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1 U.S. Department of Energy

2

3

4

5 Public Meeting on

6 Energy Conservation Standards for

7 Commercial Heating and Test Procedures for ASHRAE 

8 Equipment, Certain Industrial Equipment 

9

10

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

12 Friday, February 6, 2015

13

14 U.S. Department of Energy

15 Room 8E-089

16 1000 Independence Avenue, S.W.

17 Washington, D.C. 20585

18

19

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21

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1 Moderator:

2 DOUG BROOKMAN, Public Solutions

3

4 DOE Staff:

5 JOHN CYMBALSKY, Program Manager,

6 Appliance Standards

7 RONALD MAJETTE, Project Lead

8 ERIC STAS, Office of General Counsel

9 ASHLEY ARMSTRONG

10

11 Attendees:

12 PAUL L. DOPPEL, Mitsubishi Electric

13 DICK LORD, Carrier Corporation.

14 NICK MISLAK, Air Conditioning, Heating,

15 and Refrigeration Institute

16 LOUIS STARR, NEEA

17 MARSHALL HUNT, Pacific Gas and Electric Company

18 RACHEL FEINSTEIN, Hearth, Patio, and Barbecue

19 Association

20 AMY SHEPHERD, Air Conditioning, Heating,

21 and Refrigeration Institute

22 RANDY PALM, Allied Air
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1 Attendees: (continued)

2 DAVE WINNINGHAM, Allied Air

3 STEVE ROSENSTOCK, Edison Electric Institute

4 JOANNA MAUER, Appliance Standards Awareness

5 Project

6 LAURA G. PETRILLO-GROH, AHRI

7 ANIRUDDH ROY, Goodman Manufacturing 

8 ROBERT WHITWELL, Carrier Corporation

9

10 Consultants:

11 ED CUBERO, Lawrence Berkeley National

12 Laboratory

13 SEAN FALTERMEIER, Navigant

14 GREG ROSENQUIST, Lawrence Berkeley National

15 Laboratory

16 CHRIS LAU, Navigant

17 ALISON WILLIAMS, Lawrence Berkeley National

18 Laboratory

19 SCOTT MORRIS, Pacific Northwest National

20 Laboratory

21 COLLIN WEBER, Navigant

22 XING XU, Navigant
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1 Also Present:

2 SARAH MEDEPALLI, ICF International

3 GLENN HARRISON, Attorney, Department of Justice

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1 C O N T E N T S

2 PAGE

3 Introduction and Overview, Determination

4 of Scope 12

5 Test Procedures 15

6 Market Assessment; Engineering 17

7 Markups; Energy Use; Life-Cycle Cost and

8 Payback Period Analysis 34

9 Shipments; National Impact Analysis 55 

10 Emissions and Utility Impact Analyses 63

11 Closing Remarks 64

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

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

3 would, please. Good afternoon. This is the 

4 Energy Conservation Standards Notice of Proposed 

5 Rulemaking meeting regarding Energy Conservation 

6 Standards and Test Procedures for ASHRAE 

7 Equipment, Certain Industrial Equipment.

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

9 Forrestal Building, Washington, D.C. 

10 Welcome to all. My name is Doug 

11 Brookman, Public Solutions, Baltimore. Good to 

12 see you here.

13 We are going to start with welcoming 

14 remarks from Ashley Armstrong.

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

16 everyone to our public meeting on the test 

17 procedures -- or the test procedure and the 

18 energy conservation standards for certain 

19 equipment in ASHRAE Standard 90.1.

20 Obviously, the point of this meeting is 

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

22 proposed rule. So we strongly encourage you to 
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1 speak up whenever you have a comment or question 

2 about either our analysis or our regulatory 

3 proposal, and we appreciate you all coming here 

4 on this Friday afternoon in chilly Washington, 

5 D.C.

6 MR. BROOKMAN: Thank you.

7 We always start with introductions, and 

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

9 used to turning the microphone both on and off, 

10 and name and organizational affiliation.

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

12 with Carrier Corporation.

13 MR. LORD: Dick Lord with Carrier.

14 MR. PETRILLO-GROH: Laura Petrillo-Groh, 

15 Air Conditioning, Heating, and Refrigeration 

16 Institute.

17 MR. DOPPEL: Paul Doppel, Mitsubishi 

18 Electric.

19 MR. STARR: Louis Starr, Northwest Energy 

20 Efficiency Alliance.

21 MR. HUNT: Marshall Hunt, Pacific Gas and 

22 Electric Company and the California IOUs.
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1 MR. PALM: Randy Palm, Allied Air.

2 MR. BROOKMAN: Oh, we missed someone.

3 MS. FEINSTEIN: Rachel Feinstein, Hearth, 

4 Patio, and Barbecue Association.

5 MR. BROOKMAN: Thank you, Rachel.

6 Randy?

7 MR. WINNINGHAM: Dave Winningham, Allied 

8 Air.

9 MR. ROSENSTOCK: Steve Rosenstock, Edison 

10 Electric Institute.

11 MS. MAUER: Joanna Mauer, Appliance 

12 Standards Awareness Project.

13 MR. CYMBALSKY: John Cymbalsky, DOE.

14 MR. XU: Xing Xu, Navigant.

15 MR. FALTERMEIER: Sean Faltermeier, 

16 Navigant.

17 MR. CUBERO: Ed Cubero, Lawrence Berkeley 

18 National Laboratory.

19 MS. WILLIAMS: Alison Williams, LBNL.

20 MR. BROOKMAN: Please.

21 MR. MEDEPALLI: Sarah Medepalli, ICF 

22 International.
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1 MR. BROOKMAN: Would you introduce 

2 yourself.

3 MR. HARRISON: My name is Glenn Harrison. 

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

5 MR. BROOKMAN: Thank you.

6 MR. LAU: Chris Lau, Navigant.

7 MR. WEBER: Collin Webber, also with 

8 Navigant.

9 MR. ROSENQUIST: Greg Rosenquist, LBNL.

10 MR. BROOKMAN: Welcome again to all of 

11 you. Glad you could make it this afternoon.

12 All of you have seen the packet of 

13 information, wherein the content for this meeting 

14 is displayed.

15 We are going to start off with 

16 introductions and overviews and determination of 

17 scope. We will go from there directly into a 

18 presentation and discussion on test procedures. 

19 Following that, market assessment and 

20 engineering; and moving directly, markups, energy 

21 use, life-cycle cost and payback period analysis; 

22 then shipments, national impact analysis; then 
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1 emissions and utility impact analyses; and then 

2 followed by closing remarks at the end of the 

3 day.

4 We will take a break midafternoon, as 

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

6 there.

7 I would ask for your consideration. Most 

8 of you are very familiar with the way these 

9 meetings typically go. If you would speak one at 

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

11 the record. There will be a complete transcript 

12 of this meeting made available, and be concise to 

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

14 phones on silent mode and limit sidebar 

15 conversations. You've already gotten used to 

16 turning the microphones on and off.

