alison Williams, LBNL. 19



### MR. BROOKMAN: Please. 20


### MR. MEDEPALLI: Sarah Medepalli, ICF 21



### International. 229

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### MR. BROOKMAN: Would you introduce 1


### yourself. 2


### MR. HARRISON: My name is Glenn Harrison. 3


### I'm an attorney with the Department of Justice. 4



### MR. BR OOKMAN: Thank you. 5


### MR. LAU: Chris Lau, Navigant. 6


### MR. WEBER: Collin Webber, also with 7


### Navigant. 8


### MR. ROSENQUIST: Greg Rosenquist, LBNL. 9


### MR. BROOKMAN: Welcome again to all of 10


### you. Glad you could make it this afternoon. 11


### All of you have seen the pack et of 12


### information, wherein the content for this meeting 13


### is displayed. 14


### We are going to start off with 15



### introductions and overviews and determination of 16


### scope. We will go from there directly into a 17


### presentation and discussion on test procedures. 18


### Following that, market assessment and 19


### engineering; and moving directly, markups, energy 20



### use, life

- cycle cost and payback period analysis; 21


### then shipments, national impact analysis; then 2210

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### emissions and utility impact analyses; and then 1


### followed by closing remarks at th e end of the 2


### day. 3


### We will take a break midafternoon, as 4


### required around about 2:30, 2:45, somewhere in 5



### there. 6


### I would ask for your consideration. Most 7


### of you are very familiar with the way these 8


### meetings typically go. If you would speak one at 9



### a time. Each time you speak, say your name for 10


### the record. There will be a complete transcript 11


### of this meeting made available, and be concise to 12


### share the airtime. If you'd turn your cell 13


### phones on silent mode and limit sidebar 14


### conversations. You've already go tten used to 15


### turning the microphones on and off. 16


### Webinar participants, we welcome you. 17


### The Department of Energy is trying to make these 18


### meetings totally accessible to everyone via the 19


### Web. Please turn your phones on mute. Raise 20


### your hand to be recogniz ed to speak, and we ought 21


### to be able to have you be a part of this 2211

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### conversation here in the room. 1



### And that is the bulk of the overview 2


### material, except to say the Department strongly 3


### encourages everyone, including everyone who is 4


### joining us via the Web, to submit their written 5


### comments. The written comments are very, very 6


### important for the resolution and ongoing work in 7


### these rulemaking matters. 8


### Do you wish to do the purpose of the 9


### public meeting slide? 10



### MS. ARMSTRONG: Sure. I can do that. 11



### So I will go back one, because I was just 12


### moving right along quickly. 13


### So I think everyone knows we are here 14


### today to present the Department's proposal with 15


### respect to certain ASHRAE equipment in 90.1

. 16


### Obviously, we invite you to make comment, as I 17



### said at the outs et, and invite participation 18


### whenever possible. 19


### As Dave noted in this morning's meeting, 20



### we do have a few issues box that we have 21


### specifically highlighted throughout the 2212

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### presentation. Those are the areas that, 1


### obviously, the Department is specifically se eking 2


### comment. They correspond with some of the issues 3


### we teed up with comment. 4


### That being said, we welcome you to 5


### interject at any time in the presentation and 6


### bring up any questions or issues or comments that 7


### you may have, so please feel free. 8



### And now if anybody would like to make 9


### opening remarks, please feel free to do so. 10


### MR. BROOKMAN: Summary remarks here at 11



### the outset? 12


### [No audible response.] 13


### MR. BROOKMAN: Nothing at this time. 14


### Okay. Well, then let's go into the 15



### content 16


### MS. ARMSTRONG: Okay. I'm going to go 17


### fairly quickly through most of this stuff. Feel 18


### free to slow me down, though, if we have 19


### questions about a specific area or we'd like to 20



### make comments about it. 21


### So, obviously, this is our statutory 2213

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### trigger and why we are all here today. ASHRAE 1



### acted in 90.1

- 2013 and increased the stringency 2


### for certain types of what DOE calls ASHRAE 3


### equipment. 4



### EPCA directs DOE then to review what 5



### ASHRAE has done, and we must amend the standards 6


### at the new ASHRAE levels, unless DOE can combine 7



### -- unle ss clear and convincing evidence supports 8


### a determination that adoption of a more stringent 9


### standard would be those three things. 10



### ASHRAE 90.1

- 2013 was officially released 11


### on October 9th, 2013, hereby bringing us to this 12



### NOPR. 13


### So the next slide just gives you an 14


### overview of what's in scope in the rulemaking and 15



### what ’s our proposed action. So for oil

- fired 16


### storage water heaters, we are adopting

-- we 17


### propose to adopt ASHRAE for small three

- phased 18



### air

- cooled air conditioners, both single

- package 19


### and single

- package and split

- system heat pumps , 20



### less than 65,000 in cooling capacity, we propose 21


### to adopt ASHRAE. 2214

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### For water

- source heat pumps, we are 1


### proposing to adopt ASHRAE. For package terminal 2


### air conditioners and for single

- package vertical 3


### units, both air c onditioners and heat pumps , we 4


### are investigating those in separate rulemaking 5


### dockets, as we're going further analysis on the 6



### evaluation of those. 7



### So this is where we are in terms of 8


### what's in for this rulemaking, and the ones where 9


### it says they're in fu rther analysis in a separate 10


### docket, it will not be the subject of today's 11


### proceeding. 12


### So this just provides an overview of why 13


### we propose to adopt ASHRAE for the three

-- what 14



### I would call

-- categories of equipment that were 15



### in the NOPR. One is for oil

- fired storage water 16


### heaters. You can see that the energy savings 17



### estimated in the notice of date of availability, 18


### we found to be de minimis, so we proposed to 19


### adopt the ASHRAE levels. 20



### For three

- phased air

- cooled air 21


### conditioners and heat pumps less than 65,000, we 2215

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### found that there was lack of clear and convincing 1


### evidence justifying higher standards, and then 2



### for water

- source heat pumps, we determined 3


### tentatively, at least in the proposal, that there 4


### was a lack of clear and convincing evidence to 5


### justify higher standards, primarily due to a 6


### variety of different things, but mainly has to do 7


### with some data uncertainties in the analysis 8


### we've done, and we will get through that a little 9


### bit later as we walk through our specific 10


### analysis. 11


### So I am going to hit really quick on the 12


### test procedure update we're doing in this 13


### proposal. EPCA requires the DOE to amend any 14


### test procedures for ASHRAE products to the latest 15



### versions that are reflected in 90.1. 16


### When we did the review, as you know, we 17


### have been updating test procedures quite a bit as 18


### of late to try to do some revisions and catch up 19


### to industry standards, at least in our 20


### rulemakings. 21



### The one we found in 90.1 that is an 2216

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### ASHRAE product that we had not yet evaluated for 1


