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 UNITED STATES OF AMERICA 

 + + + + + 

 DEPARTMENT OF ENERGY 

 + + + + + 

 ENERGY EFFICIENCY AND RENEWABLE ENERGY 

 OFFICE OF BUILDING TECHNOLOGIES 

 + + + + + 

PRELIMINARY ANALYSIS PUBLIC MEETING FOR 

 RESIDENTIAL CENTRAL AIR CONDITIONERS 

 & HEAT PUMPS 

 + + + + + 

 WEDNESDAY 

 MAY 5, 2010 

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

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

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

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

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

Adjourn................................... 221 
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1 P R O C E E D I N G S 

2 (time not provided) 

3 MR. BROOKMAN: Okay. So good 

4 morning everybody and welcome. This is the 

5 U.S. Department of Energy's Preliminary 

6 Analysis Public Meeting for Residential 

7 Central Air Conditioners and Heat Pumps. 

8 My name is Doug Brookman from 

9 Public Solutions in Baltimore. Appreciate you 

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

11 start on this day. The Department is making 

12 every effort to make these meetings efficient 

13 and shorter. And so I appreciate you being 

14 here on time. That will help with this. 

15 We're going to start off by doing 

16 introductions around the room. And then I'm 

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

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

19 the table. And then around the perimeter. 

20 Please say your name and 

21 organizational affiliation. 

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

2 International. 

3 MR. ECKMAN: Tom Eckman, Northwest 

4 Power & Conservation Council. 

5 MS. TROMBLEY-McCANN: Molly 

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

7 MR. STANGA: Mark Stanga for Daikin 

8 Industries. 

9 MS. HOWARD: Kate Howard, Natural 

10 Resources Defense Council. 

11 PARTICIPANT: Tim Ballo, 

12 Earthjustice. 

13 MR. ROSENSTOCK: Steve Rosenstock, 

14 Edison Electric Institute. 

15 MR. BRESHAW: Jim Breshaw 

16 (phonetic), Ingersoll Rand Trane. 

17 MR. MANDYCK: John Mandyck, Carrier 

18 Corporation. 

19 MR. NICHOLS: Jeff Nichols, Johnson 

20 Controls. 

21 MS. MEYERS: Karen Meyers, Rheem. 

22 DR. KIRIM AMRANE: Kirim Amrane, 
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1 Air Conditioning, Heating, and Refrigeration 

2 International. 

3 MR. SACHS: Harvey Sachs, American 

4 Council for an Energy-Efficient Economy. 

5 MR. BRUNDADGE: Don Brundadge, 

6 Southern Company. 

7 MS. TIEDEMAN: Jennifer Tiedeman, 

8 DOE, Office of General Counsel. 

9 MS. KOHL: Betsy Kohl, DOE GC. 

10 MR. Cymbalsky: John Cymbalsky, DOE 

11 Appliance Standards. 

12 MR. WES ANDERSON: Wes Anderson, 

13 DOE Appliance Standards. 

14 MR MILLARD: Matt Millard, Navigant 

15 Consulting. 

16 MR. WEBER: Collin Weber, Navigant 

17 Consulting. 

18 MR. CARMICHAEL: Rob Carmichael, 

19 Navigant Consulting. 

20 MR. ROSENQUIST: Greg Rosenquist, 

21 Lawrence Berkeley National Laboratory. 
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1 MR. SENTINO: Glen Sentino 

2 (phonetic), Navigant Consulting. 

3 MR. ANDERSON: Eric Anderson, 

4 Pacific Northwest National Laboratory. 

5 MR. WINIARSKI: David Winiarski, 

6 Pacific Northwest National Laboratory. 

7 MR. SCOTT: Michael Scott, Pacific 

8 Northwest National Laboratory. 

9 MS. WILLIAMSON: Jennifer 

10 Williamson, Pacific Northwest National 

11 Laboratory. 

12 MR. SMALL: Terry Small, Mortex 

13 Products, Inc. 

14 MR. CARR: Chris Carr (phonetic), 

15 Lennox International. 

16 MS. MAUER: Joanna Mauer, Appliance 

17 Standards Awareness Project. 

18 MR. RAYMOND: Michael Raymond, DOE 

19 Appliance Standards. 

20 MR. KHAN: Mohammed Khan, DOE. 

21 MR. LEKOV: Alex Lekov, Lawrence 

22 Berkeley National Laboratory. 
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1 MR. INDIG: Harry Indig, DOE. 

2 MR. JAMES: Brian James (phonetic), 

3 Southern California Edison. 

4 MR. HARRIS: Jeff Harris, Alliance 

5 to Save Energy. 

6 MR. COMSTOCK: Owen Comstock, 

7 Energy Information Administration. 

8 MR. BROOKMAN: Okay. Thanks to all 

9 of you. Did everybody get a chance to 

10 introduce him or herself? Good. 

11 I think all of you registered or 

12 should have registered at the front desk as 

13 you entered the Department of Energy today. 

14 And so the Department will supply at the end 

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

16 today, a listing of all those present. 

17 And we don't have a court reporter 

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

19 audio recording of this that will then be 

20 transcribed as the Department's official 

21 record of this meeting. 

22 So it is all the more important 
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1 that we use the microphones today when we 

2 speak. We need to really be disciplined about 

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

4 as a standard. 

5 John, would you like to make 

6 welcoming remarks? 

7 MR. John Cymbalsky: Sure. As Doug 

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

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

10 to submit written comments. So in case the 

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

12 written comment as well. 

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

14 least on my part, to make these meetings more 

15 focused and more time efficient for everybody. 

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

17 best served if we could keep the comments and 

18 our presentations more focused. 

19 And so with that, I would ask if 

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

21 more than once. I think last week we were 

22 able to do the fluorescent ballast, both the 
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1 test procedures and the standards in one day. 

2 Seventy percent of the attendees 

3 had positive feedback from doing that. And I 

4 think one of the things I noticed as we went 

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

6 comment box, there was one person in 

7 particular who felt that he had to make a 

8 comment. And most of his comments started 

9 with “I said this before but....” If we could 

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

11 efficient. 

12 So with that, welcome. And let's 

13 have an efficient meeting. 

14 MR. BROOKMAN: Thank you. Always 

15 strive for that. 

16 I think all of you received a 

17 packet as you registered. In that was a copy 

18 of the agenda, the Federal Register notice, 

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

20 which are these PowerPoint slides. I hope all 

21 of you have a copy of that. 

22 If you'll take a quick peek at the 
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1 agenda, I'm just going to run through this 

2 briefly. 

3 Following this agenda review, we're 

4 going to have brief opening remarks by Wes 

5 Anderson. And there is an opportunity for 

6 anybody that wishes to do so to make very 

7 brief summary remarks about key issues and 

8 concerns that they might have. 

9 Following that we'll have a 

10 rulemaking overview, regional standards 

11 background, consensus agreement, and combined 

12 rulemaking presentation, followed by an 

13 opportunity for comment for all of you. And 

14 then a market and technology assessment, 

15 screening analysis, and engineering analysis. 

16 We'll take a break mid-morning. 

17 Following the mid-morning break; 

18 markups for equipment price determination, 

19 energy use characterization, life-cycle cost 

20 and payback period analysis. 

21 And then following those 

22 presentations followed by opportunity for 
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1 discussion and follow up, shipments analysis, 

2 national impact analysis, and then preliminary 

3 manufacturing analysis, next steps, and 

4 closing. 

5 There's typically another 

6 opportunity at the end of the meeting for you 

7 to make any additional comments you feel you 

8 would like to make to inform the Department's 

9 process. 

10 As you can see, you're looking at 

11 the agenda, we intend to finish today around 

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

13 everything to try and adhere to that time 

14 frame. A few people have already told me they 

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

16 best we can. 

17 That's the overview on the agenda. 

18 Questions and comments on that? 

19 (No response.) 

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

21 ask for your consideration. Please speak one 

22 at a time. And today it is especially 
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1 necessary to speak into the microphone. The 

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

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

4 a lot. 

5 Please say your name for the 

6 record. There will be a complete transcript 

7 of this meeting made available. And it will 

8 be posted on the EERE website in the span of 

9 say a week or ten days or so. 

10 I'm going to be queuing people as 

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

12 encourage follow on. 

13 Are we all set? Yes? 

14 Wes, speak to this gentleman. I 

15 also wish to encourage follow-on remarks. 

16 Sometimes it is very helpful to have the back 

17 and forth or supportive comments based on the 

18 original commenter's ideas. 

19 So please say your name each time 

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

21 organizational affiliation, just your name. 

22 And please be concise. Share the 
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1 air time. There is a lot to be said on this 

2 subject matter if you keep the focus here 

3 during the course of the meeting today. 

4 Please turn off your cells phones 

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

6 have a sidebar conversation with the person 

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

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

9 fine. And it will keep it focused here. 

10 So that's the overview. Questions 

11 or comments before we proceed? 

12 (No response.) 

13 MR. BROOKMAN: Okay. Then let's 

14 follow on. We need Wes. 

15 Wes, you're up. Wes Anderson. 

16 MR. WES ANDERSON: Hello everyone. 

17 I'm sorry for the delay. I'm Wes Anderson 

18 with the Department of Energy. 

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

20 to introduce where we are in the process. 

21 We've had the framework and currently this is 

22 the preliminary analysis public meeting. 
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1 And we're here to get your oral 

2 comments and written comments on the Federal 

3 Register notice, technical support document, 

4 and analytical spreadsheets that will be 

5 presented today. And we will be requesting 

6 data inputs from manufacturers and other 

7 interested parties. The data inputs is -- 

8 emphasis on data inputs from manufacturers. 

9 And the issue boxes look like this. 

10 Everyone should be familiar with. So in the 

11 Notice of Public Meeting and Availability of 

12 Preliminary Technical Support document, the 

13 NOPM (phonetic), DOE welcomes comment. 

14 Throughout this presentation, 

15 specific issues will be raised for discussion 

16 on slides such as this with identifying item 

17 numbers corresponding to those in the 

18 Executive Summary. Nonetheless, comments 

19 concerning any part of the document or 

20 presentation are welcome at this time. 

21 For your submission of comments, we 

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

2 to have the title of the rule, Energy 

3 Conservation Standards for Resident CAC and 

4 Heat Pumps, docket number, and the regulatory 

5 identification number. 

6 And emails through this -- the 

7 email address and to Brenda Edwards for postal 

8 mails going through the Forrestal and 

9 personal carriers to the 950 L'Enfant address. 

10 The comment period closes May 10th. 

11 At this time, we'd like to get 

12 opening remarks. 

13 MR. BROOKMAN: An opportunity for 

14 brief summary remarks about issues and 

15 concerns that you might have here at the 

16 outset. 

17 It looks like Harvey Sachs is 

18 ready. 

19 MR. SACHS: Wes, this is Harvey 

20 Sachs at ACEEE. 

21 And I'm appalled that the 

22 Department would propose to close the public 
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1 comments three business days after this 

2 meeting. 

3 MR. WES ANDERSON: Thank you. 

4 Other comments here at the outset? 

5 Don Brundage? 

6 MR. BRUNDAGE: I agree with Mr. 

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

8 proposed settlement was going to be accepted, 

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

10 the proposed settlement. 

11 But we have to assume it is going 

12 to go through NOPR. And this is a very 

13 important phase. 

14 If it is going to go through that 

15 process, we need to dig into the details to 

16 provide meaningful input to the Department. 

17 And five calendar days, three business days, 

18 is just not acceptable. 

19 Thank you. 

20 MR. BROOKMAN: So how much would 

21 you suggest the Department try to supply? 

22 MR. BRUNDADGE: Two weeks would be 
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1 a lot better. 

2 MR. BROOKMAN: Okay. Thank you. 

3 Steven Rosenstock? 

4 MR. ROSENSTOCK: Steve Rosenstock, 

5 Edison Electric Institute. We've also come 

6 out in favor of the consensus agreement. 

7 And for our previous comments that 

8 we made for the furnace rulemaking rules, it 

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

10 bifurcated comment saying we endorsed the 

11 agreement but since we had no idea if DOE was 

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

13 was going to go through the full rulemaking 

14 process. 