17 Webinar participants, we welcome you. 

18 The Department of Energy is trying to make these 

19 meetings totally accessible to everyone via the 

20 Web. Please turn your phones on mute. Raise 

21 your hand to be recognized to speak, and we ought 

22 to be able to have you be a part of this 
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1 conversation here in the room.

2 And that is the bulk of the overview 

3 material, except to say the Department strongly 

4 encourages everyone, including everyone who is 

5 joining us via the Web, to submit their written 

6 comments. The written comments are very, very 

7 important for the resolution and ongoing work in 

8 these rulemaking matters.

9 Do you wish to do the purpose of the 

10 public meeting slide?

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

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

13 moving right along quickly.

14 So I think everyone knows we are here 

15 today to present the Department's proposal with 

16 respect to certain ASHRAE equipment in 90.1. 

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

18 said at the outset, and invite participation 

19 whenever possible.

20 As Dave noted in this morning's meeting, 

21 we do have a few issues box that we have 

22 specifically highlighted throughout the 
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1 presentation. Those are the areas that, 

2 obviously, the Department is specifically seeking 

3 comment. They correspond with some of the issues 

4 we teed up with comment.

5 That being said, we welcome you to 

6 interject at any time in the presentation and 

7 bring up any questions or issues or comments that 

8 you may have, so please feel free.

9 And now if anybody would like to make 

10 opening remarks, please feel free to do so.

11 MR. BROOKMAN: Summary remarks here at 

12 the outset?

13 [No audible response.]

14 MR. BROOKMAN: Nothing at this time.

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

16 content

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

18 fairly quickly through most of this stuff. Feel 

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

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

21 make comments about it.

22 So, obviously, this is our statutory 
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1 trigger and why we are all here today. ASHRAE 

2 acted in 90.1-2013 and increased the stringency 

3 for certain types of what DOE calls ASHRAE 

4 equipment. 

5 EPCA directs DOE then to review what 

6 ASHRAE has done, and we must amend the standards 

7 at the new ASHRAE levels, unless DOE can combine 

8 -- unless clear and convincing evidence supports 

9 a determination that adoption of a more stringent 

10 standard would be those three things.

11 ASHRAE 90.1-2013 was officially released 

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

13 NOPR.

14 So the next slide just gives you an 

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

16 what’s our proposed action. So for oil-fired 

17 storage water heaters, we are adopting -- we 

18 propose to adopt ASHRAE for small three-phased 

19 air-cooled air conditioners, both single-package 

20 and single-package and split-system heat pumps, 

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

22 to adopt ASHRAE.
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1 For water-source heat pumps, we are 

2 proposing to adopt ASHRAE. For package terminal 

3 air conditioners and for single-package vertical 

4 units, both air conditioners and heat pumps, we 

5 are investigating those in separate rulemaking 

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

7 evaluation of those.

8 So this is where we are in terms of 

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

10 it says they're in further analysis in a separate 

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

12 proceeding.

13 So this just provides an overview of why 

14 we propose to adopt ASHRAE for the three -- what 

15 I would call -- categories of equipment that were 

16 in the NOPR. One is for oil-fired storage water 

17 heaters. You can see that the energy savings 

18 estimated in the notice of date of availability, 

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

20 adopt the ASHRAE levels.

21 For three-phased air-cooled air 

22 conditioners and heat pumps less than 65,000, we 
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1 found that there was lack of clear and convincing 

2 evidence justifying higher standards, and then 

3 for water-source heat pumps, we determined 

4 tentatively, at least in the proposal, that there 

5 was a lack of clear and convincing evidence to 

6 justify higher standards, primarily due to a 

7 variety of different things, but mainly has to do 

8 with some data uncertainties in the analysis 

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

10 bit later as we walk through our specific 

11 analysis.

12 So I am going to hit really quick on the 

13 test procedure update we're doing in this 

14 proposal. EPCA requires the DOE to amend any 

15 test procedures for ASHRAE products to the latest 

16 versions that are reflected in 90.1.

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

18 have been updating test procedures quite a bit as 

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

20 to industry standards, at least in our 

21 rulemakings.

22 The one we found in 90.1 that is an 
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1 ASHRAE product that we had not yet evaluated for 

2 adoption is for gas-fired warm-air furnaces. So, 

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

4 industry standard versions.

5 When we did a comparison between our 

6 current methods as well as those in this new 

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

8 So DOE does not expect any of the ratings to 

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

10 want to harmonize with the latest industry 

11 versions to make sure we keep up.

12 So that's it for the test procedure 

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

14 comments on our proposal to update with the 

15 latest version for warm-air furnaces or not, but 

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

17 with that?

18 MR. BROOKMAN: I see some heads nodding. 

19 It would be nice to get some verbal comment on 

20 the record.

21 Laura.

22 MS. PETRILLO-GROH: Laura Petrillo-Groh, 
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1 AHRI. 

2 We strongly support DOE, DOE's actions, 

3 proposed action.

4 MR. BROOKMAN: Thank you.

5 MS. ARMSTRONG: Just generally, right?

6 MS. PETRILLO-GROH: Always.

7 [Laughter.]

8 MR. WINNINGHAM: This is Dave Winningham 

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

10 regard to this.

11 MR. BROOKMAN: And maybe we can just --

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

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

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

15 did specifically in our analysis of the two areas 

16 where we actually did a cost-benefit analysis.

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

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

19 about the market assessment and engineering 

20 analysis for the three-phase CAC equipment.

21 So this slide outlines the ASHRAE 

22 rulemaking process. I'm pretty sure that 
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1 everyone is quite familiar with this process.

2 So for this analysis, DOE started by 

3 publishing a NODA, and the current phase is the 

4 NOPR analysis. So DOE started by the market 

5 assessment and engineering analysis and followed 

6 by a markup analysis, and together with the 

7 energy use analysis, DOE developed the life-cycle 

8 cost and payback period analysis. And also, with 

9 the shipment data, DOE further analyzed the 

10 national impact analysis followed by the emission 

11 impact, monetization and the utility impact 

12 analysis.

13 So the following sections include 

14 analysis for two types of equipment. Three-phase 

15 air-cooled commercial air conditioning and 

16 heating equipment with a capacity less than 

17 65,000 Btu per hour as well as the water-source 

18 heat pumps.

19 So I am going to start with the 

20 three-phase CAC analysis.

21 Equipment classes for the three-phase CAC 

22 equipment, the current federal standards do not 
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1 differentiate between the split- and 

2 single-package equipment for the three-phase CAC 

3 equipment.

4 And ASHRAE 90.1-2013 divides the small 

5 three-phase commercial heating and cooling 

6 equipment into four subcategories, based on the 

7 functionality and the configuration.

8 So, in this rulemaking, DOE proposes to 

9 amend the equipment classes and also to adopt 

10 this in the equipment classes for the three-phase 

11 analysis. Basically, we are looking at the 

12 split-system air conditioner and heat pump and 

13 single-package air conditioners and heat pumps, 

14 less than 65,000 Btu per hour.