### adoption is for gas

- fired warm

- air fur naces. So, 2


### in this rule, we propose to update to the latest 3


### industry standard versions. 4


### When we did a comparison between our 5



### current methods as well as those in this new 6


### version, we found that the methods were the same. 7


### So DOE does not expect any of the ratings to 8


### change as a result of this proposal, but we did 9


### want to harmonize with the latest industry 10


### versions to make sure we keep up. 11


### So that's it for the test procedure 12


### section. I don't know if anyone has any specific 13


### comments on our proposal to upda te with the 14



### latest version for warm

- air furnaces or not, but 15


### if not, we will move on. Do you generally agree 16



### with that? 17


### MR. BROOKMAN: I see some heads nodding. 18


### It would be nice to get some verbal comment on 19



### the record. 20



### Laura. 21



### MS. PETRILLO

- GROH: Laur a Petrillo

- Groh, 2217

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### AHRI. 1


### We strongly support DOE, DOE's actions, 2


### proposed action. 3


### MR. BROOKMAN: Thank you. 4


### MS. ARMSTRONG: Just generally, right? 5



### MS. PETRILLO

- GROH: Always. 6


### [Laughter.] 7


### MR. WINNINGHAM: This is Dave Winningham 8



### from Allied Air, and we support DOE's actions in 9


### regard to this. 10


### MR. BROOKMAN: And maybe we can just

-- 11


### no. It's good to get verbal confirmation. 12



### MS. ARMSTRONG: I am going to pass it over 13


### to Xing, and Xing is going to talk about what we 14


### did specifically in our analysis of th e two areas 15


### where we actually did a cost

- benefit analysis. 16


### MR. XU: All right. Thanks, everyone. 17


### My name is Xing Xu, and today, I am going to talk 18


### about the market assessment and engineering 19


### analysis for the three

- phase CAC equipment. 20



### So this slide out lines the ASHRAE 21


### rulemaking process. I'm pretty sure that 2218

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### everyone is quite familiar with this process. 1


### So for this analysis, DOE started by 2


### publishing a NODA, and the current phase is the 3


### NOPR analysis. So DOE started by the market 4


### assessment and engin eering analysis and followed 5


### by a markup analysis, and together with the 6


### energy use analysis, DOE developed the life

- cycle 7


### cost and payback period analysis. And also, with 8


### the shipment data, DOE further analyzed the 9


### national impact analysis followed by th e emission 10


### impact , monetization and the utility impact 11


### analysis. 12


### So the following sections include 13


### analysis for two types of equipment. Three

- phase 14



### air

- cooled commercial air conditioning and 15


### heating equipment with a capacity less than 16


### 65,000 Btu per hour as well as the water

- source 17


### heat pumps. 18


### So I am going to start with the 19



### three

- phase CAC analysis. 20


### Equipment classes for the three

- phase CAC 21


### equipment, the current federal standards do not 2219

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### differentiate between the split

- and 1


### single

- package equipment for the three

- phase CAC 2


### equipment. 3



### And ASHRAE 90.1

- 2013 divides the small 4



### three

- phase commercial heating and cooling 5


### equipment into four subcategories, based on the 6


### functionality and the configuration. 7


### So, in this rulemaking, DOE proposes to 8


### amend the equip ment classes and also to adopt 9


### this in the equipment classes for the three

- phase 10


### analysis. Basically, we are looking at the 11


### split

- system air conditioner and heat pump and 12


### single

- package air conditioners and heat pumps, 13


### less than 65,000 Btu per hour. 14



### So f or the engineering analysis, the 15


### purpose is to characterize the relationship 16


### between the manufacturing cost and energy 17


### efficiency. 18


### So to conduct the engineering analysis, 19


### DOE started by developing the baseline for each 20


### equipment class, and then DOE develo ped the 21


### efficiency levels that span the full range from 2220

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### the baseline all the way to the max tech for each 1


### equipment class, and then we conducted physical 2


### and catalog teardowns and conducted the cost 3


### modeling for units at each efficiency level that 4



### we deter mined. 5


### Then by combining efficiency levels as 6


### well as the cost we developed, we created the 7



### cost

- efficiency curves for each equipment class. 8



### So baseline and max

- tech efficiency 9



### levels for the three

- phase equipment, in this 10


### analysis, DOE used ASHRAE 90.1

- 2013 as the 11


### baseline efficiency levels for the four equipment 12


### classes, and as you can see from the table below, 13


### the split AC, the baseline is 13, while the three 14


### remaining equipment classes, they all start with 15



### 14 SEER. 16


### HSPF for the split

- system heat pump is 17


### 8.2, and for single

- package heat pump, it starts 18



### with 8.0. 19



### And then DOE established the incremental 20


### efficiency levels based on review from the AHRI 21


### database manufacturing catalogs and the other 2221

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### available information. 1



### And the max

- tech efficiency level s were 2


### determined by the market research for the AHRI 3



### database as of November 2013. 4



### MR. BROOKMAN: Louis. 5



### MR. STARR: Louis with NEE A. 6


### On the baseline using the ASHRAE standard 7


### 2013 as the baseline, is that representing that 8



### the current market standards of the equipment is 9


### at that level, or will that be at that level at 10


### 2019? Where is the baseline drawn at, and what 11


### is the assumption about the equipment? 12


### MR. XU: In this analysis, DOE looked at 13


### the AHRI directory, and so we plotted the 14


### different produc t class, the different equipment 15


### classes, and a look at the efficiency levels, so 16



### we still considered the ASHRAE standard at 2013 17


### levels for each equipment class. They are still 18


### representative of the current market, so that is 19


### why we are using that as a b aseline. 20



### MS. ARMSTRONG: So, to clarify , it is not 21


### necessarily a market baseline, but we have to 2222

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### adopt ASHRAE. We can't do anything less than 1


### ASHRAE. So we start our analysis with the ASHRAE 2


### 90.1 being the baseline, because really we are 3


### trying to evalu ate whether we should go beyond 4


### ASHRAE. By law, the ASHRAE becomes a default. 5



### MR. BROOKMAN: Dick. 6



### MR. LORD: Dick Lord with Carrier. 7


### One thing to clarify is it says 2013, but 8


### it is really effective January 1, 2015. It is 9


### one of those delayed implemen tation dates. 10


### MR. STARR: 2016, right? 11


### MR. LORD: 2015 for this product. 12



### MR. BROOKMAN: Bob? 13


### MR. WHITWELL: Yeah. I just wanted to 14


### clarify for Louis also that at least as of 15



### November 2013, most of the market for 16


### single

- package air conditioner and heat pump, for 17


### example, were 13. 18



### MR. BROOKMAN: Marshall? 19


### MR. HUNT: Hi. This is Marshall Hunt, 20



### California Utilities. 21


### I am very concerned we don't have EER 2223

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### anywhere here, and we also don't have this level 1


### at the level that required for residential 2


### equipmen t, and this equipment's near cousin is 3



### residential. 4


### In the commercial setting, this is going 5


### to use a lot more energy, so I am very surprised 6


### that we don't have SEER 14 for split system, and 7



### we also don't have EER listed. So we will 8


### continue to be very c oncerned about that peak 9



### demand. 10


### MR. BROOKMAN: Thank you. 11



### Additional comments here? 12


### [No audible response.] 13


### MR. BROOKMAN: Okay. 14


### MR. XU: All right. So this slide 15


### summarizes the incremental efficiency levels for 16


### the four equipment classes that we loo ked at. As 17


### you can see, in addition to the ASHRAE baseline, 18


### DOE analyzed additional six efficiency levels, 19


### and we have listed the efficiency level zero for 20


### the split AC because there is only

-- only for 21


### the split AC, we have the 14 SEER. 2224

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### And then for t he max tech for split AC 1