15 We find ourselves in the same 

16 situation today where we do endorse the 

17 agreement but we have to assume that lacking 

18 further input from the Department of Energy, 

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

20 full rulemaking process, a full detailed 

21 rulemaking process. 

22 So, again, we're going to only get 
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1 kind of a, you know, split comments at this 

2 point from the Edison Electric Institute. 

3 It would be helpful, again, if the 

4 Department was able to say number one, has the 

5 Department made a decision or, number two, 

6 provide a timeline to stakeholders as to when 

7 they are going to make a final decision. 

8 As I recall, the Department was 

9 presented with this last October so that was 

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

11 it would be helpful to everybody just to get 

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

13 consensus agreement so we really know -- can 

14 really provide the comments the Department is 

15 looking for. 

16 MR. BROOKMAN: Thank you. 

17 MR. ROSENSTOCK: Thank you very 

18 much. 

19 MS. TROMBLEY-McCANN: Molly. 

20 MR. BROOKMAN: Molly, please. 

21 MS. TROMBLEY-McCANN: Molly 

22 Trombley-McCann. I just wanted to echo what 
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1 Harvey, and Don, and Steve have just said in 

2 terms of timing. Three business days is 

3 completely impossible for us. 

4 And in addition, it would be 

5 helpful to have a timeline not just for a 

6 decision on the consensus agreement but also 

7 for a decision on whether or not this will be 

8 a combined rulemaking with furnaces and 

9 furnace fans. 

10 MR. BROOKMAN: Good comments. 

11 Karim? 

12 DR. AMRANE: Well, I have a more 

13 formal statement to make. First of all, I 

14 concur with Harvey and others as far as the 

15 comment period. I think it is totally 

16 inappropriate to give just three business days 

17 for stakeholders to provide comments. 

18 But having said that, I would like 

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

20 agreement. As you all know, AHRI is a 

21 signatory of the consensus agreement that was 

22 reached between HRI and several leading energy 
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1 efficiency organizations last October. 

2 And of course, as a signatory, we 

3 strongly support the agreement and we urge the 

4 Department of Energy to adopt it in a direct 

5 final rule and without delay. 

6 We believe that the agreement has 

7 several benefits including an accelerated 

8 effective date. What we're proposing here for 

9 central air conditioning and heat pump will 

10 take effect in January of 2015, which is a 

11 year and a half ahead of the standard that 

12 will take effect if DOE goes through the 

13 normal rulemaking process. 

14 In addition, it will provide a 

15 significant amount of energy savings. We are 

16 estimating that the combined furnace and 

17 central air conditioning and heat pump 

18 standard will save about three quads of 

19 primary energy by 2030. And this is very 

20 significant. 

21 In addition, it will basically 

22 reduce about 18 million metric ton of CO2 
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1 equivalent by the year 2030. 

2 It will have a lot of economic 

3 benefits to consumers. We are estimating the 

4 net economic savings will be about 13 billion 

5 dollars by the year 2030. 

6 Now the Department of Energy has 

7 encouraged stakeholders in the past to 

8 consider informal discussions which could 

9 result in a consensus agreement. Furthermore, 

10 Congress in 2007 amended the Energy 

11 Conservation -- the Energy Policy and 

12 Conservation Act to expedite rulemaking 

13 process by authorizing DOE to issue direct 

14 final rules, establishing new energy 

15 conservation standards upon receipt of joint 

16 stakeholder proposals. 

17 The consensus agreement satisfies 

18 the criteria of the law and the process 

19 improvement rule. Consequently, again we urge 

20 the Department to issue direct final rule, 

21 adopting the consensus agreement as soon as 

22 possible. 
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1 In the event that DOE cannot 

2 conduct a direct final rule, we would 

3 recommend that DOE adopt the agreement in an 

4 expedited rulemaking process. 

5 Thank you. 

6 MR. BROOKMAN: Thank you. Thank 

7 you. 

8 Other comments here at the outset? 

9 (No response.) 

10 MR. BROOKMAN: No additional 

11 comments? Okay. 

12 Then let's proceed with Harvey 

13 Sachs. 

14 MR. SACHS: Harvey Sachs, ACEEE. 

15 It goes without saying but it must 

16 be said that as a signatory to the consensus 

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

18 that in that statement, I would be speaking 

19 for the other signatories who are here just to 

20 save time. 

21 MR. BROOKMAN: Thank you. 

22 And the Department, I think, is 
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1 well aware of who the signatories are. 

2 MR. SACHS: I guess we should then 

3 ask if there is any signatory that wishes to 

4 recant. 

5 (Laughter.) 

6 PARTICIPANT: I'm sorry. Was that 

7 recant or repent. 

8 MR. BROOKMAN: Okay. So then no 

9 additional comments, we're going to proceed 

10 with the program and have a rulemaking 

11 overview with Wes Anderson. 

12 MR. WES ANDERSON: We were brought 

13 here to -- based on the requirements of the 

14 U.S. Code 42 6295 (d)(3)(A) and (B). The 

15 first review was done -- was completed in 

16 August of 2004 with technical amendment -- the 

17 publication of a technical amendment. And the 

18 standard was determined in `01 as to be 13 

19 SEER. 

20 Today, the second edition of this, 

21 the rulemaking will constitute a second review 

22 for the amendment and the energy conservation 
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1 standard. 

2 Also pursuant to this, there was a 

3 consent decree which requires us to publish a 

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

5 effective date of five years hence. DOE is 

6 looking for comment on the impact of the 

7 effective date occurring during the peak 

8 selling season for the regional central air 

9 conditioners and heat pumps rule. 

10 MR. BROOKMAN: You can see the 

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

12 Comments related to this question? 

13 Yes, John Mandyck? 

14 MR. MANDYCK: John Mandyck with 

15 Carrier. 

16 As a manufacturer and distributor 

17 of residential central air conditioners and 

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

19 implementation date would be very disruptive 

20 to the marketplace, which is why Carrier is a 

21 signatory to the consensus agreement because 

22 we established that date as January 2015 to 
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1 avoid, in part, part of the distribution mess 

2 and manufacturing complexity that would occur 

3 with a mid-season implementation date. 

4 Thank you. 

5 MR. BROOKMAN: Thank you. And 

6 thanks for the specificity surrounding your 

7 proposed date. 

8 Talbot? 

9 MR. GEE: Yes, Talbot Gee with 

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

11 be a special problem, especially noting the 

12 complexity and the additional components 

13 necessary to launch the more efficient 

14 equipment. 

15 You'd be essentially creating 

16 multiple demand curves, multiple safety stocks 

17 in the middle of the cooling season. It would 

18 be a real problem. 

19 MR. BROOKMAN: Okay. Thank you. 

20 Are there other manufacturers that 

21 wish to comment on this point? 

22 Yes, please? 
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1 MR. NICHOLS: Only to reinforce -- 

2 MR. BROOKMAN: Please say your 

3 name, Jeff. 

4 MR. NICHOLS: Jeff Nichols. Only 

5 to reinforce John Mandyck's comments -- 

6 MR. BROOKMAN: Thanks, Jeff. 

7 MR. NICHOLS: -- that it is very 

8 disruptive. 

9 MR. BROOKMAN: Yes, Tim? 

10 MR. BALIWORTH: Tim Ballo 

11 (phonetic), Justice. 

12 Just wanted to state that I believe 

13 the Department's interpretation that it has to 

14 do an effective date five years after 

15 publication is incorrect. If the Department 

16 wants to adopt the standards in the consensus 

17 agreement, there is certainly flexibility in 

18 the statute for them to do that. 

19 And even if the Department rejects 

20 those levels, there is ample flexibility in 

21 the statute. The Department actually had to 

22 deal with the effective date in 2006 and we're 
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1 now four years past that. That's the date 

2 that really matters, not the five implicit 

3 years of lead time. 

4 MR. BROOKMAN: Tim, in your written 

5 comments, you'll provide some citations and 

6 the like. 

7 MR. BALIWORTH: Okay. 

8 MR. BROOKMAN: Yes, please? 

9 MS. HOWARD: This is Kate Howard 

10 from the Natural Resources Defense Council. 

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

12 will be following up with comments on that 

13 point, written comments. Thank you. 

14 MR. BROOKMAN: Thank you. 

15 Additional comments on this first 

16 box before we move on? 

17 MR. WES ANDERSON: Actually, since 

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

19 could maybe slow down a little bit because 

20 we're going to have to transcribe this from a 

21 recording and speak -- get closer to the 

22 microphone because I'm having trouble hearing 
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1 some of the comments at this point at this 

2 lectern. 

3 MR. BROOKMAN: Okay. Thanks, Wes, 

4 okay. 

5 Additional comments before we move 

6 on? 

7 (No response.) 

8 MR. BROOKMAN: Okay. 

9 MR. WES ANDERSON: That's it? 

10 MR. BROOKMAN: Yes. 

11 MR. WES ANDERSON: The Energy 

12 Independence and Security Act 2007, which is 

13 effectively referred to as EISA 2007, issued 

14 three bullet points. Give an overview of what 

15 EISA has imposed on DOE. 

16 If they incorporate standby and off 

17 mode for a final rule published -- any final 

18 rule published after July 1, 2010, permits DOE 

19 to establish up to two regional standards in 

20 addition to its national standard. 

21 And also DOE must consider the 

22 impacts on the distribution channel, the 
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1 consumer, manufacturers, other marketing 

2 participants including the product 

3 distributors, dealers, contractors, and 

4 installers. 

5 DOE seeks comment on the energy 

6 consumption of components during off mode and 

7 the potential to reduce the energy consumption 

8 of these components. 

9 DOE also seeks comment on the 

10 possibility of separate standards for off mode 

11 energy consumption. 

12 MR. BROOKMAN: Two issues related 

13 to off mode. 

14 Steve Rosenstock? 

15 MR. ROSENSTOCK: Steve Rosenstock, 

16 Edison Electric Institute. 

17 I thought for central air 

18 conditioners and heat pumps that the test 

19 procedures already incorporate the off mode 

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

21 separate standard since it is already 

22 incorporated into the annual energy efficiency 
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1 metric. 

2 Thank you. 

3 MR. BROOKMAN: Thank you. 

4 Karim? 

5 DR. AMRANE: Karim Amrane and I 

6 will concur with what Steve just said. I urge 

7 DOE to review the test procedures because we 

8 believe that it is already accounted in the 

9 SEER calculations. 

10 MR. BROOKMAN: Okay. Thanks. 

11 Other comments on these two issues? 

12 (No response.) 

13 MR. BROOKMAN: No additional 

14 comments? 

15 (No response.) 

16 MR. WES ANDERSON: Further 

17 clarification of what EISA requires of DOE for 

18 the establishment of regional standards, two 

19 regional standards, in addition to a base 

20 national standard. The boundaries are -- of 

21 geographical regions must include contiguous 

22 states. Individual states cannot be bisected 
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1 by the boundaries. 

2 The establishment of additional 

3 regional standards must result in significant 

4 energy savings. And the establishment of any 

5 additional regional standard must be 

6 economically justified. 

7 This is DOE's interpretation of a 

8 proposed regional layout with the rest of the 

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

10 southwest, and hot, humid in the southeast. 

11 We've listed the states in the subsequent 

12 table for more detail. 

13 DOE seeks comment from interested 

14 parties regarding DOE's regional definitions 

15 for analysis of regional standards generally 

16 used. 

17 MR. BROOKMAN: Molly? 

18 MS. TROMBLEY-McCANN: Molly 

19 Trombley-McCann. 

20 I just wanted to take a moment to 

21 plead the case of large states such as 

22 California who have climates that range from 
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1 less than 1,000 heating degree days to over 

2 5,000 heating degree days. 

3 The requirement for our state to be 

4 in only one climate zone and not to split 

5 states between climate zones is not very 

6 effective for efficiency in a state such as 

7 California. 

8 This is one of the reasons that 

9 we're a supporter of the consensus agreement. 

10 It includes requirements for disclosure of 

11 performance points that allow utilities and 

12 other programs to set individual requirements 

13 within the state through efficiency rebates 

14 and other programs that this standard cannot 

15 effectively address. 