15 So for the engineering analysis, the 

16 purpose is to characterize the relationship 

17 between the manufacturing cost and energy 

18 efficiency.

19 So to conduct the engineering analysis, 

20 DOE started by developing the baseline for each 

21 equipment class, and then DOE developed the 

22 efficiency levels that span the full range from 
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1 the baseline all the way to the max tech for each 

2 equipment class, and then we conducted physical 

3 and catalog teardowns and conducted the cost 

4 modeling for units at each efficiency level that 

5 we determined.

6 Then by combining efficiency levels as 

7 well as the cost we developed, we created the 

8 cost-efficiency curves for each equipment class.

9 So baseline and max-tech efficiency 

10 levels for the three-phase equipment, in this 

11 analysis, DOE used ASHRAE 90.1-2013 as the 

12 baseline efficiency levels for the four equipment 

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

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

15 remaining equipment classes, they all start with 

16 14 SEER.

17 HSPF for the split-system heat pump is 

18 8.2, and for single-package heat pump, it starts 

19 with 8.0.

20 And then DOE established the incremental 

21 efficiency levels based on review from the AHRI 

22 database manufacturing catalogs and the other 
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1 available information.

2 And the max-tech efficiency levels were 

3 determined by the market research for the AHRI 

4 database as of November 2013.

5 MR. BROOKMAN: Louis.

6 MR. STARR: Louis with NEEA.

7 On the baseline using the ASHRAE standard 

8 2013 as the baseline, is that representing that 

9 the current market standards of the equipment is 

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

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

12 is the assumption about the equipment?

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

14 the AHRI directory, and so we plotted the 

15 different product class, the different equipment 

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

17 we still considered the ASHRAE standard at 2013 

18 levels for each equipment class. They are still 

19 representative of the current market, so that is 

20 why we are using that as a baseline.

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

22 necessarily a market baseline, but we have to 
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1 adopt ASHRAE. We can't do anything less than 

2 ASHRAE. So we start our analysis with the ASHRAE 

3 90.1 being the baseline, because really we are 

4 trying to evaluate whether we should go beyond 

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

6 MR. BROOKMAN: Dick.

7 MR. LORD: Dick Lord with Carrier.

8 One thing to clarify is it says 2013, but 

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

10 one of those delayed implementation dates.

11 MR. STARR: 2016, right?

12 MR. LORD: 2015 for this product.

13 MR. BROOKMAN: Bob?

14 MR. WHITWELL: Yeah. I just wanted to 

15 clarify for Louis also that at least as of 

16 November 2013, most of the market for 

17 single-package air conditioner and heat pump, for 

18 example, were 13.

19 MR. BROOKMAN: Marshall?

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

21 California Utilities.

22 I am very concerned we don't have EER 
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1 anywhere here, and we also don't have this level 

2 at the level that required for residential 

3 equipment, and this equipment's near cousin is 

4 residential.

5 In the commercial setting, this is going 

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

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

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

9 continue to be very concerned about that peak 

10 demand.

11 MR. BROOKMAN: Thank you.

12 Additional comments here?

13 [No audible response.]

14 MR. BROOKMAN: Okay.

15 MR. XU: All right. So this slide 

16 summarizes the incremental efficiency levels for 

17 the four equipment classes that we looked at. As 

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

19 DOE analyzed additional six efficiency levels, 

20 and we have listed the efficiency level zero for 

21 the split AC because there is only -- only for 

22 the split AC, we have the 14 SEER. 
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1 And then for the max tech for split AC 

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

3 for the split heat pump and single-package heat 

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

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

6 the correlation between SEER and HSPF from the 

7 single-phase product back to the 2011 direct 

8 final rule.

9 So manufacturer cost model, the 

10 manufacturer cost model was developed as part of 

11 the reverse engineering approach, and DOE started 

12 this analysis by selecting representative units, 

13 and then we conducted physical teardowns to 

14 generate the bill of materials, and from the bill 

15 of materials, we have the purchased parts as well 

16 as the raw materials that need to go through a 

17 different fabrication process. So we considered 

18 those manufacturing processes to develop the 

19 manufacturing cost.

20 So in the case that a physical teardown 

21 is not feasible, DOE conducted catalog teardowns 

22 which means that it is based on manufacturer 
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1 literature. We collected information such as 

2 compressors and heat exchangers and data analysis 

3 as similar fashion for the physical teardowns to 

4 develop the cost.

5 In this analysis, we considered 3-ton 

6 units as the representative capacity.

7 Also, during the market research, we 

8 noticed that the three-phase equipment and the 

9 single-phase products, there are a lot of 

10 similarities between the two. So the majority of 

11 the cost models were essentially based on the 

12 single-phase products.

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

14 going to pass it on to Sean for the water-source 

15 heat pumps.

16 MR. FALTERMEIER: All right. My name is 

17 Sean Faltermeier. I'm with Navigant Consulting. 

18 I will be discussing the market assessment and 

19 engineering analysis conducted for the second 

20 type of equipment we will be looking at, 

21 water-source heat pumps.

22 First, we will look at the definitions 
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1 and nomenclature. In Standard 90.1-2013, ASHRAE 

2 changed the name of the equipment type from 

3 "water-source" to "water-to-air, water-loop" heat 

4 pumps. DOE is proposing to change its name to 

5 match this change in ASHRAE, calling the 

6 equipment class "water-source (water-to-air, 

7 water-loop) heat pumps."

8 ASHRAE also changed the heating mode 

9 efficiency metric from just COP to COPH, and DOE 

10 has tentatively decided not to adopt this 

11 editorial change, which it deemed only clarifying 

12 the difference between COP for refrigeration and 

13 heat pumps.

14 Also, because there is currently no 

15 definition for water-source heat pumps in the 

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

17 proposing the following definition, which is 

18 largely adopted from that in the ASHRAE handbook.

19 DOE seeks comment on this proposed 

20 definition for water-source heat pumps.

21 Comments?

22 MR. BROOKMAN: I see no comments here.
27

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1 Yes, please. Paul.

2 MR. DOPPEL: So this would not include 

3 the water-source heat pumps that are part of the 

4 VRF systems?

5 MS. ARMSTRONG: This is Ashley from DOE.

6 That's correct. They're separate.

7 MR. DOPPEL: Thank you.

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

9 want to take an earlier flight?

10 [Laughter.]

11 MR. DOPPEL: That was my one question. 

12 I'm ready to go.

13 [Laughter.]

14 MR. BROOKMAN: Okay. So nothing 

15 additional here?

16 [No audible response.]

17 MR. BROOKMAN: Okay.

18 MR. FALTERMEIER: Moving on, to begin the 

19 market assessment, DOE looked at the market for 

20 all units falling into the equipment classes

21 under review. The equipment classes used are 

22 those defined in ASHRAE 90.1-2013, which are the 
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1 same as currently used in the federal standards.