### and single

- package AC, it goes to 19 SEER, and 2


### for the split heat pump and single

- package heat 3


### pump, the max tech we identified were 18. The 4


### HSPF listed in the tables here, this was based on 5



### the correlation between SEER and HSPF fr om the 6


### single

- phase product back to the 2011 direct 7



### final rule. 8



### So manufacturer cost model, the 9


### manufacturer cost model was developed as part of 10


### the reverse engineering approach, and DOE started 11


### this analysis by se lecting representative units, 12



### and then we conducted physical teardowns to 13


### generate the bill of materials, and from the bill 14



### of materials, we have the purchased parts as well 15


### as the raw materials that need to go through a 16


### different fabrication process. So we considered 17


### those manufacturing process es to develop the 18


### manufacturing cost. 19


### So in the case that a physical teardown 20



### is not feasible, DOE conducted catalog teardowns 21



### which means that it is based on manufacturer 2225

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### literature. We collected information such as 1


### compressors and heat exchangers and d ata analysis 2


### as similar fashion for the physical teardowns to 3


### develop the cost. 4


### In this analysis, we considered 3

- ton 5


### units as the representative capacity. 6


### Also, during the market research, we 7



### noticed that the three

- phase equipment and the 8


### single

- phase p roducts, there are a lot of 9


### similarities between the two. So the majority of 10


### the cost models were essentially based on the 11


### single

- phase products. 12


### So if we don't have any questions, I am 13


### going to pass it on to Sean for the water

- source 14


### heat pumps. 15



### MR. FA LTERMEIER: All right. My name is 16


### Sean Faltermeier. I'm with Navigant Consulting. 17


### I will be discussing the market assessment and 18


### engineering analysis conducted for the second 19


### type of equipment we will be looking at, 20



### water

- source heat pumps. 21


### First, we w ill look at the definitions 2226

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### and nomenclature. In Standard 90.1

- 2013, ASHRAE 1


### changed the name of the equipment type from 2



### "water

- source" to "water

- to

- air, water

- loop" heat 3


### pumps. DOE is proposing to change its name to 4


### match this change in ASHRAE, calling t he 5


### equipment class "water

- source (water

- to

- air, 6



### water

- loop) heat pumps." 7


### ASHRAE also changed the heating mode 8


### efficiency metric from just COP to COP H 

### , and DOE 9


### has tentatively decided not to adopt this 10


### editorial change, which it deemed only clarifying 11



### the difference between COP for refrigeration and 12


### heat pumps. 13


### Also, because there is currently no 14



### definition for water

- source heat pumps in the 15


### U.S. Code or Code of Federal Regulations, DOE is 16


### proposing the following definition, which is 17


### largely adopted from t hat in the ASHRAE handbook. 18


### DOE seeks comment on this proposed 19



### definition for water

- source heat pumps. 20



### Comments? 21



### MR. BROOKMAN: I see no comments here. 2227

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### Yes, please. Paul. 1



### MR. DOPPEL: So this would not include 2



### the water

- source heat pumps that are part of the 3



### VRF systems? 4


### MS. ARMSTRONG: This is Ashley from DOE. 5


### That's correct. They're separate. 6


### MR. DOPPEL: Thank you. 7


### MS. ARMSTRONG: Are you sure you don't 8


### want to take an earlier flight? 9


### [Laughter.] 10


### MR. DOPPEL: That was my one question. 11



### I'm re ady to go. 12


### [Laughter.] 13


### MR. BROOKMAN: Okay. So nothing 14



### additional here? 15


### [No audible response.] 16


### MR. BROOKMAN: Okay. 17


### MR. FALTERMEIER: Moving on, to begin the 18



### market assessment, DOE looked at the market for 19


### all units falling into the equipment classes 20


### under review. The equipment classes used are 21



### those defined in ASHRAE 90.1

- 2013, which are the 2228

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### same as currently used in the federal standards. 1


### There are three equipment categories for 2



### water

- source heat pumps separated by cooling 3


### capacity, as you can see in the table here, less 4


### than 17,000 Btu per hour, between 17,000 and 5


### 65,000 Btu per hour, and between 65,000 and 6


### 135,000 Btu per hour. 7


### DOE obtained all its equipment and market 8



### data from the AHRI

- certified product database as 9



### of November 2013. 10



### More deta ils and results from the market 11


### assessment can be found in Chapter 2 of the NOPR 12



### TSD. 13


### Next, we will get into the engineering 14


### analysis for water

- source heat pumps. As Xing 15


### described for central air conditioners, the goal 16


### of the engineering analysis is to develop 17


### efficiency levels for each equipment class and 18


### then manufacturer production cost estimates for 19


### each of these efficiency levels. 20


### DOE selected efficiency levels based on 21


### the range of efficiencies represented in the AHRI 2229

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### database for water

- source hea t pumps. Again, as 1


### Ashley clarified, the ASHRAE levels we used as 2



### the baseline because these levels must be 3


### accepted by rule in EPCA. 4


### These efficiency levels are selected for 5


### each equipment class based on the metric EER, as 6



### the standard for COP was not c hanged. 7


### Beyond the ASHRAE baseline, five 8



### additional

-- 9



### MR. BROOKMAN: Hold on one second. 10



### MR. HUNT: Marshall Hunt, PG&E. 11


### I am very concerned to know whether you 12



### looked at the sisters and brothers of these 13


### units. That's the ground

- source heat pumps, 14



### e ither closed loop or open loops. Mechanically, 15


### they are extremely similar, have extremely 16


### similar parts in them. 17



### Yes, three

- phase, single

- phase is 18


### different, and yet we see better, much better 19


### performance in that market. That market has to 20



### have a unit

- - this is geothermal

-- that goes 21


### over a much broader range of temperatures, and 2230

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### these operate in a much narrower range and can be 1


### optimized. 2


### I hoped that you looked at those as a 3


### similar market. Did you? 4



### MR. FALTERMEIER: We looked at those 5


### units, but EPCA excludes ground

- source and 6


### ground

- water units from its definition of 7



### water

- source heat pumps. 8



### MR. HUNT: I am not worried about EPCA 9


### here. I'm worried about the engineering side of 10


### it. In other words, I can buy a ground

- source 11


### heat pump right now a nd hook it up to a building 12


### water loop, and it would work fine. And that 13


### industry has done a fantastic job of efficiency, 14


### and it really should be looked at. 15



### MR. FALTERMEIER: We did look at those 16


### units, and actually, the majority of units that 17



### are used o r the majority of models rated for 18


### ground

- loop and ground

- water application are 19


### actually also rated for water

- loop application 20



### and therefore would be considered under this 21



### rule. 2231

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### MR. HUNT: I'd like to look at that 1


### further. Thank you. 2



### MR. BROOKMAN: Addi tional thoughts on 3



### this? 4


### [No audible response.] 5


### MR. BROOKMAN: Okay. 6


### MR. FALTERMEIER: Next, manufacturing 7


### production cost or MPC estimates were developed 8


### using a manufacturing cost model, as Xing 9


### described for central air conditioners. However, 10



### for wa ter

- source heat pumps, instead of using a 11


### cost model based upon physically torn

- down 12



### water

- source heat pumps, the cost model from 13


### previously torn

- down commercial heating and 14


### cooling equipment with similar components was 15


### adapted for water

- source heat pumps, using a 16


### catalog data cost analysis approach. 17


### To adapt the cost model, published 18



### water

- source heat pump catalog data along with 19


### dimensions, weights, component details, and other 20


### specifications were input into the model. 21


### DOE conducted these catalog teardo wns in 2232

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### which all the data that could be found for a unit 1