16 So I just wanted to put that out 

17 there. 

18 MR. BROOKMAN: Okay. Thank you. 

19 Don Brundadge? 

20 MR. BRUNDADGE: Don Brundadge, 

21 Southern Company. 

22 This is a different set of regions 
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1 than in the consensus agreement. And I think 

2 I would prefer the consensus agreement 

3 boundaries to what's here. 

4 Thank you. 

5 MR. BROOKMAN: Thank you. 

6 Yes, Karim? 

7 DR. AMRANE: Karim Amrane, AHRI. 

8 Yes, I mean it looks like DOE is 

9 using different regions that what is in the 

10 consensus agreement. I guess I'm asking the 

11 question to DOE is DOE looking at the 

12 consensus agreement and has DOE studied the 

13 consensus agreement? 

14 MR. BROOKMAN: Wes? 

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

16 to that point in the next couple of slides. 

17 MR. BROOKMAN: Okay. 

18 Andrew deLaski? 

19 MR. deLASKI: What was the 

20 criteria? How did you develop the -- 

21 MR. WES ANDERSON: This is about -- 

22 we generally -- the boundary is around 5,000 
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1 heating degree days and population base. 

2 We'll get into more detail later in the 

3 presentation with the specific analysis. 

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

5 hold your question until then? 

6 MR. deLASKI: I guess I would 

7 respond that I believe, Karim, correct me if 

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

9 criteria was also 5,000 heating degree days. 

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

11 that at some point. 

12 MR. BROOKMAN: We're going to 

13 proceed with this. 

14 Do you have a short answer, Dave? 

15 Find the microphone, Dave, Dave Winiarski. 

16 MR. WINIARSKI: Dave Winiarski, 

17 Pacific Northwest National Lab. 

18 Yes, I will address that. But 

19 roughly the boundaries are close to 4,500. 

20 MR. BROOKMAN: It's slightly 

21 different, okay. 

22 So then we'll address this in 
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1 greater detail as we're going along. 

2 Additional comments on this -- 

3 these regions as established -- as proposed by 

4 the Department? 

5 (No response.) 

6 MR. BROOKMAN: Okay, Wes. 

7 MR. WES ANDERSON: Okay. Now we 

8 will start discussion on enforcement plan by 

9 Rob Carmichael. 

10 MR. BROOKMAN: Robert Carmichael. 

11 MR. CARMICHAEL: Thanks, Wes. 

12 My name is Rob Carmichael. I'm 

13 with Navigant Consulting. 

14 I'm going to briefly go over two 

15 items with you today. The first are just 

16 talking about the considerations related to 

17 regional standards enforcement. And the 

18 second is an overview of our preliminary 

19 analysis of the impacts on the distribution 

20 chain due to regional standards. 

21 But first here's the statutory 

22 obligations related to regional standards 
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1 enforcement. So simply put, EISA requires DOE 

2 to start an enforcement plan rulemaking within 

3 90 days of establishing -- or issuing a final 

4 rule that establishes regional standards. And 

5 DOE must complete that enforcement rulemaking 

6 within 15 months. 

7 And so DOE has not yet determined 

8 an enforcement plan but does believe that an 

9 effective enforcement plan would include some 

10 of the following elements that are shown on 

11 this slide, including labeling, enforcement 

12 through building codes, fines for noncompliant 

13 installations, warranty or product 

14 registration, consumer education, and other 

15 competitively-driven enforcement mechanisms. 

16 MR. BROOKMAN: Don Brundadge? 

17 MR. BRUNDADGE: If this is not the 

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

19 I asked back in the furnace hearings a few 

20 weeks ago for some clarification on building 

21 codes on what states could and could not due 

22 on restricting the use of NAECA products. 
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1 It comes up a lot in the south 

2 where a product may be poorly suited for a 

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

4 states, in particular there has been some 

5 discussions in Florida, don't think they have 

6 the right to restrict any NAECA-approved 

7 products from being used. 

8 Is there any clarification that we 

9 can get on that? 

10 MR. BROOKMAN: Wes? Wes Anderson? 

11 MR. WES ANDERSON: Wes Anderson, 

12 DOE. 

13 Please, can you put that in writing 

14 in your official comments to us so that we can 

15 officially respond to that? 

16 MR. deLASKI: Okay. Well, I had 

17 asked at the furnace hearing for general 

18 counsel to try to be prepared for this when we 

19 got to this meeting so we could go ahead. 

20 It's really independent of this 

21 rulemaking because I think it is more of an 

22 issue coming up with people adopting the 2009 
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1 IECC, which drastically increases the 

2 insulation levels and changes in the south the 

3 latent sensible load on equipment. 

4 It's something that needed now and 

5 not when this rulemaking is put in place. 

6 MR. BROOKMAN: Betsy Kohl? 

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

8 Kohl, DOE General Counsel's Office. 

9 So it's really hard not knowing -- 

10 MR. BROOKMAN: Betsy, get closer 

11 please. 

12 MS. KOHL: It's really hard not 

13 knowing the specifics of your question because 

14 the provisions in EPCA on preemption, 

15 particularly those dealing with building 

16 codes, are very complicated. 

17 So if you do have something that 

18 you can submit in writing, if it is separate 

19 from this comment process, we can take a 

20 closer look. 

21 MR. deLASKI: Okay. Thank you. 

22 MR. BROOKMAN: Thank you. 
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1 Yes, Steve Rosenstock? 

2 MR. ROSENSTOCK: Steve Rosenstock, 

3 Edison Electric Institute. 

4 I guess the other thing in terms of 

5 building codes is that you're -- there are 

6 timing issues in that building codes are 

7 updated every three years. And then under 

8 federal law, DOE is supposed to do a 

9 determination. 

10 And then states have up to two 

11 years to update their codes to match or exceed 

12 the newly determined national code. 

13 So, you know, if IECC comes out 

14 with their code in 2012, and DOE does their 

15 determination in the following year- they're 

16 supposed to do it within one year- and then 

17 states have two years, it might not be until 

18 2015 until many states adopt the 2012 codes, 

19 which may or may not have the new efficiency 

20 levels. 

21 So there is a time lag issue with 

22 relying on building codes in terms of an 
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1 enforcement mechanism for new national or 

2 regional appliance efficiency standards. 

3 Also the fact that many states when 

4 they have home rule, different cities or 

5 counties can adopt different levels if they 

6 wanted to. 

7 So -- thank you. 

8 MR. BROOKMAN: Thank you. 

9 John Mandyck? 

10 MR. MANDYCK: John Mandyck with 

11 Carrier. 

12 I'd like to make a comment on the 

13 labeling item on the slide, which we think is 

14 the least effective of all of the enforcement 

15 mechanisms. 

16 The AHRI directory has some 600,000 

17 combinations in it. And this comes from a 

18 personal experience where I put an addition on 

19 to my house last year and the system or my 

20 condensing unit arrived with a 15 SEER hang 

21 tag but it was being installed with a high 

22 efficiency indoor furnace with a variable 
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1 speed fan, which combined together achieved a 

2 16 SEER official rating. 

3 And so it is impossible to label 

4 products because systems are matched and they 

5 are shipped differently. And sometimes they 

6 are not even shipped by the same manufacturer. 

7 So labeling would have to account 

8 for the fact that there are 600,000 

9 combinations which achieve an official rating 

10 within the AHRI directory and would be nearly 

11 impossible to do. 

12 MR. BROOKMAN: Would you suggest an 

13 alternative to the Department? 

14 MR. MANDYCK: Well, we would 

15 suggest that we look at all the other issues 

16 on the chart, including enforcement at the 

17 local level by building inspectors. But I 

18 guess my point today is that labeling should 

19 either be removed from the chart or should be 

20 the least preferable method because of its 

21 complexity and almost impossibility. 

22 MR. BROOKMAN: Thank you. 
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1 Talbot? 

2 MR. GEE: Well, Talbot Gee with 

3 HARDI Air Conditioning Distributors. 

4 I would agree with John's comments. 

5 And we've seen this just even with efficiency 

6 programs where you have to require that you 

7 can certify that it is a properly installed 

8 matched system to achieve an incentive, which 

9 requires additional documentation that any 

10 single label on a piece of product wouldn't 

11 have achieved. 

12 I'd also point out that there is a 

13 few things here we again bring up that we did 

14 during the furnace rulemaking, that the 

15 warranty registration as an enforcement 

16 mechanism is probably not feasible because 

17 some states have consumer protection laws that 

18 would prevent any type of mandate tied to 

19 warranty registrations. 

20 In general, for the wholesale 

21 distributor community, product registration, 

22 period, is not that effective. Most 
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1 homeowners don't return that type of 

2 information. And it would be very, very 

3 costly for industry to try to do that. 

4 I would point on the consumer 

5 education on regional standards is not an 

6 enforcement mechanism, especially if it is in 

7 absence of an actual enforcement mechanism 

8 that might be in the marketplace, which drives 

9 down to the last point. 

10 Reiterate again that competitively 

11 driven enforcement works if there is actually 

12 an enforcement body that you would report to. 

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

14 experience. 

15 If we take, for example, EPA -- 

16 (tape change, some audio missing) 

17 PARTICIPANT: -- in the cold 

18 climates and in the warmer states because the 

19 BIN temperature effect on the heat pump is 

20 fairly significant in that distribution. And 

21 the northern tier is really different than in 

22 the southern tier. And so the performance is 
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1 really different for the same ARI or AHRI 

2 rating in climate zone 4, which is where it 

3 gets rated. 

4 So we don't get the same 

5 performance, sometimes better, sometimes 

6 worse, than that rating. And we really need 

7 to do the simulation model or BIN temperature 

8 approach to that to get the right answer. 

9 MR. WINIARSKI: Okay. I'd like to 

10 talk to that maybe in another slide or two. 

11 MR. BROOKMAN: Steve Rosenstock? 

12 MR. ROSENSTOCK: Steve Rosenstock 

13 EEI. 

14 And I think following up with Don 

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

16 in replacements towards I'll say more hybrid 

17 systems where a central air conditioner is 

18 replaced with an air source heat pump along 

19 with the fossil fuel heating system as a back20 up (inaudible) or just preferenced during the 

21 really cold weather, that is going to have an 

22 impact on the analysis. 
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1 Especially if more and more 

2 households are doing that, that definitely has 

3 an impact on the life cycle cost analysis for 

4 the heat pumps. 

5 Thank you. 

6 MR. BROOKMAN: Thank you. 

7 MR. WINIARSKI: So this is a basic 

8 diagram of the simplified residential energy 

9 use calculation. Over in the top lefthand 

10 side, we start with RECS. Along the left row 

11 there, we use the age of the household and, 

12 where reported, the age of the air conditioner 

13 or heat pump in RECS. 

14 We use AHRI average shipment SEER 

15 ratings to generate an estimated SEER for each 

16 particular household observation. 

17 And then, as was alluded to in the 

18 discussion, there is a basic scaling process 

19 where we take the stock unit energy 

20 consumption and multiple it by the ratio of 

21 the SEER estimate for the stock to the SEER 

22 estimate for a particular standard level that 
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1 we're interested in. 

2 We do that for a baseline analysis, 

3 baseline being a 13-SEER product that was used 

4 in the engineering analysis at least for those 

5 classes where that's appropriate. We also do 

6 it for each standard level that DOE is 

7 analyzing off to the right. 

8 We also, because we recognize that 

9 there is going to be a distribution of 

10 products sold into the market at different 

11 SEER levels, we develop for each household a a 

12 general distribution of SEERs for the market 

13 and then for each household, we randomly 

14 sample from that distribution to estimate the 

15 SEERs for the market baseline. And I'll talk 

16 about that in a little bit. 

17 The commercial process is a little 

18 more complicated but essentially we start with 

19 a small office building model. We used a 

20 reference building or a benchmark building 

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

22 square foot single-story small office 
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1 building. It kind of looks like that picture 

2 on the right. 

3 We simulated with 237 typical 

4 meteorological year locations. That's the 

5 TMY2 set. And we simulated for each product 

6 class four different efficiency levels, a 13, 

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

8 for that particular product class. 