2 There are three equipment categories for 

3 water-source heat pumps separated by cooling 

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

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

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

7 135,000 Btu per hour.

8 DOE obtained all its equipment and market 

9 data from the AHRI-certified product database as 

10 of November 2013.

11 More details and results from the market 

12 assessment can be found in Chapter 2 of the NOPR 

13 TSD.

14 Next, we will get into the engineering 

15 analysis for water-source heat pumps. As Xing 

16 described for central air conditioners, the goal 

17 of the engineering analysis is to develop 

18 efficiency levels for each equipment class and 

19 then manufacturer production cost estimates for 

20 each of these efficiency levels.

21 DOE selected efficiency levels based on 

22 the range of efficiencies represented in the AHRI 
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1 database for water-source heat pumps. Again, as 

2 Ashley clarified, the ASHRAE levels we used as 

3 the baseline because these levels must be 

4 accepted by rule in EPCA.

5 These efficiency levels are selected for 

6 each equipment class based on the metric EER, as 

7 the standard for COP was not changed.

8 Beyond the ASHRAE baseline, five 

9 additional --

10 MR. BROOKMAN: Hold on one second.

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

12 I am very concerned to know whether you 

13 looked at the sisters and brothers of these 

14 units. That's the ground-source heat pumps, 

15 either closed loop or open loops. Mechanically, 

16 they are extremely similar, have extremely 

17 similar parts in them.

18 Yes, three-phase, single-phase is 

19 different, and yet we see better, much better 

20 performance in that market. That market has to 

21 have a unit -- this is geothermal -- that goes 

22 over a much broader range of temperatures, and 
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1 these operate in a much narrower range and can be 

2 optimized.

3 I hoped that you looked at those as a 

4 similar market. Did you?

5 MR. FALTERMEIER: We looked at those 

6 units, but EPCA excludes ground-source and 

7 ground-water units from its definition of 

8 water-source heat pumps.

9 MR. HUNT: I am not worried about EPCA 

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

11 it. In other words, I can buy a ground-source 

12 heat pump right now and hook it up to a building 

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

14 industry has done a fantastic job of efficiency, 

15 and it really should be looked at.

16 MR. FALTERMEIER: We did look at those 

17 units, and actually, the majority of units that 

18 are used or the majority of models rated for 

19 ground-loop and ground-water application are 

20 actually also rated for water-loop application 

21 and therefore would be considered under this 

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

2 further. Thank you.

3 MR. BROOKMAN: Additional thoughts on 

4 this?

5 [No audible response.]

6 MR. BROOKMAN: Okay.

7 MR. FALTERMEIER: Next, manufacturing 

8 production cost or MPC estimates were developed 

9 using a manufacturing cost model, as Xing 

10 described for central air conditioners. However, 

11 for water-source heat pumps, instead of using a 

12 cost model based upon physically torn-down 

13 water-source heat pumps, the cost model from 

14 previously torn-down commercial heating and 

15 cooling equipment with similar components was 

16 adapted for water-source heat pumps, using a

17 catalog data cost analysis approach.

18 To adapt the cost model, published 

19 water-source heat pump catalog data along with 

20 dimensions, weights, component details, and other 

21 specifications were input into the model.

22 DOE conducted these catalog teardowns in 
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1 which all the data that could be found for a unit 

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

3 spanning the range of equipment classes and 

4 efficiency levels.

5 With all of this data, the cost model 

6 output MPC estimates for each efficiency level. 

7 More details on the methodology and results from 

8 this analysis can be found in Chapter 3 of the 

9 NOPR TSD.

10 MR. BROOKMAN: Yes, Louis.

11 MR. STARR: Louis Starr, NEEA.

12 Actually, I just had one last question on 

13 the last slide. The higher efficiency levels 

14 would kind of tie into the question Marshall was 

15 asking. Is some of the equipment that are 

16 ground-source heat pumps going to be reflected in 

17 some of these higher efficiency levels? Would 

18 that be an accurate statement?

19 MR. FALTERMEIER: Only those units that 

20 are also rated for water-loop application.

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

22 MR. BROOKMAN: Bob?
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1 MR. WHITWELL: Yes. so one thing to look 

2 at when you look at the ground-source versus the 

3 other water-source heat pump, it is a different 

4 test procedure, different test standard, with 

5 different conditions, and so that drives at least 

6 part of the difference in the efficiency level.

7 MR. BROOKMAN: Thank you.

8 MR. LORD: [Speaking off mic.]

9 MR. BROOKMAN: Thanks, Dick.

10 Okay.

11 MR. CYMBALSKY: Dick, can you just repeat 

12 that for the record?

13 MR. BROOKMAN: Yeah.

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

15 that. Dick Lord with Carrier.

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

17 two different test standards, and when you do 

18 ground-source, it's rated a different condenser 

19 water temperature, so it tends to make the 

20 efficiency levels higher.

21 MR. BROOKMAN: Thank you.

22 MR. FALTERMEIER: Okay. That's it for 
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1 the engineering analysis.

2 I will pass it on to Ed to discuss the 

3 markups analysis.

4 MR. BROOKMAN: Thank you.

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

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

7 life-cycle cost model.

8 I am going to begin to talk about the 

9 markups analysis. The purpose of the markups 

10 analysis is to determine the customer price based 

11 on the manufacturer's production cost for 

12 baseline and higher efficiency equipment, and in 

13 order to do this, we have to determine the 

14 distribution channel that that equipment takes.

15 There will be four distribution channels 

16 in this rulemaking, two for new construction and 

17 two for replacements, and if you see the 

18 percentages in the --, in the consumer box there, 

19 that represents the amount of shipments that goes 

20 through each distribution channel.

21 Now, in order to determine the markup, we 

22 have to determine the expenses and profits at 
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1 each level. So, for manufacturers, we look at 

2 10K reports. For wholesalers, we look at the 

3 HARDI Profit Report. For mechanical contractors, 

4 we look at the ACCA financial reports and Census 

5 data. For general contractors, census data, and 

6 for sales taxes, we use the sales tax 

7 clearinghouse.

8 There are two types of markups we use, 

9 baseline markups, which relate the manufacturer's 

10 production cost to the customer purchase price 

11 for baseline equipment, and then incremental 

12 markups which relate the increase in manufacturer 

13 production cost to the increase in customer 

14 purchase price for higher efficiency equipment. 

15 And the table below represents the markups at 

16 different levels in the distribution chain, and 

17 the bottom row shows the overall markups we used 

18 in our analysis.

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

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

21 what's listed there?

22 [No audible response.]
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1 MR. BROOKMAN: Okay.

2 MR. CUBERO: Okay. Moving on to the 

3 energy use analysis.

4 So the purpose here is to determine the 

5 unit energy consumption for the equipment at the 

6 considered efficiency levels in order to find the 

7 annual costs and savings, which are then inputs 

8 for the life-cycle cost and payback period model.