### was input into the cost model for over 60 units, 2


### spanning the range of equipment classes and 3


### efficiency levels. 4


### With all of this data, the cost model 5


### output MPC estimates for each efficiency level. 6


### More details on the methodology and results from 7


### this analysis can be found in Chapter 3 of the 8



### NOPR TSD. 9


### MR. BROOKMAN: Yes, Louis. 10


### MR. STARR: Louis Starr, NEE A. 11


### Actually, I just had one last question on 12


### the last slide. The higher efficiency levels 13


### would kind of tie into the question Marshall was 14


### asking. Is some of the equipment that are 15


### ground

- source heat pumps going to be reflected in 16


### some of these higher efficiency levels? Would 17



### that be an accurate statement? 18


### MR. FALTERMEIER: Only those units that 19



### are also rated for water

- loop application. 20


### MR. STARR: Okay. All right. Thanks. 21



### MR. BROOKMAN: Bob? 2233

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### MR. WHITWELL: Yes. so one thing to look 1


### at when you look at the ground

- source versus the 2



### other water

- source heat pump, it is a different 3



### test pr ocedure, different test standard, with 4


### different conditions, and so that drives at least 5


### part of the difference in the efficiency level. 6


### MR. BROOKMAN: Thank you. 7


### MR. LORD: [Speaking off mic.] 8



### MR. BROOKMAN: Thanks, Dick. 9


### Okay. 10


### MR. CYMBALSKY: Dick, can you just repeat 11



### that for the record? 12



### MR. BROOKMAN: Yeah. 13


### MR. LORD: Yeah, sure. So sorry about 14



### that. Dick Lord with Carrier. 15


### I just said, what Bob was saying, there's 16


### two different test standards, and when you do 17


### ground

- source, it's rated a diffe rent condenser 18


### water temperature, so it tends to make the 19


### efficiency levels higher. 20


### MR. BROOKMAN: Thank you. 21


### MR. FALTERMEIER: Okay. That's it for 2234

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### the engineering analysis. 1


### I will pass it on to Ed to discuss the 2


### markups analysis. 3



### MR. BROOKMAN: Thank you. 4


### MR. CUBERO: I am Ed Cubero, and I will 5


### be talking about the markups, energy use, and the 6



### life

- cycle cost model. 7


### I am going to begin to talk about the 8


### markups analysis. The purpose of the markups 9


### analysis is to determine the customer price based 10



### o n the manufacturer's production cost for 11


### baseline and higher efficiency equipment, and in 12


### order to do this, we have to determine the 13


### distribution channel that that equipment takes. 14



### There will be four distribution channels 15



### in this rulemaking, two for new c onstruction and 16


### two for replacements, and if you see the 17


### percentages in the

-- , in the consumer box there, 18


### that represents the amount of shipments that goes 19


### through each distribution channel. 20


### Now, in order to determine the markup, we 21



### have to determine the expenses and profits at 2235

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### each level. So, for manufacturers, we look at 1


### 10K reports

. F or wholesalers , w e look at the 2


### HARDI Profit Report

. F or mechanical contractors , 3



### w e look at the ACCA financial reports and Census 4



### data

. F or general contractor s, census da ta, and 5



### for sales taxes, we use the sales tax 6


### clearinghouse. 7


### There are two types of markups we use, 8


### baseline markups, which relate the manufacturer's 9


### production cost to the customer purchase price 10


### for baseline equipment, and then incremental 11


### markups which relate the increase in manufacturer 12


### production cost to the increase in customer 13


### purchase price for higher efficiency equipment. 14


### And the table below represents the markups at 15


### different levels in the distribution chain, and 16



### the bottom row shows the overall markups we used 17


### in our analysis. 18


### MR. BROOKMAN: Let's just pause there for 19


### a second. Take a peek at that. Any comments on 20



### what's listed there? 21


### [No audible response.] 2236

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### MR. BROOKMAN: Okay. 1


### MR. CUBERO: Okay. Moving on to the 2


### energy use analysis. 3



### So the purpose here is to determine the 4


### unit energy consumption for the equipment at the 5


### considered efficiency levels in order to find the 6


### annual costs and savings, which are then inputs 7



### for the life

- cycle cost and payback period model. 8



### The method we use her e was to use 9


### previous DOE reports. We used the 2011 Direct 10



### Final Rule for residential central air 11



### conditioners as well as the 2000 Screening 12


### Analysis for EPACT

- covered Equipment

. 13


### We also adjusted the UECs to account for 14


### improvements in buildings over tim e, and we 15


### incorporated variability into the analysis using 16



### estimates of full

- load equivalent operating hours 17


### by building type and by census division. 18



### In order to find our base UECs for 19


### cooling for three

- phase air conditioners and heat 20


### pumps, we took the s ame UECs directly from the 21



### 2011 Direct Final Rule for residential central 2237

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### air conditioners, using the portion of those 1


### products that were sold to the commercial market. 2


### For heating, we determined from the 2011 3


### analysis that UEC did not scale with HSPF, wi th 4


### an increase in HSPF. Therefore, we did not 5


### include heating in our analysis. 6



### For water

- source heat pumps, the cooling 7


### unit energy consumption came from the 2000 8



### S creening A nalysis where we were given national 9



### full

- load equivalent operating data and inp ut 10


### capacities. By multiplying the two, we got a 11



### national UEC. 12


### And on the heating side, we estimated the 13


### UECs using data from the Commercial Building 14


### Energy Consumption Survey for air source heat 15


### pumps, and also because the data from the 2000 16


### Screening An alysis was a little old, we use 17


### scaling factors from the National Energy Modeling 18


### System to account for improvements in the 19


### building shell over time. 20


### Finally, to incorporate variability into 21


### the analysis, we developed distributions of our 2238

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### equipment by bui lding type and by census 1


### division. Then we scaled the national UECs by 2


### the FLEOH data we had from the 2000 Screening 3


### Analysis. 4



### MR. HUNT: This is Marshall Hunt. 5


### Oh, go ahead, Joanna. 6



### MS. MAUER: Joanna Mauer. 7


### On the heating for the three

- phase 8



### central AC and heat pump, I guess I'm having 9


### trouble understanding why increasing HSPF

-- 10


### wouldn't it result in heating energy savings? 11



### MR. CUBERO : There is a table in Chapter 12


### 4 of the TSD, which shows the heat savings were 13


### quite small as HSPF increased, but I' m not sure. 14



### MS. WILLIAMS: This is Alison. 15


### Yeah. It was based on building 16


### simulations of equipment in commercial buildings, 17


### and the heating UECs were around 500, and they 18



### sort of did this with

-- 19


### [Laughter.] 20


### MS. WILLIAMS: Sorry for those who can't 21



### se e me. 2239

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### [Laughter.] 1


### MS. WILLIAMS: They didn't just go up 2


### with HSPF. They kind of dipped. 3


### MR. BROOKMAN: They kind of went up and 4



### down and all around. 5



### MS. WILLIAMS: Yeah. 6


### And so our understanding of it was, 7


### personally because of the HSPF rating being 8


### designed for residential situations and that this 9


### is commercial equipment, that it's unclear that 10


### putting

-- as the simulation shows, that you 11


### really actually got much heating energy savings 12


### from increasing the HSPF. They are primarily 13


### designing for the c ooling side, but we certainly 14


### do request comment on that. We are requesting 15


### comment on the NODA, and we did not receive

-- or 16


### we received some comments that supported this, 17


### but we didn't receive any other data. 18


### MR. BROOKMAN: Alison, would you state 19



### spec ifically what you wanted comment on? 20


### MS. WILLIAMS: Just if people have 21


### concerns about our conclusion that increasing 2240

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### HSPF for this equipment would not result in 1