9 And we actually simulated the coil 

10 only and the blower coil products, pretending 

11 that they're two separate product classes for 

12 this analysis. 

13 Simulation was done in EnergyPlus. 

14 And from each simulation in each climate zone, 

15 we extract out the hourly annual cooling, 

16 heating, and fan use from the simulation as 

17 well as the peak sizing that was established 

18 in EnergyPlus for that product. 

19 And then we normalized the average 

20 energy use or average cooling, heating, and 

21 fan energy use for the building to reflect 

22 that for a three-ton air conditioning unit so 
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1 that we can fit it with the rest of the 

2 analysis work that's being done on the 

3 residential side. 

4 And, again, we develop a market 

5 baseline distribution and a standard level 

6 distribution because we explicitly simulated 

7 the 13 SEER that comes directly out of the 

8 analysis as the baseline energy use 

9 distribution. 

10 MR. BROOKMAN: Steve Rosenstock? 

11 MR. ROSENSTOCK: Steve Rosenstock, 

12 Edison Electric Institute. 

13 In this case, again obviously 

14 depending on what part of the country you're 

15 in, you just basically kind of took a zone 

16 approach that you said well, in the north it 

17 might be two units of three tons each but in 

18 the south it might be four units three tons 

19 each, something like that? 

20 MR. WINIARSKI: No, actually the 

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

22 -- when you set up the input deck for the 
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1 building model, you have to define the zones 

2 and the systems directly. 

3 So the small office building model 

4 is assumed to have five zones, four perimeters 

5 and a core zone appropriate to this -- roughly 

6 appropriate to this size building. And then 

7 as the unit moves around the country, for each 

8 weather tape that you use, it will develop a 

9 different sizing of equipment for that. 

10 So you'll end up with, for instance 

11 in the south maybe it will be -- I'm going to 

12 throw out a number here -- like 12 tons and 

13 maybe in the north it will be ten tons. 

14 MR. ROSENSTOCK: But, again, Steve 

15 Rosenstock, EEI, thanks. But following up on 

16 that in terms of -- but you still -- the model 

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

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

19 one 12-ton unit did you? 

20 MR. WINIARSKI: No. What you would 

21 end up with, if it is sized for -- you've got 

22 five units in there, okay. 
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1 MR. ROSENSTOCK: It's five units, 

2 thank you. 

3 MR. WINIARSKI: Yes, there's five 

4 units. And we just normalize it down to a 

5 single three-ton unit. 

6 MR. BROOKMAN: (Inaudible)? 

7 MR. BRUNDAGE: In the northern 

8 tier, how was the heat pump sized? 

9 MR. WINIARSKI: Heat pump sized on 

10 cooling. 

11 MR. BRUNDAGE: Good. Thank you 

12 very much. Just asking. Wrong but just 

13 asking. 

14 MR. WINIARSKI: Yes. 

15 MR. BROOKMAN: John Mandyck? 

16 MR. MANDYCK: Harvey, stay calm. 

17 MR. BROOKMAN: Let's let Harvey 

18 follow on. Harvey, go ahead. 

19 MR. SACHS: I'm conscious that Ron 

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

21 polite. 

22 I guess I really don't understand 
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1 why it would be looking at northern heat pumps 

2 being sized for cooling rather than for 

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

4 what I'm buying the equipment for. 

5 And the consequences in terms of 

6 total energy use are rather extraordinary if I 

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

8 think about high bill complaints. 

9 MR. WINIARSKI: Yes. But to follow 

10 up, you know, essentially on the cooling side, 

11 the heat pump, the compressor is effectively 

12 sized so that it can meet the cooling 

13 requirements for the building and operation 

14 around the country. 

15 Where that compressor cannot 

16 provide the amount of heat under design load 

17 conditions, electric resistance backup was 

18 assumed. 

19 MR. SACHS: I'm sorry. Is that the 

20 recommended standard practice I would find, 

21 for example, in an ACCA manual for serving 

22 customer needs? I can't believe that best 
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1 practices in this industry are still to size a 

2 Seattle heat pump for the cooling load. 

3 PARTICIPANT: Right. Seattle has 

4 300 heating degree hours -- hours. Not days. 

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

6 in these zones instead of a three- or four7 ton, which is -- 

8 MR. SACHS: This is a heat pump and 

9 air conditioner framework, isn't it? 

10 PARTICIPANT: No, it's preliminary. 

11 PARTICIPANT: I'm sorry. It is a -

12 - 

13 PARTICIPANT: If we do the 

14 consensus agreement, we bypass this problem. 

15 (Laughter.) 

16 PARTICIPANT: And if we don't, I 

17 would recommend suggesting comments on what is 

18 the appropriate sizing mechanism for heat 

19 pumps across the U.S. 

20 PARTICIPANT: I want to back up. 

21 You said 300 hours cooling -- 

22 PARTICIPANT: Cooling load -- 
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1 PARTICIPANT: Thank you. 

2 PARTICIPANT: -- cooling degree 

3 hours. 

4 MR. BROOKMAN: John Mandyck? 

5 MR. MANDYCK: John Mandyck with 

6 Carrier. 

7 I have several questions regarding 

8 the simulated levels. 

9 MR. WINIARSKI: Yes. 

10 MR. MANDYCK: The first one is what 

11 was max tech that you evaluated for central 

12 air conditioners? 

13 MR. WINIARSKI: What was max tech? 

14 Was it -- 22, I think for the blower coil. 

15 MR. MANDYCK: Okay. Did you use 

16 the same four simulated points for your 

17 residential analysis, too? 

18 MR. WINIARSKI: We did not simulate 

19 the residential analysis. That was done using 

20 the RECS data. 

21 MR. MANDYCK: Okay. Great. 

22 And then on this, I'm curious as to 
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1 why you went from 13, 14 and then jumped to 

2 16. Does that mean that 15 SEER is not 

3 considered a possible standard if you don't 

4 accept the consensus agreement? 

5 MR. WINIARSKI: No, no, that's not 

6 what it means. Basically in using the 

7 EnergyPlus, we had lots of levels to simulate. 

8 And there are a lot of simulations involved 

9 here. 

10 So what we did is we simulated 

11 these four levels for each product. Between 

12 those levels, the energy use is interpolated. 

13 And I'll go into that in the next slide if 

14 that's all right. 

15 MR. BROOKMAN: Go to the next 

16 slide. 

17 Harvey? 

18 MR. SACHS: Harvey Sachs, ACEEE. 

19 I guess I am surprised and stunned 

20 is probably not too strong a word that if I 

21 look back at slides like 45 on the markups, 

22 we're going to extraordinary measures to get 
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1 estimates to the third decimal. 

2 And then when I look at how we're 

3 looking -- setting up our models, setting up 

4 our fundamental assumptions, it sounds like 

5 we're not looking at climate zone-specific 

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

7 northern climates for heat pumps, and these 

8 are things that are on the other side of the 

9 decimal place. 

10 And it just is a very surprising 

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

12 some things. But at the level of the common 

13 sense engineering, understanding what a 

14 practitioner would be expected to do, it seems 

15 as though we're missing some things that might 

16 be pretty important. 

17 MR. BROOKMAN: Okay. Thank you. 

18 Keep going. 

19 MR. WINIARSKI: Okay. So, again, 

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

21 involved or listened to people talk about how 

22 you actually do a simulation model, we've got 
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1 to make some assumptions, starting with the 

2 fact that once we have the building model 

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

4 effectively input what corresponds to a SEER 

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

6 engineering analysis to get that information 

7 actually into the simulation. 

8 So to start with in that process, 

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

10 converting the SEER and HSPF ratings, which 

11 cannot be directly simulated, to what we call 

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

13 COP at 47 degrees heating. 

14 That process utilized a paper 

15 that's been written by a couple of researchers 

16 who looked at AHRI data and developed this 

17 particular curve you see in the right-hand 

18 corner, relating SEER and EER. 

19 Yes? 

20 MR. SACHS: Harvey Sachs, ACEEE. 

21 I'm not familiar with the Wassmer22 Brandemuehl curve. But it has been our 
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1 experience with a lot of other curves, 

2 Henderson, for example, that there is a break 

3 and we see two different families at 

4 intermediate SEER values depending on whether 

5 we have a step-modulating or other modulating 

6 compressor so that EER has a different slope 

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

8 for a modulating unit. 

9 And without some measure of 

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

11 looking like this quasi-linear relationship 

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

13 sense from looking at data. 

14 You're missing the story, I think. 

15 MR. BROOKMAN: Okay. Do you want 

16 to respond to that? 

17 MR. WINIARSKI: Oh, sorry, I 

18 thought Steve had his hand up. 

19 There are a couple of curves you do 

20 get that type of relationship. One of the 

21 issues, in particular, with the commercial 

22 building assumptions and the modeling of 
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1 commercial buildings is exactly how you handle 

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

3 allowed to essentially go to a lower fan speed 

4 or not in the modeling. 

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

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

7 compressor. The fan issue we haven't gotten 

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

9 manufacturers can fill in, whether it goes up 

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

11 inverter technology or a single speed. 

12 And my SEER/EER relationship is 

13 very different depending on which of those 

14 compressor choices I've made. That's not 

15 reflected in this curve. 

16 MR. WINIARSKI: Nor, in fact, is it 

17 clearly reflected in the standard that DOE 

18 would publish. DOE will publish -- if it 

19 publishes a SEER, it does not explicitly say 

20 single speed or two-speed equipment. This is 

21 reflection sort of a number of products that 

22 were available on the market. 
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1 MR. SACHS: But this reflects the 

2 analysis because the energy use at different 

3 temperature bins will depend on which one of 

4 these units you're using in your model 

5 equipment. Maybe I'm missing something but I 

6 think I'm on solid ground here. 

7 MR. BROOKMAN: Harvey, maybe you 

8 could send it in detailed comments. 

9 MR. SACHS: We published this 

10 several years ago in our analysis of regional 

11 standards. 

12 MR. BROOKMAN: Don Brundadge. 

13 MR. BRUNDADGE: I'm just amazed I'm 

14 agreeing with Harvey so much today. 

15 (Laughter.) 

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

17 PARTICIPANT: It's proximity. 

18 MR. BRUNDADGE: I think if you just 

19 did SEER 16 and max tech as dual or variable 

20 speed, it would solve a lot of these problems. 

21 The curve you've got here looks to me like you 

22 are assuming single speed all the way up 
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1 through SEER 20. 

2 You need to have a change when you 

3 switch the technologies. And that's probably 

4 going to happen around SEER 16. And you are 

5 going to get a very differently looking EER 

6 slope on variable speed compressors. 

7 Thank you. 

8 MR. BROOKMAN: Thank you. 

9 Steve Rosenstock? 

10 MR. ROSENSTOCK: Steve Rosenstock, 

11 EEI. 

12 And I will also agree with Harvey 

13 and Don. Hopefully they don't faint over 

14 there. 

15 But I also have to say the impact 

16 of using this nice linear curve where 

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

18 that especially on the commercial side, that 

19 regardless of what's actually happening with 

20 EER, that energy use always goes down and peak 

21 demand always goes down. 

22 And, therefore, your economic 
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1 analysis always looks better when that's not 

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

3 the testimony that's been heard earlier today. 

4 So I understand why you're doing 

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

6 Number one, in terms of the EER levels already 

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

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

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

10 for conversion. Use the actual number in 

11 terms of some of simulation. 

12 And, again, it's probably 

13 bifurcated at the higher levels in terms of 

14 very low EERs and pretty high EERs. But, 

15 again, using this will distort the eventual 

16 energy and life cycle costs and energy savings 

17 analysis. 

18 Thank you. 

19 MR. BROOKMAN: Okay. Thank you. 

20 Harvey? 

21 MR. SACHS: It's a little bit 

22 digressive but there's a piece of equipment in 
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1 the hall manufactured by an outfit named 

2 Shortridge. I'd like to see the hands of 

3 anyone in this room who has used such a piece 

4 of equipment. Thank you. 

5 It's a fundament piece of equipment 

6 for balancing the flow from air registers, one 

7 with which every contractor should be 

8 familiar. And it's relevant to the kinds of 

9 experience people have for doing these 

10 analyses. 