9 The method we use here was to use 

10 previous DOE reports. We used the 2011 Direct 

11 Final Rule for residential central air 

12 conditioners as well as the 2000 Screening 

13 Analysis for EPACT-covered Equipment.

14 We also adjusted the UECs to account for 

15 improvements in buildings over time, and we 

16 incorporated variability into the analysis using 

17 estimates of full-load equivalent operating hours 

18 by building type and by census division.

19 In order to find our base UECs for 

20 cooling for three-phase air conditioners and heat 

21 pumps, we took the same UECs directly from the 

22 2011 Direct Final Rule for residential central 
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1 air conditioners, using the portion of those 

2 products that were sold to the commercial market.

3 For heating, we determined from the 2011 

4 analysis that UEC did not scale with HSPF, with 

5 an increase in HSPF. Therefore, we did not 

6 include heating in our analysis.

7 For water-source heat pumps, the cooling 

8 unit energy consumption came from the 2000 

9 Screening Analysis where we were given national 

10 full-load equivalent operating data and input 

11 capacities. By multiplying the two, we got a 

12 national UEC.

13 And on the heating side, we estimated the 

14 UECs using data from the Commercial Building 

15 Energy Consumption Survey for air source heat 

16 pumps, and also because the data from the 2000 

17 Screening Analysis was a little old, we use 

18 scaling factors from the National Energy Modeling 

19 System to account for improvements in the 

20 building shell over time.

21 Finally, to incorporate variability into 

22 the analysis, we developed distributions of our 
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1 equipment by building type and by census 

2 division. Then we scaled the national UECs by 

3 the FLEOH data we had from the 2000 Screening 

4 Analysis.

5 MR. HUNT: This is Marshall Hunt.

6 Oh, go ahead, Joanna.

7 MS. MAUER: Joanna Mauer.

8 On the heating for the three-phase 

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

10 trouble understanding why increasing HSPF --

11 wouldn't it result in heating energy savings?

12 MR. CUBERO: There is a table in Chapter 

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

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

15 MS. WILLIAMS: This is Alison.

16 Yeah. It was based on building 

17 simulations of equipment in commercial buildings, 

18 and the heating UECs were around 500, and they 

19 sort of did this with --

20 [Laughter.]

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

22 see me.
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1 [Laughter.]

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

3 with HSPF. They kind of dipped.

4 MR. BROOKMAN: They kind of went up and 

5 down and all around.

6 MS. WILLIAMS: Yeah.

7 And so our understanding of it was, 

8 personally because of the HSPF rating being 

9 designed for residential situations and that this 

10 is commercial equipment, that it's unclear that 

11 putting -- as the simulation shows, that you 

12 really actually got much heating energy savings 

13 from increasing the HSPF. They are primarily 

14 designing for the cooling side, but we certainly 

15 do request comment on that. We are requesting 

16 comment on the NODA, and we did not receive -- or 

17 we received some comments that supported this, 

18 but we didn't receive any other data.

19 MR. BROOKMAN: Alison, would you state 

20 specifically what you wanted comment on?

21 MS. WILLIAMS: Just if people have 

22 concerns about our conclusion that increasing 
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1 HSPF for this equipment would not result in 

2 energy savings, we would welcome data to 

3 demonstrate why that is not the case.

4 MR. BROOKMAN: Thank you.

5 Yes, Marshall.

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

7 So I think I just heard that heating 

8 analysis was done for commercial buildings; is 

9 that correct?

10 MR. CUBERO: Yeah. For --

11 MR. HUNT: Correct.

12 And yet the cooling analysis was done for 

13 residential.

14 MR. CUBERO: Oh, sorry.

15 MR. HUNT: Is that correct?

16 MR. CUBERO: Are you talking about 

17 water-source heat pumps?

18 MR. HUNT: No, three-phase.

19 MR. CUBERO: No, they're both from --

20 that's from the residential analysis.

21 MR. HUNT: Cooling is from residential?

22 MR. CUBERO: Yeah. 2011 Direct Final 
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1 Rule for residential.

2 MS. WILLIAMS: For residential used in 

3 commercial applications.

4 MR. HUNT: What was the simulation? What 

5 was the building you worked with?

6 MS. WILLIAMS: This is Alison.

7 I don't have the specifics in front of me 

8 because the simulations were done for the 2011 

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

10 that last TSD to remind myself what exactly they 

11 modeled, but they were modeling the single-phase 

12 equipment in specific commercial applications.

13 MR. CUBERO: And I believe we asked for 

14 comment in the NODA period, and everyone said 

15 that -- most of the comments came back said that 

16 the single-phase UECs for commercial applications 

17 were relevant.

18 MR. BROOKMAN: Louis.

19 MR. STARR: So kind of talking -- or 

20 going back to what Alison was talking about, 

21 typically in the smaller commercial buildings, 

22 they tend to be a little more envelope-dominated, 
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1 more so than the commercial ones.

2 You tend to be affected by the weather a 

3 little more, and so as you increased your heating 

4 demand, it would seem that you would see -- or if 

5 you increased the efficiency of your heating 

6 side, you would see that in energy savings.

7 In the typical -- in the larger 

8 commercial office, that would be less the case. 

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

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

11 thumb --

12 Maybe Dick had some thoughts.

13 MR. BROOKMAN: Yeah. Dick, please.

14 MR. LORD: In the models that PNNL 

15 generated that DOE funded, commercial small

16 office buildings do not look like residential. 

17 Changeover temperatures are down at 40, 50 

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

19 have a lot of internal plug loads that tend to 

20 still make them a cooling-dominated building.

21 MR. STARR: They have typically more 

22 envelope loads, right, than your bigger 
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1 commercial office spaces.

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

3 large office, a large office may have a 

4 changeover temperature down at zero degrees. A 

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

6 MR. STARR: Okay.

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

8 different than a residential building.

9 MR. STARR: So there ends up not being 

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

11 the small commercial buildings?

12 MR. LORD: The other thing to keep in 

13 mind, commercial buildings are occupied in the 

14 day, unoccupied in the evening, which is usually 

15 when you have a lot of your heating.

16 MR. STARR: Okay.

17 MR. BROOKMAN: Yes. Joanna.

18 MS. MAUER: And then I had one question 

19 on the cooling side, and I understand that the 

20 energy values come from the previous 2011 

21 analysis. 

22 If I am remembering correctly, the energy 
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1 savings are smaller than what we would expect, 

2 just looking at ratios of SEER values. For 

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

4 split-system AC, just looking at SEER values, we 

5 might expect a 7 percent savings, whereas I think 

6 the savings are more like 3 percent.

7 I was just wondering if there was kind of 

8 a high-level explanation for why the savings are 

9 lower than --

10 MR. CUBERO: I'm not sure.

11 Alison, do you?

12 MS. WILLIAMS: This is Alison.

13 I probably don't have the explanation you 

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

15 certainly, when we reviewed the results of the 

16 2011 analysis, they weren't scaling in proportion 

17 to SEER.