### energy savings, we would welcome data to 2


### demonstrate why that is not the case. 3



### MR. BROOKMAN: Thank you. 4



### Yes, Marshall. 5



### MR. HUNT: Marshall Hunt, PG&E. 6


### So I think I just heard that heating 7


### analysis was done for commercial buildings; is 8



### that correct? 9



### MR. CUBERO : Yeah. For

-- 10



### MR. HUNT: Correct. 11


### And yet the cooling analysis was done for 12



### res idential. 13



### MR. CUBERO : Oh, sorry. 14



### MR. HUNT: Is that correct? 15



### MR. CUBERO : Are you talking about 16



### water

- source heat pumps? 17



### MR. HUNT: No, three

- phase. 18



### MR. CUBERO : No, they're both from

-- 19


### that's from the residential analysis. 20


### MR. HUNT: Cooling is fr om residential? 21



### MR. CUBERO : Yeah. 2011 Direct Final 2241

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### Rule for residential. 1



### MS. WILLIAMS: For residential used in 2


### commercial applications. 3



### MR. HUNT: What was the simulation? What 4


### was the building you worked with? 5



### MS. WILLIAMS: This is Alison. 6



### I do n't have the specifics in front of me 7



### because the simulations were done for the 2011 8


### DFR, and so I would have to go back and look at 9


### that last TSD to remind myself what exactly they 10


### modeled, but they were modeling the single

- phase 11


### equipment in specific com mercial applications. 12



### MR. CUBERO : And I believe we asked for 13


### comment in the NODA period, and everyone said 14



### that

-- most of the comments came back said that 15



### th e single

- phase UECs for commercial applications 16



### were relevant. 17



### MR. BROOKMAN: Louis. 18



### MR. STARR : So kind of talking

-- or 19


### going back to what Alison was talking about, 20


### typically in the smaller commercial buildings, 21


### they tend to be a little more envelope

- dominated, 2242

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### more so than the commercial ones. 1


### You tend to be affected by the weather a 2



### little mor e, and so as you increased your heating 3


### demand, it would seem that you would see

-- or if 4


### you increased the efficiency of your heating 5


### side, you would see that in energy savings. 6


### In the typical

-- in the larger 7


### commercial office, that would be less the ca se. 8


### So I don't know. I guess we will have to look at 9


### the models and things, but just as a rule of 10



### thumb

-- 11


### Maybe Dick had some thoughts. 12


### MR. BROOKMAN: Yeah. Dick, please. 13



### MR. LORD: In the models that PNNL 14


### generated that DOE funded, commercial small 15


### office buildings do not look like residential. 16


### Changeover temperatures are down at 40, 50 17


### degrees. Residential is up to 60, 65. So they 18


### have a lot of internal plug loads that tend to 19


### still make them a cooling

- dominated building. 20


### MR. STARR: They have typically more 21


### envelope loads, right, than your bigger 2243

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### commercial office spaces. 1


### MR. LORD: Yeah. If you look at like a 2


### large office, a large office may have a 3


### changeover temperature down at zero degrees. A 4


### small office may be up at 40, 50 degrees. 5



### MR. STARR: Okay. 6


### MR. LORD: But it's still much, much 7


### different than a residential building. 8


### MR. STARR: So there ends up not being 9


### that much in the way of heating going on, even in 10


### the small commercial buildings? 11


### MR. LORD: The other thing to keep in 12



### min d, commercial buildings are occupied in the 13


### day, unoccupied in the evening, which is usually 14


### when you have a lot of your heating. 15


### MR. STARR: Okay. 16



### MR. BROOKMAN: Yes. Joanna. 17


### MS. MAUER: And then I had one question 18


### on the cooling side, and I understan d that the 19


### energy values come from the previous 2011 20


### analysis. 21


### If I am remembering correctly, the energy 2244

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### savings are smaller than what we would expect, 1


### just looking at ratios of SEER values. For 2


### example, going from SEER 13 to SEER 14 for the 3


### split

- syste m AC, just looking at SEER values, we 4


### might expect a 7 percent savings, whereas I think 5


### the savings are more like 3 percent. 6


### I was just wondering if there was kind of 7


### a high

- level explanation for why the savings are 8



### lower than

-- 9



### MR. CUBERO : I'm not sur e. 10


### Alison, do you? 11



### MS. WILLIAMS: This is Alison. 12


### I probably don't have the explanation you 13


### are really looking for, but we did notice that, 14


### certainly, when we reviewed the results of the 15


### 2011 analysis , t hey weren't scaling in proportion 16



### to SEER. 17



### As we said, there are commercial building 18


### simulations, and that is what came out of

-- 19



### Hey. 20


### MR. ROSENQUIST: Hi. Greg Rosenquist 21



### here. 2245

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### It is due to the ventilation requirements 1


### for office buildings, so

-- and that fan energy 2


### doesn't change from efficiency le vel to 3


### efficiency level. 4


### MR. BROOKMAN: Thank you, Greg. I note 5


### that a few of your industry friends are nodding 6


### their heads in agreement. 7



### Steve Rosenstock. 8



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 9


### There might be a little bit of building 10


### demographics he re, too, especially northern 11


### climates are more likely to be fossil 12



### fuel

- heated, so it's a smaller base to begin 13


### with, possibly. So that might also have 14


### something to do with it. 15


### MR. BROOKMAN: Okay. Thank you. 16


### I guess we are going to move on then. 17



### MR. CUBERO : Now we will talk about the 18



### life

- cycle cost and payback period analysis. 19


### So the purpose here is to provide an 20



### economic e valuation from the consumer's 21


### perspective of the purchase of higher efficiency 2246

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### equipment, and the life

- cycle cost is the total 1


### consumer cost over the life of the equipment. 2


### The payback period is the time required to 3


### recover the increased purchase price through 4


### operating cost savings

. 5



### And the method, we used a Monte Carlo 6


### simulation, so we ran the LCC model through 7


### 10,000 differe nt iterations, and then we took the 8


### average of those to calculate our LCC savings. 9


### The first input we looked at was total 10


### installed cost. Total installed cost, the sum of 11


### the equipment price and the installation cost. 12


### The equipment price came from the m arkups 13


### analysis. DOE also looks at producer price index 14


### to determine price trends over time. 15



### We looked at two PPI series here. The 16



### first was for commercial unitary air 17


### conditioners, the second was for refrigeration 18


### and heating equipment, and there was n o 19


### discernible upward or downward trend, so we 20


### maintained constant real prices to project our 21


### future equipment price. 2247

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### The installation cost s represent labor 1