11 Thank you. End of rant. I'm 

12 sorry. 

13 MR. BROOKMAN: Thank you. 

14 Jim? 

15 MR. BRESHAW: Jim Breshaw. 

16 I've just got to state that this -- 

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

18 appropriate if you go dig into the AHRI 

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

20 EERs on most of these equipment. It just 

21 doesn't look right to me. 

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

2 into the AHRI directory about a week ago, this 

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

4 not sure what the sources were for the paper. 

5 And I should probably look up the paper and 

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

7 But based on what's on the AHRI directory 

8 right now, this does not look accurate. 

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

10 the TSD, Dave, is it not? 

11 MR. WINIARSKI: The paper? 

12 MR. BROOKMAN: Your citations. 

13 MR. WINIARSKI: Oh, yes, yes, 

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

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

16 it. 

17 One of the things we can do is we 

18 can propose to show this along with results 

19 from the AHRI directory in comparison. 

20 MR. BROOKMAN: We need to keep 

21 moving along here, folks. 

22 Jeff first. And then to Andrew. 
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1 PARTICIPANT: Just, you know, to 

2 reinforce some of the other statements. If 

3 you are analyzing different compressor 

4 technologies, you have to take into account 

5 the fact that they are going to be different. 

6 Single stage is going to give you one EER at a 

7 16 SEER. And a two stage is going to give you 

8 a different EER in a 16 SEER. 

9 At the same SEER level, they're 

10 going to be different because the technologies 

11 are different. And that will have to be taken 

12 into account. 

13 MR. BROOKMAN: Okay. 

14 Andrew? 

15 MR. deLASKI: So just to follow on 

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

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

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

19 are the fundamental parameters of the 

20 rulemaking. 

21 It is also going effect the utility 

22 impact analysis. And in central air 
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1 conditioners, peak demand impacts is a 

2 critical concern for this docket. And, you 

3 know, my recollection of the last docket is, 

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

5 peak savings from the last central air 

6 conditioner standard. 

7 But that the Department in the last 

8 docket concluded that over SEER 13 or 14, the 

9 relationship between SEER and EER broke down. 

10 And it strikes me that, you know, 

11 in a market where you look at the market today 

12 and what Molly has observed -- just said now 

13 that she doesn't see a real relationship over 

14 SEER 14 is that, you know, that relationship 

15 may very well become more clear once a 

16 standard is set and as the market migrates to 

17 the lowest cost compliance path. 

18 And if that results in higher EER, 

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

20 have undermined the goal of the savings. So I 

21 think this really needs to be sorted out in a 

22 way that reflects what is the low cost 
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1 compliance path. 

2 MR. BROOKMAN: Okay. So thanks for 

3 all those comments. 

4 Take final comments. You see a 

5 series of assumptions listed here and some of 

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

7 all have. Final comments on the assumptions 

8 listed on slide 50. 

9 Yes, Jim? 

10 PARTICIPANT: On the static 

11 pressure, is that the external static pressure 

12 that the blower system sees? Does that 

13 include the coil pressure drops as well? 

14 MR. WINIARSKI: I was going to 

15 clarify that. The static pressure that you 

16 see there is used in the conversion between a 

17 -- effectively what the simulation model needs 

18 is it separates out the fan from the 

19 condensing unit. 

20 And so in order to come up with an 

21 effective cooling COP and heating COP for the 

22 condensing unit, you have to extract out the 
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1 fan, you have to extract out the fan power at 

2 test conditions. 

3 At test conditions, we estimated 

4 that a typical static pressure -- total static 

5 pressure for the system was around this 1.1 

6 inches. The actual building model when it's 

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

8 PARTICIPANT: And you're assuming 

9 this is for residential equipment applied in a 

10 commercial building? 

11 MR. WINIARSKI: Exactly. A very 

12 small commercial building. 

13 PARTICIPANT: But if you look 

14 through our application guide, you won't find 

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

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

17 and a half. 

18 MR. WINIARSKI: That's external 

19 static, right? 

20 PARTICIPANT: I thought that's what 

21 you just said but -- 

22 MR. WINIARSKI: Oh, yes, that's 
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1 what I'm saying. So this here is the total 

2 static pressure. 

3 PARTICIPANT: This includes the 

4 pressure drop across the coil and the filter 

5 and the internal losses of the air handler? 

6 MR. WINIARSKI: Yes, the whole 

7 thing. 

8 PARTICIPANT: Okay. 

9 MR. WINIARSKI: Yes. 

10 MR. BROOKMAN: Okay. Jeff? 

11 PARTICIPANT: One last question. 

12 On the fan efficiency of .58 and .65, I assume 

13 that's .58 for 13 and .65 for 14 is what 

14 you're modeling? 

15 MR. WINIARSKI: No. The fan 

16 efficiency, the efficiency of the actual fan 

17 itself, you know, brake horsepower-type 

18 efficiency is assumed to be .58 -- 

19 PARTICIPANT: Okay. 

20 MR. WINIARSKI: -- the blower motor 

21 -- 

22 PARTICIPANT: I'm sorry. I 
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1 apologize. I missed that. 

2 MR. WINIARSKI: Yes. 

3 MR. BROOKMAN: Okay. 

4 Harvey Sachs? 

5 MR. SACHS: First of all, thank you 

6 for using the total static pressure and for 

7 using realistic values instead of the rating 

8 method values. I guess I'm not at all 

9 confident that these motor efficiencies or 

10 combined efficiencies are realistic at these 

11 high ASPs for residential equipment. 

12 MR. BROOKMAN: Okay. 

13 Tom Eckman? 

14 MR. ECKMAN: On the presumption 

15 that we move to a simulation of the heat pump 

16 on residential as well as on commercial, I 

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

18 inverteribbon driven technology, I think 

19 picking a single point COP temperature is 

20 probably wrong in trying to fit a curve 

21 through that because inverter-driven 

22 technology has a wholly different performance 
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1 curve as temperatures go down relative to 

2 other technologies. 

3 And so if that's evaluated on the 

4 heat pump side, we need to look at the 

5 performance curves with that technology 

6 embedded in the system versus the non-inverter 

7 driven compressors because they perform quite 

8 differently at lower temperatures relative to 

9 the standard rating points that we have right 

10 now available. 

11 MR. WINIARSKI: For what it's 

12 worth, let me respond to that. 

13 I believe that the simulation tool, 

14 EnergyPlus, allows for a single and a double 

15 stage model. Essentially there are 

16 performance curves that handle how the COP or 

17 condensing unit efficiency varies as a 

18 function of indoor wet bulb, outdoor dry bulb 

19 temperature. All these things. 

20 And so there's only a limited 

21 selection of curves currently available in 

22 EnergyPlus to do that. I don't think inverter 
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1 is one of them. Just a general comment. 

2 MR. ECKMAN: That would be a 

3 limitation for evaluating that technology then 

4 I gather. 

5 MR. BROOKMAN: Thanks, Tom. 

6 Okay, yes, Molly? 

7 MS. TROMBLEY-McCANN: I just kind 

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

9 representative of a utility. The SEER rating 

10 as it is currently designed is based on the 

11 performance at 82 degrees. 

12 And as you push harder to get a 

13 better SEER rating, you prioritize performance 

14 at those lower temperatures over performance 

15 at much higher temperatures. 

16 What you end up seeing, at least in 

17 my experience with the equipment that's on the 

18 market, is that for a very high SEER, the EER 

19 at 95 and above actually goes down compared to 

20 lower SEER. 

21 And the reasons this is such an 

22 important issue for us is because that means 
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1 that peak performance goes down as you 

2 nominally increase the efficiency of the 

3 equipment. 

4 For utilities in hot, dry areas 

5 that have really high peak loads, this is 

6 potentially catastrophic. And it is one of 

7 the reasons that we are so emphatic about not 

8 using SEER as the only or even any efficiency 

9 metric in hot, dry regions. 

10 So if this curve is wrong, you 

11 could potentially miss extremely important 

12 impacts to utilities and also to consumers. 

13 So it's not just that we're nitpicking about 

14 whose study is right. It's really important. 

15 MR. BROOKMAN: Okay. Thanks for 

16 that summary. That's helpful. 

17 Karim? 

18 DR. AMRANE: Karim Amrane, AHRI. 

19 Just a comment here. I mean we're 

20 talking about what, seven percent of the 

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

22 not sure -- we're spending a lot of time on 
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1 this but I don't think at the end of the day 

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

3 analysis. That's my personal opinion. 

4 MR. BROOKMAN: Thank you. 

5 Don Brundadge? But we do need to 

6 keep moving along or we'll be here all 

7 afternoon. 

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

9 only seven percent. But part of the reason I 

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

11 really like something more similar to this 

12 done on the residential side because for all 

13 the flaws, this is still a better approach 

14 than what you're doing on residential. 

15 Thank you. 

16 MR. BROOKMAN: Great. 

17 Harvey? 

18 MR. SACHS: Harvey Sachs, ACEEE. 

19 And, again, Mr. Brundadge took 

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

21 something else I wanted to say but he took the 

22 words out of my mouth on the first piece. 
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1 MR. BROOKMAN: Okay. Thank you. 

2 Then we're going to move on then. 

3 MR. WINIARSKI: Okay. So this is 

4 essentially an estimate of the market baseline 

5 efficiency distributions for each product 

6 class. In the past, I think in past 

7 rulemakings this data was made available by 

8 the industry. It was not available for this 

9 rulemaking so DOE had to make some estimate 

10 for what the distributions looked like. 

11 Essentially the distributions are 

12 built around first establishing SEER bins off 

13 to the left, the SEER bins that -- at the 

14 center point for the most part, the bins have 

15 one of the design efficiency levels from the 

16 engineering analysis. 

17 We then took some data, some 

18 industry trade press data that essentially 

19 suggested in the market in 2007, I believe, 

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

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

22 and above is another group. 
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1 And then we developed distributions 

2 such that using that data, using the 

3 characteristic efficiencies for the bins, we 

4 could come up with weighted average SEERs that 

5 matched the weighted average statistical data 

6 that ARI had in 2007. 

7 These -- so the values on the 

8 bottom basically reflect the AHRI -- pardon 

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

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

11 single packaged AIR CONDITIONERS, I think the 

12 2007 data actually suggested that the shipment 

13 weighted average efficiency was below 13. 

14 I think that reflects -- I'm not 

15 quite clear what that all reflects but we 

16 adjusted for that for the 2008 data and then 

17 developed the distribution shown here. 

18 Basically we would like any type of comment 

19 from the industry on whether these 

20 distributions look about right. 

21 MR. BROOKMAN: Steve Rosenstock? 

22 MR. ROSENSTOCK: Steve Rosenstock, 
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1 EEI. 

2 Just a quick question. Again, this 

3 is going -- looking at if there's any data for 

4 2009 in terms of the impact of the federal tax 

5 credits because for those they were either -- 

6 I think they were 15 or 16 depending on the 

7 technology, 15 for heat pumps and 16 for 

8 central air conditioners. 

9 So, again, I don't know how 

10 recently you want to look but there might have 

11 been -- those tax credits in effect for 2009 

12 and 2010 might have had an impact on some of 

13 this distribution. 

14 And I know there are proposals to 

15 extend the tax credits for several years. I 

16 know that some just came up recently. 

17 Thank you. 

18 MR. BROOKMAN: Talbot? 

19 MR. GEE: Well, yes, this is Talbot 

20 with HARDI. 

21 And I think it is a good point to 

22 consider what impact that may have had. And 
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1 we talked about this a lot in our initial 

2 comments that I would recommend that there 

3 actually be an added analysis of the impact of 

4 efficiency programs on all of the deployment 

5 of these products because first of all, if you 

6 are going to say that okay, the mix has 

7 shifted to more high efficiency products but 

8 then you find that it is 90 percent due to 

9 some sort of an efficiency incentive, then I 

10 don't believe that justifies an increase in 

11 the minimum standard because if you increase 

12 the minimum standard, you are thereby probably 

13 undermining those efficiency programs, which 

14 may not exist in the long run. 