18 As we said, there are commercial building 

19 simulations, and that is what came out of --

20 Hey.

21 MR. ROSENQUIST: Hi. Greg Rosenquist 

22 here.
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1 It is due to the ventilation requirements 

2 for office buildings, so -- and that fan energy 

3 doesn't change from efficiency level to 

4 efficiency level.

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

6 that a few of your industry friends are nodding 

7 their heads in agreement.

8 Steve Rosenstock.

9 MR. ROSENSTOCK: Steve Rosenstock, EEI.

10 There might be a little bit of building 

11 demographics here, too, especially northern 

12 climates are more likely to be fossil 

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

14 with, possibly. So that might also have 

15 something to do with it.

16 MR. BROOKMAN: Okay. Thank you.

17 I guess we are going to move on then.

18 MR. CUBERO: Now we will talk about the 

19 life-cycle cost and payback period analysis.

20 So the purpose here is to provide an 

21 economic evaluation from the consumer's 

22 perspective of the purchase of higher efficiency 
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1 equipment, and the life-cycle cost is the total 

2 consumer cost over the life of the equipment. 

3 The payback period is the time required to 

4 recover the increased purchase price through 

5 operating cost savings.

6 And the method, we used a Monte Carlo 

7 simulation, so we ran the LCC model through 

8 10,000 different iterations, and then we took the 

9 average of those to calculate our LCC savings.

10 The first input we looked at was total 

11 installed cost. Total installed cost, the sum of 

12 the equipment price and the installation cost. 

13 The equipment price came from the markups 

14 analysis. DOE also looks at producer price index 

15 to determine price trends over time.

16 We looked at two PPI series here. The 

17 first was for commercial unitary air 

18 conditioners, the second was for refrigeration 

19 and heating equipment, and there was no 

20 discernible upward or downward trend, so we 

21 maintained constant real prices to project our 

22 future equipment price.
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1 The installation costs represent labor 

2 and materials that are required to install the 

3 equipment. These costs came directly from RS 

4 Means for the appropriate equipment, and 

5 installation costs do scale with larger, with 

6 higher efficiency equipment. As the weight 

7 increases of higher efficiency equipment, the 

8 installation cost will scale proportionally.

9 Second, I will talk about annual 

10 operating costs. So there are three annual 

11 operating costs. The first is annual energy 

12 costs, then maintenance costs and repair costs.

13 The annual energy costs are calculated by 

14 taking the energy use, annual energy use, and 

15 multiplying it by the electricity price. Our 

16 electricity prices were by Census Division, and 

17 they were taken from tariff data, which has been 

18 processed into commercial building marginal and 

19 average prices.

20 In order to project future electricity 

21 prices, we used the Annual Energy Outlook from 

22 2014.
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1 The maintenance costs represent labor and 

2 materials required to maintain the equipment. 

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

4 increase with the efficiency of equipment.

5 And finally, repair costs are associated 

6 with repairing or replacing components that have 

7 failed, and the materials portion of the repair 

8 costs were scaled with the equipment weight, so 

9 they grow by efficiency level. And in order to 

10 make the repair cost into an annual value, DOE 

11 assumed the repair would happen in year 10, and 

12 we took the present value of that number and 

13 divided it over the equipment lifetime.

14 For both maintenance and repair cost, we 

15 didn't have any RS Means available for 

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

17 air-source heat pumps, assuming that was 

18 representative of water-source heat pumps.

19 So next, looking at the equipment 

20 lifetime, lifetime is defined as the age when the 

21 equipment is retired from service. We used a 

22 survival function in the form of a Weibull 
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1 distribution, which is from the 2011 Direct Final 

2 Rule of residential air conditioners, and we came 

3 up with median values for three-phase central air 

4 conditioners and water-source heat pumps of 17.7 

5 years and 14.6 years for three-phase central heat 

6 pumps.

7 And we also applied discount rates to the 

8 future operating expenses to bring them back to 

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

10 2020, the compliance year. These are estimated 

11 as the weighted average cost of capital for the 

12 types of firms who have this type of equipment.

13 For three-phase central air conditioners 

14 and heat pumps, we assumed it was the small 

15 office and small retail market, and for 

16 water-source heat pumps, we assumed office -- the 

17 office market, public market, lodging, property 

18 owners, and medical services. And our 

19 information came from Damodaran Online.

20 MR. BROOKMAN: Louis.

21 MR. STARR: Louis with NEEA.

22 So on the survival function, it seems 
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1 like since it's commercial equipment, it's 

2 generally built a little better, so it seems like 

3 the lifetime -- so the residential ones you're 

4 pulling of 17.6 -- 17.7, 14.6, it seems like the 

5 commercial ones would have perhaps greater life.

6 MR. CUBERO: That was actually one of the 

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

8 up.

9 MR. STARR: Looks like --

10 MR. LORD: Yeah. I mean, they are 

11 typically designed the same, same basic process. 

12 The residential is probably higher tooled than 

13 the commercial, so we typically use a 15-year 

14 design life.

15 That's what we do for all the ASHRAE 

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

17 sometimes miss, and they go 17 years.

18 [Laughter.]

19 MR. STARR: Aren't the commercial 

20 products more durable, though, than --

21 MR. LORD: No. No different components. 

22 No thicker steel. No.
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1 MR. WINNINGHAM: This is Dave from Allied 

2 Air, and I would concur with Dick.

3 In a lot of cases, there may be some 

4 special three-phase products. The majority of 

5 these are residential-type products with 

6 components changed out for a three-phased 

7 application.

8 MR. LORD: To add things like economizers 

9 and features like that. That's what we do.

10 MR. BROOKMAN: Okay. Thank you. 

11 Helpful.

12 Yes, please.

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

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

15 just looking at the TSD Chapter 6 life-cycle cost 

16 and payback period. There is a table in there 

17 which talks about the simple payback period years 

18 for split-system ACs, less than 65,000 

19 three-phase, and the simple payback is 68 years 

20 at EL zero.

21 And over here, it seems like you are 

22 looking at a medium lifetime of 17.7 years, so
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1 that's about four times that life, that equipment 

2 life that it's operating at.

3 Also, my question is -- I wanted to make 

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

5 talking about, in this Slide 33 -- actually, the 

6 previous slide -- repair costs assumed to take 

7 place every 10 years. So did you account for 

8 that seven times over when you did the analysis?

9 MR. CUBERO: The simple payback is just 

10 the LCC savings divided by the equipment -- the 

11 change in equipment price between efficiency 

12 levels. It is undiscounted.

13 Yeah. So there's very little LCC savings 

14 because there's very little electricity savings, 

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

16 to be a lot longer.

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

18 through one lifetime, so it's not -- yeah. We're 

19 not assuming there's four lifetimes of equipment 

20 in a 68-year payback period.

21 MR. BROOKMAN: So, correspondently, you 

22 wouldn't have the repair costs.
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1 MR. CUBERO: What was that?

2 MR. BROOKMAN: Nothing.

3 [Laughter.]

4 MR. BROOKMAN: Okay. Additional 

5 thoughts? Comments?