### and materials that are required to install the 2


### equipment. These costs came directly from RS 3



### Means for the appropriate equipment, and 4


### installation costs do scale with larger, with 5


### higher efficiency equipment. As the weight 6


### increases of higher efficiency equipment, the 7


### installation cost will scale proportionally. 8



### Second, I will talk about annual 9



### operat ing costs. So there are three annual 10


### operating costs. The first is annual energy 11


### costs, then maintenance costs and repair costs. 12


### The annual energy costs are calculated by 13


### taking the energy use, annual energy use, and 14


### multiplying it by the electricity pr ice. Our 15


### electricity prices were by Census Division, and 16


### they were taken from tariff data, which has been 17


### processed into commercial building marginal and 18


### average prices. 19


### In order to pro j ect future electricity 20


### prices, we used the Annual Energy Outlook fro m 21



### 2014. 2248

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### The maintenance costs represent labor and 1


### materials required to maintain the equipment. 2


### These came directly from RS Means, and they don't 3


### increase with the efficiency of equipment. 4


### And finally, repair costs are associated 5


### with repairing or repla cing components that have 6


### failed, and the materials portion of the repair 7


### costs were scaled with the equipment weight, so 8


### they grow by efficiency level. And in order to 9


### make the repair cost into an annual value, DOE 10


### assumed the repair would happen in year 10, and 11


### we took the present value of that number and 12


### divided it over the equipment lifetime. 13


### For both maintenance and repair cost, we 14


### didn't have any RS Means available for 15



### water

- source heat pumps, so we used the data for 16



### air

- source heat pumps, assuming that was 17


### representative of water

- source heat pumps. 18


### So next, looking at the equipment 19


### lifetime, lifetime is defined as the age when the 20


### equipment is retired from service. We used a 21



### survival function in the form of a Weibull 2249

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### distribution, which is from th e 2011 Direct Final 1



### Rule of residential air conditioners, and we came 2


### up with median values for three

- phase central air 3



### conditioners and water

- source heat pumps of 17.7 4


### years and 14.6 years for three

- phase central heat 5



### pumps. 6


### And we also applied discount rates to the 7


### future operating expenses to bring them back to 8


### the year of purchase, which in this case would be 9


### 2020, the compliance year. These are estimated 10


### as the weighted average cost of capital for the 11


### types of firms who have this type of equipment. 12



### For three

- phase central air conditioners 13


### and heat pumps, we assumed it was the small 14



### office and small retail market, and for 15



### water

- source heat pumps, we assumed office

-- the 16


### office market, public market, lodging, property 17



### owners, and medical services. An d our 18



### information came from Damodaran Online. 19



### MR. BROOKMAN: Louis. 20



### MR. STARR: Louis with NEEA. 21



### So on the survival function, it seems 2250

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### like since it's commercial equipment, it's 1


### generally built a little better, so it seems like 2



### the lifetime

-- so the re sidential ones you're 3


### pulling of 17.6

-- 17.7, 14.6, it seems like the 4


### commercial ones would have perhaps greater life. 5



### MR. CUBERO : That was actually one of the 6


### comments we were going to ask. The box is coming 7



### up. 8



### MR. STARR: Looks like

-- 9



### MR. LORD: Y eah. I mean, they are 10


### typically designed the same, same basic process. 11


### The residential is probably higher tool ed than 12


### the commercial, so we typically use a 15

- year 13


### design life. 14



### That's what we do for all the ASHRAE 15


### analysis, and that's what we design to. We 16


### sometimes miss, and they go 17 years. 17


### [Laughter.] 18



### MR. STARR: Aren't the commercial 19


### products more durable, though, than

-- 20



### MR. LORD : No. No different components. 21



### No thicker steel. No. 2251

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### MR. WINNINGHAM: This is Dave from Allied 1


### Air, and I would concur with Dick. 2


### In a lot of cases, there may be some 3


### special three

- phase products. The majority of 4



### these are residential

- type products with 5


### components changed out for a three

- phased 6


### application. 7


### MR. LORD: To add things like economizers 8



### and features l ike that. That's what we do. 9


### MR. BROOKMAN: Okay. Thank you. 10


### Helpful. 11


### Yes, please. 12


### MR. ROY: Hi. Aniruddh Roy with Goodman. 13


### I might be getting ahead of myself here, but I am 14


### just looking at the TSD Chapter 6 life

- cycle cost 15


### and payback period. The re is a table in there 16


### which talks about the simple payback period years 17


### for split

- system ACs, less than 65,000 18



### three

- phase, and the simple payback is 68 years 19



### at EL zero. 20


### And over here, it seems like you are 21


### looking at a medium lifetime of 17.7 years, so 2252

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### that's about four times that life, that equipment 1


### life that it's operating at. 2


### Also, my question is

-- I wanted to make 3


### that one point, and the other one is that you are 4


### talking about, in this Slide 33

-- actually, the 5


### previous slide

-- repair costs assu med to take 6


### place every 10 years. So did you account for 7


### that seven times over when you did the analysis? 8



### MR. CUBERO : The simple payback is just 9


### the LCC savings divided by the equipment

-- the 10


### change in equipment price between efficiency 11



### levels. It is undiscounted. 12


### Yeah. So there's very little LCC savings 13


### because there's very little electricity savings, 14


### so it's just that that sort of payback is going 15


### to be a lot longer. 16


### When we run the LCC model, we only run it 17


### through one lifetime, so it's not

-- ye ah. We're 18


### not assuming there's four lifetimes of equipment 19



### in a 68

- year payback period. 20


### MR. BROOKMAN: So, correspondently, you 21


### wouldn't have the repair costs. 2253

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### MR. CUBERO : What was that? 1


### MR. BROOKMAN: Nothing. 2


### [Laughter.] 3


### MR. BROOKMAN: Okay. Addi tional 4


### thoughts? Comments? 5


### [No audible response.] 6



### MR. CUBERO : Okay. So, finally, we have 7



### a base

- case efficiency distribution. So this 8


### defines the percentage of products that are being 9


### sold at each efficiency level, and we base this 10



### on the AHRI

- certif ied directory, on model 11


### availability in that directory, and we also 12


### assumed a trend of 1 SEER every 35 years, so we 13



### take the base

- case efficiency distribution this 14


### year and apply it to 2020 by applying that trend 15


### of meeting in the absence of a standard , t he 16


### efficiency will improve by 1 SEER every 35 years. 17


### And these are two requests for comment. 18



### The first was about the use of RS Means for 19


### maintenance, repair, and installation costs, and 20


### if not appropriate, if there is more data, we 21


### would be happy to look at it. And the second was 2254

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### for lifetimes and if the use of the Weibull 1


### distribution was appropriate. 2


### Finally, since there are seven different 3


### product types, rather than having seven slides, 4


### just to give you an example of what the results 5



### look like for th ree
- phase single

- package air 6


### conditioners, we start with the ASHRAE baseline, 7


### and five efficiency levels above that, and all 8



### the life

- cycle savings are compared to the ASHRAE 9



### baseline. 10



### Question? 11


### MR. BROOKMAN: Yes, please. Steve. 12



### MR. ROSENSTOCK: Steve Rosenstock, Edison 13



### Electric Institute. 14


### Percent of customers. Is that percent of 15


### customers with higher life

- cycle cost rather than 16



### new cost? I'm not sure what new means in that 17


### perspective. 18


### MR. CYMBALSKY: It's supposed to be net. 19



### MR. ROSENSTOCK: Wi th net cost? Okay. 20


### Thank you. 21



### MR. BROOKMAN: This table is 2255

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### illustrative. Any questions, comments on the 1