15 So in other words, you could hurt 

16 the product shift going forward. Now, again, 

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

18 experts in efficiency programs but we know 

19 that there is some cost effectiveness that has 

20 to be established in those things. 

21 And we think it would be well worth 

22 the DOE's time in this rulemaking and frankly 
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1 other ones that apply to incentivized products 

2 to thoroughly study the impact of efficiency 

3 standards on any type of energy efficiency 

4 incentive program be it utility, state, 

5 federal. 

6 But also not falling into the trap 

7 to think because heavily incentivized products 

8 may have shifted a little bit of market shares 

9 that it therefore justifies that it would be 

10 an easy jump to just raise the standard to 

11 that level or one close to it. 

12 MR. BROOKMAN: Okay. Thank you. 

13 Don? 

14 MR. BRUNDADGE: A general comment 

15 on data over the last few years. These have 

16 not been normal times. You've had near 

17 Depression era type conditions in 2008. You 

18 had a lot of incentives and tax credits thrown 

19 at things over the last year or two. 

20 It may be that rather than 

21 automatically using the most recent data you 

22 need to consider these impacts and make 
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1 adjustments or drop back to earlier data. 

2 I mean we don't want to make long3 term projections going forward based on the 

4 roller coaster of the last couple of years and 

5 where your snapshot happened to grab it. 

6 Thank you. 

7 MR. WINIARSKI: If I can make two 

8 other comments. One, one of the issues is 

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

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

11 for something like that. 

12 The other issue I want to bring 

13 forth is, again, we established these 

14 distributions for 2008 based on the data that 

15 we were able to come up with. These actually 

16 also form the distributions in the LCC 

17 analysis that Mike Scott will address earlier 

18 -- or will address in a little bit. 

19 So they've essentially been held 

20 flat for that period from today through the 

21 start of the rule. 

22 MR. BROOKMAN: Andrew deLaski? 
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1 MR. deLASKI: Dave, a question for 

2 clarification. 

3 MR. WINIARSKI: Yes? 

4 MR. deLASKI: So in your table -- 

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

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

7 about half the products are in that second 

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

9 wondering what you are observing or what you 

10 are finding. 

11 Is it that -- you know, in shooting 

12 to meet the standard, maybe the manufacturers 

13 can answer this better than you or I'm sure 

14 they can -- but maybe they can't but maybe 

15 they will -- but are manufacturers shooting 

16 for a higher SEER to be assured of meeting the 

17 standard or is this market driven? 

18 You know why are we observing half 

19 the market -- you know, because there are 

20 costs in being a little bit more efficient. 

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

22 level that's a little bit higher than the 
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1 standard. 

2 MR. WINIARSKI: Okay. I can speak 

3 to the process used for developing this, we 

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

5 distributions that would actually get us to 

6 those weighted average SEER numbers that we 

7 had with the AHRI data. 

8 And it was difficult using the 

9 limited trade press data we had. And, in 

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

11 split system AIR CONDITION, given, you know, 

12 this limited accuracy of the trade press data 

13 which basically said, you know, we know we 

14 have X percent of the market at between 14 and 

15 15 to, you know, one significant digit. 

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

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

18 achieve that weighted average SEER of 13.77 

19 without assuming that a significant fraction 

20 were slightly above 13. 

21 So, you know, that was our 

22 analytical process. We certainly welcome data 
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1 from the industry on, as you pointed out, 

2 whether they shoot for a little higher than 

3 13. 

4 MR. BROOKMAN: Karim? 

5 DR. AMRANE: Karim Amrane, AHRI. 

6 We don't capture, as far as 

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

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

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

10 data. 

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

12 we cannot estimate, you know, what is the 

13 percentage at 13.25. 

14 MR. BROOKMAN: Molly? 

15 MS. TROMBLEY-McCANN: Molly 

16 Trombley-McCann. 

17 As a clarification, you were trying 

18 to match 13.77, which was the AHRI weighted 

19 SEER based on model availability? 

20 MR. WINIARSKI: That's shipment. 

21 MS. TROMBLEY-McCANN: That's 

22 shipment weighted, okay. 
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1 MR. BROOKMAN: Andrew? 

2 MR. deLASKI: Just to make sure I 

3 understand the methodology here. 

4 The weighted average SEERs in the 

5 bottom of the table are what AHRI provided to 

6 you? 

7 MR. WINIARSKI: 

8 MR. SACHS: That's correct. 

9 MR. deLASKI: Okay. 

10 MR. BROOKMAN: Thank you, Andrew. 

11 Dave, keep going. 

12 MR. WINIARSKI: Yes. Okay, we 

13 talked a little bit about the standard regions 

14 that were developed for this analysis. Those 

15 standard regions were actually developed prior 

16 to the consensus agreement. 

17 Here is the map that Wes showed you 

18 earlier. I want to talk a little bit about 

19 how they were developed. 

20 Essentially we looked at the 

21 cooling load hours map that has been available 

22 from AHRI for years now. A picture of it is 
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1 off to the right. 

2 Essentially with the assumption 

3 that the standard SEER rating is based on 

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

5 that a hotter climate would be those with 

6 greater than 1,000 cooling load hours. 

7 That 1,000 cooling load hour line 

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

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

10 Kentucky, it goes below Virginia. 

11 What we actually did is we looked 

12 at that issue, we looked at the relative 

13 humidity from a bunch of weather data for I 

14 think it was 1,000 sites, the TMY3 data. 

15 During those cooling load hours, we 

16 looked at cooling degree day data in terms of 

17 establishing that. And we also considered the 

18 EISA requirements for contiguous regions and 

19 whole states within each region. 

20 When you get, as was alluded to 

21 earlier, when you get out to the western 

22 states, there are huge variations in cooling 
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1 degree days. It's really hard to characterize 

2 anything as necessarily hot from a geographic 

3 perspective. And you can see that kind of the 

4 cooling load hour map, the compressed lines 

5 off to the left here around California and 

6 into Arizona. 

7 So we took a lot of this into 

8 account in trying to come up with a boundary 

9 for our map that I showed you earlier. Really 

10 the differences here between this and the 

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

12 states of Virginia, Kentucky, Delaware, and 

13 Maryland in this analysis were put into the 

14 rest of the country, the northern region. I 

15 think the consensus agreement puts those into 

16 the southern region. 

17 And as we were developing this, we 

18 also consulted with people with the furnace 

19 rulemaking trying to establish where we 

20 thought OPRI ORI (phonetic) would be the 

21 benefits to improving furnace standards or 

22 improving the air conditioning standards in 
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1 trying to establish this initial map. 

2 Let's see here. We talked about 

3 the wide variation in temperatures. The 

4 regions in this map, obviously one of the 

5 issues is that the RECS data is aggregated at 

6 the census division level. And any climate 

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

8 So we have to allocate certain RECS 

9 observations to one side or the other of a 

10 boundary. 

11 And in addition, the DOE, an 

12 appendix of the PSE talks about the 

13 development of a possible SEER hot, dry 

14 metric, a separate metric for the hot, dry 

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

16 done the analysis. That we're looking really 

17 toward feedback on whether that is a viable 

18 approach. 

19 MR. BROOKMAN: So you can see the 

20 comment box there. The Department seeks 

21 comment on introduction of regional SEER, the 

22 use of bin method, and the calculation of 
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1 cooling load and hours, bins for determining 

2 the regional SEER and also the use of SEER for 

3 establishing cooling efficiency standards in 

4 hot, dry region of the country. 

5 Let's take comments on these. 

6 Steve Rosenstock? 

7 MR. ROSENSTOCK: Steve Rosenstock, 

8 Edison Electric Institute. 

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

10 You'll have to forgive me here. 

11 In terms of the SEER hot, dry 

12 metric, is DOE looking at basically a separate 

13 test procedure for that part of the country? 

14 And if so, if you're looking at a SEER HD and 

15 the numbers are different, would you have to 

16 redo some of this analysis as well if the SEER 

17 HD results are, you know, different. 

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

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

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

21 think of the implications of this in terms of, 

22 you know, number one changing the test 
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1 procedure, and then number two, redoing this 

2 analysis based on the new metric for that part 

3 of the country. 

4 MR. BROOKMAN: Molly, you want to 

5 go ahead? 

6 MS. TROMBLEY-McCANN: No. 

7 MR. BROOKMAN: Okay. Then Karim? 

8 Oh, Dave, go ahead. 

9 MR. WINIARSKI: I was going to let 

10 Wes answer something. 

11 (Laughter.) 

12 MR. WES ANDERSON: No, I was going 

13 to say the test procedures currently being 

14 rewritten now -- this is Wes, DOE, and there 

15 will be a public meeting on that to address 

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

17 speak to the test procedure right now until 

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

19 be -- 

20 MR. ROSENSTOCK: This is Steven 

21 Rosenstock. Thank you very much. 

22 But, again, if -- and, again, I 
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1 don't know if you're looking at a separate 

2 test procedure for the hot, humid climates, 

3 which in a way makes more sense, but then 

4 again, if these new test procedures are 

5 established, this could have quite the impact 

6 on numbers in this. And it would have to 

7 impact the candidate standard levels. 

8 If you're doing a separate test 

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

10 numbers I would guess. And that would change 

11 a lot of the -- possibly change the economics 

12 and it changes everything in terms of an 

13 efficiency standard. 

14 MR. BROOKMAN: Harvey Sachs? 

15 MR. SACHS: Harvey Sachs, ACEEE. 

16 To my mind as an advocate, trying 

17 to think about putting myself in the other 

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

19 a different regional boundary for air 

20 conditioning versus heating products, if 

21 nothing else because the heat pump bridges 

22 that gap. 
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1 So my question is whether the 

2 Department and its contractors sat down and 

3 did at least a back of the envelope 

4 calculation on the 4,500 bases it has 

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

6 5,500. I mean we certainly spent a great deal 

7 of effort in the development of the consensus 

8 agreement thinking about what made sense in 

9 terms of energy savings and the market. 

10 So I'm curious about the process 

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

12 5,000. 

13 MR. WINIARSKI: Well, going back to 

14 the development, 4,500 is roughly an outcome. 

15 It's not the input to developing this process. 

16 So bear that in mind. 

17 The other thing I want to say is 

18 that if you consider the issues that DOE had 

19 to deal with, as you move that line farther 

20 south and you are considering regional 

21 standards, obviously you start to get hotter 

22 and hotter climates and the SEER level that 
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1 can be cost justified obviously goes up. 

2 As you move the line -- and at the 

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

4 DOE was considering consistent boundaries when 

5 we looked at this, the furnace efficiency that 

6 you justify is now for warmer climates and 

7 appears to be going down. 

8 So there is a choice here in terms 

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

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

11 analysis on air conditioners and heat pumps, 

12 that change is very, very minor in the 

13 resulting positive LCC. 

14 MR. SACHS: But, Dave, my 

15 underlying question was trying to get inside 

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

17 guys talk together about where the line ought 

18 to be? 

19 MR. WINIARSKI: Yes. We have 

20 meetings about that. 

21 MR. SACHS: Thank you. 

22 I have another statement if I might 
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1 and that's an apology. I believe that our 

2 publication was the first to propose a SEER 

3 sub HD for the hot, dry climate. This was to 

4 be based on using bin hour distributions 

5 appropriate. And, in fact, the economic value 

6 of the electricity used at high temperatures 

7 as (inaudible) bin hour distributions. 

8 We did that and I assume you did as 

9 well on the assumption that the Department's 

10 theology would not allow using dual metrics. 

11 We've heard this morning from Kate and I 

12 believe from Tim as well, that there is good 

13 precedent for using both an EER and a SEER. 

14 And there will be a great deal more discussion 

15 of that. 

16 And partly in support of the 

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

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

19 the terms that Steve has suggested for 

20 marketing, that it is a really bad third 

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

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

2 MR. BROOKMAN: Thank you. 

3 Let's go to Karim first. 

4 DR. AMRANE: Karim Amrane, AHRI. 

5 I'd like to agree with Harvey. 

6 (Laughter.) 

7 MR. SACHS: I'm becoming a frame of 

8 reference. 