6 [No audible response.]

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

8 a base-case efficiency distribution. So this 

9 defines the percentage of products that are being 

10 sold at each efficiency level, and we base this 

11 on the AHRI-certified directory, on model 

12 availability in that directory, and we also 

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

14 take the base-case efficiency distribution this 

15 year and apply it to 2020 by applying that trend 

16 of meeting in the absence of a standard, the 

17 efficiency will improve by 1 SEER every 35 years.

18 And these are two requests for comment. 

19 The first was about the use of RS Means for 

20 maintenance, repair, and installation costs, and 

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

22 would be happy to look at it. And the second was 
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1 for lifetimes and if the use of the Weibull 

2 distribution was appropriate.

3 Finally, since there are seven different 

4 product types, rather than having seven slides, 

5 just to give you an example of what the results 

6 look like for three-phase single-package air 

7 conditioners, we start with the ASHRAE baseline, 

8 and five efficiency levels above that, and all 

9 the life-cycle savings are compared to the ASHRAE 

10 baseline.

11 Question?

12 MR. BROOKMAN: Yes, please. Steve.

13 MR. ROSENSTOCK: Steve Rosenstock, Edison 

14 Electric Institute. 

15 Percent of customers. Is that percent of 

16 customers with higher life-cycle cost rather than 

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

18 perspective.

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

20 MR. ROSENSTOCK: With net cost? Okay. 

21 Thank you.

22 MR. BROOKMAN: This table is 
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1 illustrative. Any questions, comments on the 

2 foregoing slide, and particularly the comment 

3 boxes that are there, does anybody wish to 

4 comment on those?

5 [No audible response.]

6 MR. BROOKMAN: Okay. 

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

8 talk about the shipments and national impact 

9 analysis.

10 The shipments is to -- I feel like I'm 

11 repeating myself from this morning. The purpose 

12 of the shipments analysis, this is to estimate 

13 shipments over the 30-year period. We are using 

14 this as an input to the national impact analysis.

15 We are using whatever available sources 

16 we could find for the initial shipments and then 

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

18 floor space to project.

19 I am going to start with the three-phase 

20 CAC and CHP equipment. The data we had available 

21 to start with for the initial was 1999 estimates 

22 from the 2000 Screening Analysis. We requested 
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1 other data in the NODA and didn't get any, so 

2 that's what we started with.

3 We used Census data from 1999 to 2010 to 

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

5 data alone because it includes both single-phase 

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

7 used it as a scaling factor.

8 We made some changes from the NODA in 

9 this analysis. Part of the problem was that our 

10 data ends in 2010 because that Census data is no 

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

12 happen as a result of this recession and what 

13 would occur in the future.

14 So we looked at some AHRI shipments data,

15 which isn't specifically for three-phase CAC, to 

16 see what the market did over the last couple of 

17 years, and we found that there was a decline 

18 through 2010, and then starting in 2011, it 

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

20 adjust our shipments from 2010 to 2011, and 

21 starting in 2011, we had AEO 2014 floor space 

22 data available that we used to project the 
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1 shipments. And that's about a 1 percent annual 

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

3 On the water-source heat pumps side, we 

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

5 available years. We used the 1999 to 2010 

6 segment to project shipments past 2010, and 

7 that's for all water-source heat pumps. We used 

8 the allocation between equipment classes that was 

9 found in the 2000 Screening Analysis to 

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

11 analysis.

12 So these are just the resulting trends 

13 that you will see here for both the three-phase 

14 CAC and water-source heat pump. We are using the 

15 same shipments in both the base case the 

16 standards cases, and so that's what our issue box 

17 is here, just requesting comment on that.

18 MR. BROOKMAN: Steve Rosenstock.

19 MR. ROSENSTOCK: Steve Rosenstock, EEI.

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

21 Slide 40 for the three-phase CAC and CHP, and I 

22 see either flat or declining sales based on all 
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1 the data that you have, and now you're showing 

2 increasing sales. I know you're relying on 

3 different data, but I just -- I'm just surprised 

4 that you're showing any increase overall.

5 I can see flat, but the history that you 

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

7 little --

8 MS. WILLIAMS: Sure. And we used -- in 

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

10 declining, and some were increasing, and I think 

11 we switched to constant for one because we 

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

13 data, and we felt that it did clearly demonstrate 

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

15 expect the market to increase, which is why you 

16 see that 1 percent annual growth rate.

17 However, obviously, we welcome actual 

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

19 have right now.

20 [Laughter.]

21 MR. ROSENSTOCK: This is Steve 

22 Rosenstock, EEI.
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1 I am looking at Slide 40. Aren't these 

2 actual data points? 

3 MS. WILLIAMS: Okay. So -- wait. Slide 

4 what?

5 MR. BROOKMAN: 40.

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

7 now, that one.

8 MS. WILLIAMS: Okay. That is the 1999 

9 data scaled with Census data, and so the issue 

10 with the Census data is this is not strictly for 

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

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

13 class.

14 So the only data we have exactly for this 

15 is literally from 1999.

16 MR. ROSENSTOCK: Steve Rosenstock, EEI.

17 So everything since then is just total --

18 MS. WILLIAMS: Yeah.

19 MR. ROSENSTOCK: Wow! Okay.

20 MS. WILLIAMS: I mean, we're using what 

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

22 actual industry data for that specific equipment 
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1 class, this is currently the best we can do.

2 MR. BROOKMAN: Louis Starr.

3 MR. ROSENSTOCK: Thank you.

4 MR. STARR: So I guess, essentially, 

5 you're assuming a 1 percent increase in shipments 

6 for the next 30 years.

7 I am kind of trying to understand. The 

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

9 that same level? It almost seems like they have 

10 to put equipment in building, right? So is it 

11 just going to be 1 percent, or is it -- I mean, 

12 it seems like it almost might be with the 

13 proportion to the increase in building 

14 population.

15 MS. WILLIAMS: Right. So this is 

16 proportional. We are scaling with the AEO 2014 

17 floor space forecast for the sectors that we're 

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

19 MR. STARR: Well, that seems reasonable 

20 to me.

21 MS. WILLIAMS: Okay.

22 [Laughter.]
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1 MS. WILLIAMS: All right. So I am going 

2 to move on to the national impact analysis. We 

3 determined the national energy savings and 

4 customer national net present value resulting 

5 from potential amended standards.

6 We do this using a time series of energy 

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

8 shipments model to find out what the stock is, 

9 and we're aggregating those costs and energy use 

10 per unit in any given year and reporting the 

11 estimates as change in consumer national net 

12 present value.

13 We do, of course, use discount rates to 

14 account for the time-value of money.

15 What you saw this morning, for those who 

16 were here, we take the LCC analysis results and 

17 other inputs along with the shipments model and 

18 put them into the NIA model to get these energy 

19 savings and economic impact outputs.

20 They are for 30 years of equipment 

21 shipped, and so the energy savings and economic 

22 impacts continue for the lifetime of all the 
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1 equipment shipped in the 30-year period.