### foregoing slide, and particularly the comment 2


### boxes that are there, does anybody wish to 3



### comment on those? 4


### [No audible response.] 5



### MR. BROOKMAN: O kay. 6


### MS. WILLIAMS: Okay. So I am going to 7


### talk about the shipments and national impact 8


### analysis. 9


### The shipments is to

-- I feel like I'm 10


### repeating myself from this morning. The purpose 11


### of the shipments analysis, this is to estimate 12


### shipments over the 30

- year period. We are using 13


### this as an input to the national impact analysis. 14


### We are using whatever available sources 15


### we could find for the initial shipments and then 16


### using other data, such as U.S. Census and AEO 17


### floor space to project. 18


### I am going to s tart with the three

- phase 19


### CAC and CHP equipment. The data we had available 20



### to start with for the initial was 1999 estimates 21



### from the 2000 Screening Analysis . We requested 2256

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### other data in the NODA and didn't get any, so 1



### that's what we started with. 2



### We used Census data from 1999 to 2010 to 3



### scale the 1999 data forward. We can't use Census 4


### data alone because it includes both single

- phase 5



### and three

- phase shipments, so that's why we just 6


### used it as a scaling factor. 7


### We made some changes from the NODA in 8



### this a nalysis. Part of the problem was that our 9



### data ends in 2010 because that Census data is no 10


### longer available, and we weren't sure what would 11


### happen as a result of this recession and what 12



### would occur in the future. 13


### So we looked at some AHRI shipments data, 14


### which isn't specifically for three

- phase CAC, to 15


### see what the market did over the last couple of 16


### years, and we found that there was a decline 17


### through 2010, and then starting in 2011, it 18



### started to rebound. So we used the AHRI data to 19


### adjust our shipments from 2010 to 2011, and 20


### starting in 2011, we had AEO 2014 floor space 21


### data available that we used to project the 2257

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### shipments. And that's about a 1 percent annual 1


### growth rate that we're using into the future. 2



### On the water

- source heat pumps side, we 3



### used U.S . Census data completely. We had several 4


### available years. We used the 1999 to 2010 5


### segment to project shipments past 2010, and 6



### that's for all water

- source heat pumps. We used 7


### the allocation between equipment classes that was 8



### found in the 2000 Screening Analysis to 9


### disaggregate those, and that's the extent of that 10


### analysis. 11


### So these are just the resulting trends 12


### that you will see here for both the three

- phase 13



### CAC and water

- source heat pump. We are using the 14


### same shipments in both the base case the 15



### stand ards cases, and so that's what our issue box 16


### is here, just requesting comment on that. 17



### MR. BROOKMAN: Steve Rosenstock. 18



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 19


### I guess I am kind of struck. I look on 20



### Slide 40 for the three

- phase CAC and CHP, and I 21



### see e ither flat or declining sales based on all 2258

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### the data that you have, and now you're showing 1


### increasing sales. I know you're relying on 2


### different data, but I just

-- I'm just surprised 3


### that you're showing any increase overall. 4


### I can see flat, but the histor y that you 5


### show is shown declining. So I guess I am a 6



### little

-- 7



### MS. WILLIAMS: Sure. And we used

-- in 8



### the NODA, we used these trends, and some were 9


### declining, and some were increasing, and I think 10



### we switched to constant for one because we 11



### weren't sure . So that's why we reviewed the AHRI 12


### data, and we felt that it did clearly demonstrate 13


### that there was a turnaround in 2011, and we would 14


### expect the market to increase, which is why you 15


### see that 1 percent annual growth rate. 16


### However, obviously, we welcome actual 17


### shipments data for this equipment, which we don't 18


### have right now. 19


### [Laughter.] 20



### MR. ROSENSTOCK: This is Steve 21



### Rosenstock, EEI. 2259

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### I am looking at Slide 40. Aren't these 1


### actual data points? 2


### MS. WILLIAMS: Okay. So

-- wait. Slide 3



### what? 4



### MR. BROOK MAN: 40. 5


### MR. ROSENSTOCK: The one you're on right 6



### now, that one. 7


### MS. WILLIAMS: Okay. That is the 1999 8



### data scaled with Census data, and so the issue 9


### with the Census data is this is not strictly for 10


### this equipment class. So we're using it as a 11


### scaling factor, but it's not specific to this 12



### class. 13


### So the only data we have exactly for this 14


### is literally from 1999. 15



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 16


### So everything since then is just total

-- 17



### MS. WILLIAMS: Yeah. 18


### MR. ROSENSTOCK: Wow! Okay. 19



### MS. WI LLIAMS: I mean, we're using what 20


### we have to do the best we can, and unless we get 21


### actual industry data for that specific equipment 2260

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### class, this is currently the best we can do. 1



### MR. BROOKMAN: Louis Starr. 2


### MR. ROSENSTOCK: Thank you. 3



### MR. STARR: So I gue ss, essentially, 4


### you're assuming a 1 percent increase in shipments 5



### for the next 3 0 years. 6


### I am kind of trying to understand. The 7


### building stock is becoming more, right? Is it at 8


### that same level? It almost seems like they have 9


### to put equipment in buildi ng, right? So is it 10


### just going to be 1 percent, or is it

-- I mean, 11


### it seems like it almost might be with the 12


### proportion to the increase in building 13


### population. 14


### MS. WILLIAMS: Right. So this is 15


### proportional. We are scaling with the AEO 2014 16


### floor space forecast for the sectors that we're 17


### looking at here, so that's what it is. 18



### MR. STARR: Well, that seems reasonable 19



### to me. 20


### MS. WILLIAMS: Okay. 21


### [Laughter.] 2261

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### MS. WILLIAMS: All right. So I am going 1


### to move on to the national impact analysis. We 2



### determi ned the national energy savings and 3


### customer national net present value resulting 4


### from potential amended standards. 5


### We do this using a time series of energy 6


### and economic impacts. We, of course, used the 7


### shipments model to find out what the stock is, 8



### and we're aggregating those costs and energy use 9


### per unit in any given year and reporting the 10


### estimates as change in consumer national net 11


### present value. 12


### We do, of course, use discount rates to 13



### account for the time

- value of money. 14


### What you saw this morning, for those who 15



### were here, we take the LCC analysis results and 16


### other inputs along with the shipments model and 17


### put them into the NIA model to get these energy 18


### savings and economic impact outputs. 19


### They are for 30 years of equipment 20


### shipped, and so the energ y savings and economic 21


### impacts continue for the lifetime of all the 2262

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### equipment shipped in the 30

- year period. 1


### As you can see here, that 30

- year period 2


### does depend on equipment class. 3


### This is a summary of the inputs to the 4


### NIA. Again, most of these are t aken directly 5


### from the LCC outputs. We have total installed 6


### costs, which does vary as a function of 7


### efficiency level. Maintenance costs do not vary 8


### as a function of efficiency level, but repair 9



### costs do. 10


### The energy use was from the energy use 11


### analysis a nd the LCC. 12



### The base

- case efficiencies, as Ed 13


### mentioned, were derived from the AHRI directory, 14



### and then we used the base

- case growth rate of 1 15


### EER every 35 years

-- sorry
-- 1 SEER

-- well, 16


### it's both, SEER for three

- phase AC and EER for 17



### water

- source heat pump. 18



### In the standards

- case projected 19


### efficiencies, we did do a roll

- up scenario, so at 20


### the year of compliance, all the equipment that 21



### would be below the standard level, we assumed 2263

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### would roll up to meet the standard level. In the 1