9 DR. AMRANE: And I think if you 

10 look at the consensus agreement, you know, we 

11 came up with an EER metric as well for the 

12 southwest and to address this hot and dry 

13 climate issue. So I think it is taken care of 

14 in the consensus agreement. And that's why 

15 DOE should be adopting it. 

16 MR. BROOKMAN: Thank you. 

17 Let's go to Kate and then to Molly. 

18 MS. HOWARD: Dave, in your opinion, 

19 what is the difference? Or what is the 

20 advantage I suppose? Or actually just could 

21 you compare SEER HD to EER. What do you -- 

22 you know, I'm a lawyer. I don't understand 
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1 the technical stuff as well as many of the 

2 others in the room. 

3 But I'm just wondering in your mind 

4 what you feel is the relative difference or if 

5 you could offer a quick comparison, that would 

6 be great. Thank you. 

7 MR. WINIARSKI: Yes. I can speak 

8 to that a little quick. 

9 Appendix 7C describes the 

10 methodology. The methodology was based on bin 

11 hour data for -- I believe we used 20 KMY 

12 sites that we had population weights for that 

13 covered I think it was like 98 percent of the 

14 population of that region. 

15 It is heavily weighted by 

16 California, as you might guess. And the 

17 result, we essentially used a load line that 

18 looked very similar. In other words, assuming 

19 that cooling starts at 65 degrees and sort of 

20 -- and moves up from there for the climates 

21 within that region. 

22 The result is a slightly different 
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1 bin hour distribution. It tends to be more 

2 heavily weighted both on the cooling or the 

3 lower part of the scale in terms of 

4 temperature as well as on the higher. So it 

5 is kind of a flatter load profile versus the 

6 current SEER profile tends to be more mounded 

7 around 82 degrees. 

8 MS. HOWARD: I'm more concerned 

9 about the difference between SEER HD and EER 

10 than SEER HD and SEER. 

11 MR. WINIARSKI: Right, right. 

12 MS. HOWARD: Okay. Thanks. 

13 MR. WINIARSKI: So the SEER HD that 

14 was discussed here, basically one of the 

15 outcomes was that the weighted average cooling 

16 temperature, outdoor temperature, isn't that 

17 much different than the 82 degrees that you 

18 come up with the current bin hour method. 

19 So you really don't capture that 

20 high end performance that you get with EER or 

21 even, you know, if you were looking for 

22 specific temperature ratings for equipment. 
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1 MR. BROOKMAN: Molly. And then 

2 back to Harvey. 

3 MS. TROMBLEY-McCANN: So first I 

4 want to say thank you because we did submit 

5 comments in the framework stage strongly 

6 advocating for a SEER HD. And you are 

7 responding to us. And I appreciate that. 

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

9 tell you that I want you to do something 

10 really different. 

11 (Laughter.) 

12 MS. TROMBLEY-McCANN: So I do want 

13 to acknowledge that this was something we 

14 asked for. But as Harvey said, it was 

15 something we asked for on the assumption that 

16 we couldn't get what we really wanted. 

17 And what we really want is specific 

18 information about performance at specific 

19 temperature points about 90 degrees. So for 

20 me the biggest difference between a SEER value 

21 and an EER value is that SEER is a seasonal 

22 average. It does not give you information 
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1 about a specific performance at a specific 

2 temperature. 

3 And, you know, averages, while very 

4 useful especially for things like statewide 

5 standards, cannot give you information about 

6 performance in individual climate areas. So 

7 one of the reasons that more information, in 

8 terms of like an EER as well as a SEER, is 

9 helpful for us is that it helps us to unpack 

10 how is that unit actually performing at each 

11 of the different temperature points because in 

12 reality, performance of an air conditioner is 

13 a curve that varies with outdoor temperature 

14 continuously. So it is not a single value. 

15 So for us, as a state, being able 

16 to have access to more information so that we 

17 can set incentive programs in other 

18 requirements that are individually climate19 specific is really helpful. 

20 So that's one of the reasons that a 

21 SEER and an EER is preferable and also one of 

22 the reasons that for us the consensus 
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1 agreement is very important because it 

2 includes a provision that manufacturers will 

3 disclose performance at a number of different 

4 temperature points, which is very helpful for 

5 us. 

6 MR. BROOKMAN: Thank you. 

7 Harvey? 

8 MR. SACHS: Harvey Sachs. If you 

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

10 you steal from 20, it's research. 

11 One of the diagrams in our initial 

12 paper on regional standards was shamelessly 

13 taken from earlier work by Horowitz and 

14 others. But it shows that the cost of air 

15 conditioning seasonal energy -- that 30 

16 percent -- 35 percent of the cost of seasonal 

17 air conditioning energy in the hot, dry 

18 climate is characteristically at temperatures 

19 above 95, both because EER falls off so 

20 quickly and because of the value of high 

21 temperature electricity to capacity 

22 constrained utilities. 
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1 So simply say that SEER HD is 

2 shifted a few degrees, say to 87 instead of 

3 82, fails to capture the enormous importance 

4 of that relatively small number of very high 

5 valued hours when the air conditioners are not 

6 working as well when the temperature is above 

7 95 degrees. 

8 This is a major conceptual defect 

9 in a simple shift with a modest min 

10 displacement, which is what I'm hearing not 

11 having read 7C in any detail yet. 

12 Thank you. 

13 MR. BROOKMAN: Thank you. 

14 I'm thinking we're starting to get 

15 redundant here. And I'm also thinking that 

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

17 soon. 

18 Don? 

19 MR. BRUNDADGE: Well, just a quick 

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

21 got EER in the consensus agreement and 

22 assuming that you find a way to stick EER in 
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1 the hot, dry states in an eventual rule, 

2 whether the consensus agreement happens or 

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

4 western utilities, correct me on this, is to 

5 provide an estimate of energy use for 

6 consumers. It's more something that ought to 

7 appear on the yellow label rather than be part 

8 of the standard if you are going to actually 

9 require EER. 

10 MR. BROOKMAN: Okay. 

11 MR. BRUNDADGE: I think it does 

12 have value though. 

13 MR. BROOKMAN: Let's take final 

14 comments on this comment box because we're 

15 almost at a pausing point here. 

16 Final comments on this before we 

17 move on? 

18 (No response.) 

19 MR. BROOKMAN: Okay. 

20 MR. WINIARSKI: Okay. And the last 

21 slide is just some results here by efficiency 

22 level for the energy use in each climate. 
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1 As you can see, hot and humid tends 

2 to have more energy use both at the baseline 

3 when you compare it to the other climates 

4 compared to -- down at the higher efficiency 

5 levels, the same trend exists. 

6 One of the interesting things is 

7 that the hot, dry number is actually fairly 

8 close to the national number, maybe slightly 

9 below that, the national being for the nation 

10 as a whole. Rest of country is relatively low 

11 here. 

12 This is for one product class. The 

13 results for the other product classes are in 

14 the TSD. 

15 And that's it. 

16 MR. BROOKMAN: Comments on this 

17 table? 

18 Harvey Sachs? 

19 MR. SACHS: Harvey Sachs. 

20 Thank you very much for this table. 

21 And, again, I believe this is RECS based? 

22 MR. WINIARSKI: This includes the 
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1 results of both the residential and the 

2 commercial modeling. 

3 MR. SACHS: But so it is RECS 

4 dominated. What I feel the need to emphasize, 

5 although the utility representatives can do it 

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

7 climates tend, in most cases, to be climates 

8 with fairly large downhill swings. 

9 So some people are moderating their 

10 air conditioning use with evening cooling from 

11 ambient. And, again, the key issue in the 

12 hot, dry climates is the consumption of 

13 electricity at the same time that everybody 

14 else wants it, in the afternoon. 

15 It's not just the total kilowatt 

16 hours. And this is why California has gone to 

17 the extraordinarily complex and sophisticated 

18 time-dependent valuation methods that have 

19 been used so extensively there for screening 

20 resources. 

21 This is a simplification that is 

22 instructive but it is hardly complete in terms 
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1 of the economic analysis. 

2 MR. BROOKMAN: Thank you. 

3 Steve Rosenstock? 

4 MR. ROSENSTOCK: Steve Rosenstock, 

5 EEI. 

6 I guess -- and, again, it falls 

7 into that fact is, you know, especially at the 

8 higher SEER level, we don't know where EER is 

9 going. And then for some of those climates, 

10 you know, it looks like a constant energy 

11 reduction. 

12 As you go up the SEER level, you 

13 are always getting like a certain percentage 

14 of energy usage reduction. And personally I 

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

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

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

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

19 that relationship. 

20 Just seeing, again, it looks like 

21 it is a perfect line going downhill. And I 

22 just don't see it, especially in some of the 
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1 hot, dry climates, especially if the EERs go 

2 down as SEERs go up. 

3 Thank you. 

4 MR. BROOKMAN: Okay. Thank you. 

5 Final comments on this table? 

6 (No response.) 

7 MR. BROOKMAN: Okay. We're at a 

8 break point. And based on the agenda, as 

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

10 And we probably have at least -- probably 

11 close to another hour to complete this 

12 content. 

13 So I'm going to suggest we take a 

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

15 to do lunch in less than an hour in this 

16 building. So I'd like to -- 

17 PARTICIPANT: Is it not possible to 

18 wage on John? 

19 MR. BROOKMAN: To what? 

20 PARTICIPANT: To wage John. 

21 MR. BROOKMAN: I think it's 

22 possible if people are up for it. If they 
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1 want to keep pressing on, we can keep pressing 

2 on. How many people would like to keep 

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

4 How many of you will be seriously 

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

6 try it then. Okay? 

7 And if anybody needs a comfort 

8 break, you can leave and come back quickly. 

9 Let's press on. 

10 MR. SCOTT: Okay, Mike Scott again. 

11 Life cycle cost, payback period 

12 analysis. When you get to this stage, having 

13 heard all of the discussion beforehand, you 

14 wonder why am I even here talking about 

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

16 MR. BROOKMAN: Do it quickly. 

17 MR. SCOTT: I will do. 

18 Okay. So what we're going to be 

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

20 discussion methodology. Those of you who have 

21 been involved in more than one rulemaking, 

22 we're doing it basically the same -- pretty 
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1 much the same way we always do. 

2 Life cycle cost equals the product 

3 installed price; that is including 

4 installation. It includes the annual energy, 

5 maintenance, and repair costs associated with 

6 the equipment. And anything that happens 

7 after the first year is discounted to a 

8 particular base year. 

9 The analysis is done from a 

10 consumer perspective, using consumer discount 

11 rates, not federal rates. 

12 It's done with an Excel 

13 spreadsheet. It is implemented in uncertainty 

14 mode using a Monte Carlo implementation tool, 

15 which is a way of saying that we sample from 

16 distributions for the values that we do for 

17 any particular run. 

18 We do 10,000 runs through the 

19 spreadsheet and report the summary statistics. 

20 In addition, we do do a simple 

21 payback period, the number of years required 

22 to offset any differences in the product 
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1 installed price from increases in efficiency 

2 that are gained from changes in the annual 

3 operating costs. 

4 The Monte Carlo analysis, as I said 

5 before, allows DOE to consider end user 

6 variability and variability across regions, 

7 and to conduct sensitivity analysis. 

8 Energy use, as you've seen from the 

9 residential analysis in particular, varies 

10 across individuals because we were using the 

11 RECS data. There are variations in 

12 installation repair and installation costs -- 

13 I'm sorry, repair and maintenance costs. 

14 We, in these analyses, select 

15 either from the commercial or residential body 

16 of data for individual observations. We 

17 correlate inputs where necessary. For 

18 example, electricity price and sector would 

19 correlate as well as location and electricity 

20 price. 

21 The results wind up being 

22 distributions of life cycle cost and payback 
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1 period by product class, region, and 

2 efficiency level. 

3 The flowchart that you see in your 

4 packet corresponds to what I just told you. 

5 Factors that vary by region, we've 

6 already talked about this a little bit, 

7 markups, especially sales taxes, installation 

8 costs, electricity consumption for cooling and 

9 heating, electricity prices. 

10 The factors that vary over time 

11 include electricity prices and we're talking 

12 about this in real terms, that is in constant 

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

14 varying over time, not in real terms anyway. 