2 As you can see here, that 30-year period 

3 does depend on equipment class. 

4 This is a summary of the inputs to the 

5 NIA. Again, most of these are taken directly 

6 from the LCC outputs. We have total installed 

7 costs, which does vary as a function of 

8 efficiency level. Maintenance costs do not vary 

9 as a function of efficiency level, but repair 

10 costs do.

11 The energy use was from the energy use 

12 analysis and the LCC.

13 The base-case efficiencies, as Ed 

14 mentioned, were derived from the AHRI directory, 

15 and then we used the base-case growth rate of 1 

16 EER every 35 years -- sorry -- 1 SEER -- well, 

17 it's both, SEER for three-phase AC and EER for 

18 water-source heat pump.

19 In the standards-case projected 

20 efficiencies, we did do a roll-up scenario, so at 

21 the year of compliance, all the equipment that 

22 would be below the standard level, we assumed 
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1 would roll up to meet the standard level. In the 

2 equipment above, that would not be affected, and 

3 then we used that same growth rate in efficiency.

4 We're using EIA AEO 2014 forecasts for 

5 energy prices. We are accounting for full 

6 fuel-cycle energy savings. We used 7 percent and 

7 3 percent real discount rates, and we are 

8 discounting to 2014.

9 These are a couple requests for comments 

10 on whether we would expect a rebound effect and 

11 on our base-case efficiency trend use.

12 [No audible response.]

13 MS. WILLIAMS: Seeing none, I will just 

14 move on to the results. As you can see here, we 

15 have these summarized for each set of equipment, 

16 three-phase CAC and heat pumps as well as 

17 water-source heat pumps at an aggregate level.

18 Okay. Moving on to the emissions 

19 analysis; we do an emissions analysis where we 

20 estimate the emissions reductions resulting from 

21 those energy savings. We are using AEO 2014 to 

22 derive the emissions factors.
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1 We then use the interagency social cost 

2 of carbon values to monetize those factors for 

3 CO2. You can see those estimates for 2013 here. 

4 We also monetized NOx emissions.

5 Finally, we do a utility impact analysis 

6 to estimate changes in installed capacity and 

7 generation resulting from the amended standards. 

8 This is done using the National Energy Modeling 

9 System, and these outputs are all available in 

10 the TSD.

11 And that's it.

12 MR. BROOKMAN: So then closing remarks, 

13 final comments related to this proceeding.

14 Yes, Laura.

15 MS. PETRILLO-GROH: This is Laura 

16 Petrillo-Groh from AHRI.

17 We strongly support the DOE adopting 

18 ASHRAE levels and in our general support of 

19 ASHRAE 90.1 process.

20 Thank you.

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

22 Appreciate that.
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1 Marshall?

2 MR. HUNT: California IOUs, Marshall 

3 Hunt.

4 I reserve the right to ask for higher 

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

6 further. I am somewhat concerned about such a 

7 negative analysis happening.

8 Thank you.

9 MR. BROOKMAN: Okay. Steve?

10 MR. ROSENSTOCK: Steve Rosenstock, EEI.

11 I'm also -- I will say that the ASHRAE 

12 process works, and it will lead to energy savings 

13 very quickly, and I think I appreciate the 

14 analysis here.

15 I do have to say in terms of the energy 

16 savings, when I saw all of the -- how do I say 

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

18 little worried that higher shipments do lead to 

19 higher estimated savings at all efficiency 

20 levels.

21 So I remain a little concerned about the 

22 estimated savings, just because I didn't see any 
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1 data that shows the significant increases.

2 I know floor space increases, but there's 

3 lots of choices that people have in terms of 

4 heating and cooling their building, so I always 

5 get concerned when these shipments just seem to 

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

7 estimates that were shown that are so opposite of 

8 the estimates shown that you see these higher 

9 efficiency levels, look at all these higher 

10 savings. Well, if the shipments are a lot lower 

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

12 exist.

13 Thank you.

14 MR. BROOKMAN: Joanna.

15 MS. MAUER: Joanna Mauer.

16 So for water-source heat pumps, I believe 

17 the bulk of the energy savings at higher 

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

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

20 shows that higher levels for that category are 

21 cost effective. So we'd encourage DOE to 

22 consider setting higher levels for that one 
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1 category of water-source heat pumps that could 

2 achieve significant, additional energy savings.

3 MR. BROOKMAN: Thank you.

4 Yes, Aniruddh.

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

6 may have been addressed already. It says in the 

7 first bullet that de minimis is 0.001 to 0.002 

8 quads. Is there a specific definition?

9 And this question is for either Ashley or 

10 John. Is there a specific definition for -- or 

11 Eric. Is there a specific definition for de 

12 minimis in the statute? Because I know for 

13 significant energy savings, there is no 

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

15 what's significant and what's not.

16 MR. STAS: Eric Stas, DOE.

17 No, there is on definition of de minimis 

18 in the statute.

19 MR. ROY: Okay. So that was basically 

20 DOE's determination in the slide that that level 

21 was de minimis?

22 MR. STAS: Right. They are just giving 
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1 you an example in this particular case of what it 

2 is.

3 MR. ROY: Right. Thank you.

4 And -- sorry, Eric. One more question. 

5 Is there a threshold for which -- I guess a point 

6 beyond which you would consider it not to be de 

7 minimis?

8 MR. STAS: Eric Stas, DOE.

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

10 this on a case-by-case basis, and we have the 

11 public comments, so -- and you all aren't bashful 

12 telling us what you think, so --

13 MR. ROY: Right. Okay. Thank you.

14 MR. BROOKMAN: Any additional questions 

15 or comments? We are moving towards closure here 

16 and taking any additional final comments.

17 So I think that that is it. I will turn 

18 it back to Ashley for closing remarks.

19 MS. ARMSTRONG: Okay. So I'd just like 

20 to thank everyone for coming today. Obviously, 

21 we went through the slides on a fairly high 

22 level, and we have provided all our documentation 
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1 and additional support underlying the proposal 

2 and the actual documents that are on their 

3 website and our docket.

4 We welcome you to comment on all aspects 

5 of that, and obviously, we appreciate the 

6 comments you made today.

7 So just to note, the comment period 

8 closes on March 25th -- March 24th, and please 

9 submit comments, because we always welcome those. 

10 But thank you for coming, and safe travels home 

11 on Friday.

12 [Whereupon, at 2:02 p.m., the public 

13 hearing concluded.] 

14

15

16

17

18

19

20

21

22 CERTIFICATE OF NOTARY PUBLIC
70 

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 

9 for, related to, nor employed by any of the 

10 parties to the action in which this testimony is 

11 taken; and, further, that I am not a relative or 

12 employee of any of the parties hereto, nor 

13 

14 

15 

16 

17 

18 

19 

20 

21 

BRIAN KNIESER 

Notary Public in and for 

The District of Columbia 

Commission Expires: 03.14.2019 

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