### equipment above , that wo uld not be affected, and 2


### then we used that same growth rate in efficiency. 3


### We're using EIA AEO 2014 forecasts for 4


### energy prices. We are accounting for full 5



### fuel

- cycle energy savings. We used 7 percent and 6


### 3 percent real discount rates, and we are 7



### discou nting to 2014. 8


### These are a couple requests for comments 9


### on whether we would expect a rebound effect and 10



### on our base

- case efficiency trend use. 11


### [No audible response.] 12


### MS. WILLIAMS: Seeing none, I will just 13


### move on to the results. As you can see here, w e 14


### have these summarized for each set of equipment, 15



### three

- phase CAC and heat pumps as well as 16



### water

- source heat pumps at an aggregate level. 17


### Okay. Moving on to the emissions 18


### analysis ; we do an emissions analysis where we 19



### estimate the emissions reductions resulting from 20


### those energy savings. We are using AEO 2014 to 21



### derive the emissions factors. 2264

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### We then use the interagency social cost 1



### of carbon values to monetize those factors for 2



### CO 2 

### . You can see those estimates for 2013 here. 3



### We also monetized NO x 

### emi ssions. 4


### Finally, we do a utility impact analysis 5


### to estimate changes in installed capacity and 6


### generation resulting from the amended standards. 7


### This is done using the National Energy Modeling 8


### System, and these outputs are all available in 9



### the TSD. 10



### And t hat's it. 11


### MR. BROOKMAN: So then closing remarks, 12


### final comments related to this proceeding. 13



### Yes, Laura. 14



### MS. PETRILLO

- GROH: This is Laura 15



### Petrillo

- Groh from AHRI. 16


### We strongly support the DOE adopting 17


### ASHRAE levels and in our general support of 18



### ASHRAE 90.1 process. 19


### Thank you. 20


### MR. BROOKMAN: Thanks. That's helpful. 21


### Appreciate that. 2265

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### Marshall? 1


### MR. HUNT: California IOUs, Marshall 2



### Hunt. 3


### I reserve the right to ask for higher 4


### levels of efficiency. I have got to look at it 5



### further. I am somewhat conce rned about such a 6


### negative analysis happening. 7


### Thank you. 8


### MR. BROOKMAN: Okay. Steve? 9



### MR. ROSENSTOCK: Steve Rosenstock, EEI. 10



### I'm also

-- I will say that the ASHRAE 11


### process works, and it will lead to energy savings 12


### very quickly, and I think I appreciat e the 13


### analysis here. 14


### I do have to say in terms of the energy 15


### savings, when I saw all of the

-- how do I say 16



### it?

-- the estimations of the shipments, I'm a 17


### little worried that higher shipments do lead to 18


### higher estimated savings at all efficiency 19



### levels. 20



### So I remain a little concerned about the 21


### estimated savings, just because I didn't see any 2266

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### data that shows the significant increases. 1


### I know floor space increases, but there's 2


### lots of choices that people have in terms of 3


### heating and cooling their building, so I always 4


### get concerned when these shipments just seem to 5


### be so against the data that's being shown or the 6


### estimates that were shown that are so opposite of 7


### the estimates shown that you see these higher 8


### efficiency levels, look at all these higher 9


### saving s. Well, if the shipments are a lot lower 10


### than what you thought, then those savings don't 11



### exist. 12


### Thank you. 13



### MR. BROOKMAN: Joanna. 14



### MS. MAUER: Joanna Mauer. 15



### So for water

- source heat pumps, I believe 16


### the bulk of the energy savings at higher 17


### efficiency levels are in the 17,000 to 65,000 18



### Btu

- per
- hour equipment class, and DOE's analysis 19


### shows that higher levels for that category are 20


### cost effective. So we'd encourage DOE to 21


### consider setting higher levels for that one 2267

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### category of water

- source heat pumps tha t could 1


### achieve significant, additional energy savings. 2


### MR. BROOKMAN: Thank you. 3


### Yes, Aniruddh. 4


### MR. ROY: A question on Slide 10. This 5


### may have been addressed already. It says in the 6



### first bullet that de minimis is 0.001 to 0.002 7


### quads. Is there a s pecific definition? 8


### And this question is for either Ashley or 9


### John. Is there a specific definition for

-- or 10


### Eric. Is there a specific definition for de 11



### minimis in the statute? Because I know for 12


### significant energy savings, there is no 13


### definition, and so it is left up to DOE to decide 14


### what's significant and what's not. 15


### MR. STAS: Eric Stas, DOE. 16


### No, there is on definition of de minimis 17



### in the statute. 18


### MR. ROY: Okay. So that was basically 19



### DOE's determination in the slide that that level 20



### was de minim is? 21


### MR. STAS: Right. They are just giving 2268

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### you an example in this particular case of what it 1



### is. 2


### MR. ROY: Right. Thank you. 3



### And

-- sorry, Eric. One more question. 4



### Is there a threshold for which

-- I guess a point 5


### beyond which you would consider it not to be de 6



### minimis? 7


### MR. STAS: Eric Stas, DOE. 8


### I think it's fair to say, we've taken 9



### this on a case

- by

- case basis, and we have the 10


### public comments, so

-- and you all aren't bashful 11


### telling us what you think, so

-- 12


### MR. ROY: Right. Okay. Thank you. 13


### MR. BROOKMAN: Any additional questions 14


### or comments? We are moving towards closure here 15


### and taking any additional final comments. 16



### So I think that that is it. I will turn 17


### it back to Ashley for closing remarks. 18


### MS. ARMSTRONG: Okay. So I'd just like 19



### to thank everyone for coming today. Obviously, 20


### we went through the slides on a fairly high 21


### level, and we have provided all our documentation 2269

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### and additional support underlying the proposal 1



### and the actual documents that are on their 2



### website and our docket. 3



### We welcome you to comment on all aspects 4


### of that, and obviously, we appreciate the 5


### comments you made today. 6


### So just to note, the comment period 7



### closes on March 25th

-- March 24th, and please 8


### submit comments, because we always welcome those. 9


### But thank you f or coming, and safe travels home 10


### on Friday. 11


### [Whereupon, at 2:02 p.m., the public 12


### hearing concluded.] 13

14

15

16

17

18

19

20

21



### CERTIFICATE OF NOTARY PUBLIC 2270

1 

### I, Brian Knieser, Notary Public in and

2 

### for the District of Columbia, the officer before

3 

### whom the foregoing testimony was taken, do hereby

4 

### certify that the testimony which appears in the



### s foregoing transcript was taken by me and

6 

### thereafter reduced to typewriting under my

7 

### direction; that said testimony is a true record



### s of the testimony given; that I am neither counsel

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### for, related to, nor employed by any of the

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### parties to the action in which this testimony is

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### taken; and, further, that I am not a relative or

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### employee of any of the parties hereto, nor

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### BRIAN KNIESER

Notary Public in and for

The District of Columbia

Commission Expires: 03.14.2019

OLENDER REPORTING, INC. 1100 Connecticut Avenue NW, #810, Washington, DC 20036 Washington: 202-898-1108 • Baltimore: 410-752-3376 Toll Free: 888-445-3376