15 What factors vary by individual 

16 consumer? Well, the product efficiency will, 

17 particularly in the market baseline 

18 distribution. Dave was showing you what those 

19 were in the preliminary analysis, the market 

20 baseline, energy consumption therefore varies. 

21 Product lifetime varies by individual. 

22 Observation, we sample the product 
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1 lifetime for any particular observation from a 

2 distribution that allows for equipment to 

3 progressively fail at longer and longer 

4 lifetime periods. 

5 Discount rates vary by individual. 

6 Those are, again, sampled. And electricity 

7 prices observed by an individual vary by 

8 individual. People have different changes of 

9 being located in particular utility service 

10 areas. 

11 The electricity prices, the 

12 residential, in view of the time available, 

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

14 8 of the technical support document and a copy 

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

16 sense of the detail that was gone into in 

17 order to basically come up with marginal 

18 prices for electricity at the time the 

19 electricity is saved. 

20 Those are based on electricity 

21 tariffs from 90 utilities across the country. 

22 The difference -- there is an important 
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1 difference between the residential and the 

2 commercial. For residential, we did not use 

3 time of use tariffs. There are no mandatory 

4 time of use tariffs at the time we did the 

5 analysis at least for residential customers. 

6 That may have changed since. And that may be 

7 updated. 

8 The market penetration, at least in 

9 the data we were looking at for residential 

10 customers taking advantage of voluntarily time 

11 of use tariffs was less than one percent of 

12 residential customers, deemed to be small. 

13 And there was no significant 

14 difference on average between the default 

15 price -- or default marginal tariff and what 

16 you would have gotten had you used time of use 

17 prices at the points of time that the savings 

18 occurred, where the kilowatt hour savings 

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

20 to the document. 

21 Yes, sir? 

22 MR. SACHS: Harvey Sachs, ACEEE. 
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1 And I really want to object to this 

2 approach. The Department of Energy, 

3 headquartered in this building, is trying to 

4 steer tens of billions of dollars into the 

5 Smart Grid. 

6 The mostly likely expression of the 

7 Smart Grid for a residential consumer will be 

8 ubiquitous residential tariffs, residential 

9 time of use tariffs. 

10 Mr. Brundadge is shaking his head 

11 affirmatively on that. 

12 For the Department, for this time 

13 period, to not at least simulate what that 

14 would look like in terms of costs for 

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

16 EER, you don't care. 

17 But this is just penny wise, pound 

18 foolish. And it is just totally unrealistic 

19 in terms of the direction of public policy 

20 that is being implemented today over the 

21 period in which this set of standards would be 

22 in force. 
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1 I'm sorry. I'll try to be nice. 

2 But it just stuns me. 

3 MR. BROOKMAN: That's okay. You've 

4 been articulate. 

5 Molly? 

6 MS. TROMBLEY-McCANN: For all the 

7 reasons that Harvey just cited, I don't think 

8 any of those three bullets will be true in 

9 2015 when these standards go into effect. I 

10 think time of use tariffs are going to be 

11 present and important in the impact of this 

12 standard. And you should analyze it. 

13 MR. BROOKMAN: Thank you. 

14 So the Department would benefit 

15 from your thought processes, your projections 

16 about how this might happen because they are 

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

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

19 rely on something to do that analysis. 

20 Don Brundadge? 

21 MR. BRUNDADGE: The only comment I 

22 would add to this is yes, not using time of 
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1 use is not a good approach. But it's all 

2 built on a house of sand with the RECS data. 

3 And I'm not really clear on whether 

4 the reason they're doing this -- and you could 

5 respond to it -- is because RECS doesn't 

6 register time of use so you can't use RECS and 

7 do time of use with it. Is that why you're 

8 going in this approach is you can't use RECS 

9 data in this way? 

10 MR. BROOKMAN: Greg? 

11 MR. ROSENQUIST: Greg Rosenquist 

12 from LBNL. 

13 You know we looked at the time of 

14 use tariffs and to see what sort of impact 

15 they would have on electricity prices. And it 

16 does vary widely by region. 

17 On a national average, it doesn't 

18 change that much compared to the default 

19 tariffs. But, again, places like California, 

20 the time of use tariff is higher. 

21 And in places -- there's actually 

22 60 percent of the utilities of the sample that 
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1 we had actually offered voluntary time of use 

2 tariffs. And in many of those regions, the 

3 actual time of use tariff was lower than the 

4 default tariff price. 

5 So we did an analysis to see -- to 

6 do that comparison and determined based upon 

7 that analysis, it was worthwhile at that point 

8 only to proceed with the default tariffs. 

9 PARTICIPANT: I think one of my 

10 comments, and I may disagree with my 

11 colleagues on this is given that you are 

12 dealing with RECS, which is backward-looking 

13 data and a relatively smaller percentage of 

14 customers were on time of use tariffs at the 

15 time your data was collected, then in that 

16 case, for using this backward-looking data, 

17 not time of use might be a reasonable 

18 assumption. 

19 But you need to find some way to 

20 adjust it for forward looking. 

21 MR. BROOKMAN: Steve Rosenstock? 

22 MR. ROSENSTOCK: Steve Rosenstock, 
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1 EEI. 

2 Just to follow on to Mr. Brundadge. 

3 Again, forward looking for -- again, just 

4 thinking about the future as more smart meters 

5 get in place, I believe some estimates say by 

6 2019, there will be at least 58 million 

7 electric smart meters deployed in the United 

8 States, the analysis is going to be quite 

9 widely variable. 

10 And again, this is looking forward, 

11 the Department is going to have to realize 

12 that there are probably going to be default 

13 rates with varying prices. But also there 

14 could be multiple rates that the customers can 

15 choose from. 

16 Instead of just having a default 

17 rate and a time use rate, there could multiple 

18 choices for those customers depending on their 

19 situation, depending on the type of equipment 

20 they are using, depending on how aggressive 

21 they want to be in terms of either demand 

22 response or energy efficiency. 
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1 It's probably going to make the 

2 analysis much harder. But, again, going 

3 forward, that is going to be the situation. 

4 And especially with seasonal equipment, that's 

5 going to make things even more interesting. 

6 Thank you. 

7 MR. BROOKMAN: Other comments on 

8 these electricity pricing issues? 

9 (No response.) 

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

11 MR. SCOTT: Okay. The good news on 

12 the commercial side, we did use time of use 

13 rates. 

14 (Applause.) 

15 MR. SCOTT: And that included 

16 demand charges, block rates, seasonal rates, 

17 and any mandatory time of use rates where they 

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

19 in there. 

20 All right. I offer this with some 

21 trepidation. The regional averages of 

22 residential annual average and seasonal 
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1 marginal prices, this is intended as an 

2 indicator only because what we're really doing 

3 is in each individual case, in the case of 

4 RECS, or in the case of each individual 

5 building, you know, on the commercial side, 

6 we're actually using whatever price applies at 

7 the appropriate hour of the year, you know, 

8 given the constraints that we've already 

9 talked about, for energy savings. 

10 So what these really are is the 

11 difference in energy -- difference in annual 

12 energy bill divided by the difference in 

13 energy savings. 

14 MR. BROOKMAN: Steve Rosenstock? 

15 MR. ROSENSTOCK: Steve Rosenstock, 

16 Edison Electric Institute. 

17 And, again, having not dug through 

18 this part of the technical support document 

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

20 because in the previous slide it was talking 

21 about you got data from 90 utilities on their 

22 tariffs. I'll assume that's both residential 
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1 and commercial. 

2 But now with RECS, you had the 

3 1,854 data points for air conditioners and 339 

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

5 to match those 1,854 with the 90 utilities 

6 where you could and the 339 with the 90. And 

7 then you came up with these values. 

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

9 how the approach was done? Because then I 

10 have a follow-up question. 

11 MR. SCOTT: That's roughly it, yes. 

12 MR. BROOKMAN: Greg Rosenquist. 

13 MR. SCOTT: Yes, mapping the 

14 utilities -- 

15 MR. ROSENSTOCK: Okay. 

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

17 RECS households. 

18 MR. ROSENSTOCK: So, again -- and 

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

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

21 the marginal prices would be different for air 

22 conditioners and heat pumps since they have 
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1 the same operation unless it's just a matter 

2 of the weighting of just the sheer numbers of 

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

4 conditioners with 90 utilities versus 339 heat 

5 pumps and 30 utilities. And that's the reason 

6 for the difference in these marginal prices? 

7 MR. SCOTT: It's due to the 

8 location of the heat pumps, all right? 

9 MR. ROSENSTOCK: Okay. 

10 MR. SCOTT: So -- 

11 MR. ROSENSTOCK: Because, again, 

12 when you think about it, the tariff for air 

13 conditioners and heat pumps are not going to 

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

15 again, this will effect the impact. Now in 

16 some cases, it helps and in other cases it 

17 might hurt. 

18 But, again, looking at the July 

19 marginal price, using the July marginal price 

20 for the air conditioner, July marginal price 

21 for the heat pumps would not be totally 

22 inaccurate I would say because the tariffs are 
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1 going to be the same. 

2 MR. BROOKMAN: Steve Rosenstock 

3 back to Greg. 

4 MR. ROSENSTOCK: Yes, for a 

5 household that's located in the same place 

6 with the same utility, right, it's going to 

7 see the same marginal price regardless of 

8 whether it is an air conditioner or a heat 

9 pump. 

10 What you're seeing here are these 

11 weighted average numbers, right, based upon 

12 where those air conditioners and heat pumps 

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

14 with a different weighted average price, 

15 again, based upon where those air conditioners 

16 are mostly located and based upon where most 

17 of those heat pumps are located. 

18 So it just so happens for air 

19 conditioners, you know, where they are located 

20 results in a higher weighted average marginal 

21 price than where the heat pumps are located. 

22 MR. ECKMAN: Right. Because the 
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1 heat pumps are in the northern tier and -- 

2 MR. BROOKMAN: Tom Eckman. 

3 MR. ECKMAN: Tom Eckman -- the heat 

4 pumps are in the northern tier or in southeast 

5 and the air conditioners, by and large, are in 

6 California. 

7 MR. ROSENQUIST: Yes, but Steve is 

8 looking specifically at the hot, dry region, 

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

10 MR. BROOKMAN: Okay. And so that 

11 was Tom and then back to Greg Rosenquist. 

12 Tom Eckman? 

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

14 limitation of the RECS data but the deployment 

15 of air conditioning and heat pump as we go 

16 forward in time may or may not match the 

17 current geographical distribution of that 

18 equipment. 

19 And so I don't know how you deal 

20 with it. But clearly looking at some trends 

21 in terms of where the population is employing 

22 those devices rather than just a point in 
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1 time, so maybe looking backwards to the prior 

2 RECS to see whether there is a growth in the 

3 application of those technologies in various 

4 regions to see whether you could adjust on a 

5 going-forward basis because right now you've 

6 got a single point in time estimate of where 

7 heat pumps are being used and where air 

8 conditioning is being used and the rates 

9 associated with those. 

10 And I'm not quite certain that that 

11 long-term trend or that current picture 

12 matches where the long-term trend of 

13 population growth and system -- 

14 MR. BROOKMAN: Greg Rosenquist. 

15 MR. ROSENQUIST: Right. For the 

16 purposes of the LCC analysis, what you are 

17 saying is true. But we tried to capture that 

18 to some extent in the national impact analysis 

19 which will be described later because we're 

20 doing things at the regional level. 

21 MR. ECKMAN: Can you-- 

22 MR. ROSENQUIST: And so, you know 
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1 construction starts, for example, and 

2 saturations of equipment in those starts will 

3 change over time based upon the data that we 

4 had. 

5 MR. ECKMAN: Is there any way -- 

6 this is Tom Eckman -- is there any way to 

7 connect the dots between the NES and the life 

8 cycle costs so that you get consistent 

9 treatment? 

10 MR. ROSENQUIST: The way the life 

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

12 hypothetical where every single household or 

13 commercial building gets its equipment 

14 replaced in the year that the standard becomes 

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

16 a close approximation of what you might get 

17 from the NIA but not exactly. So in short, 

18 no. 

19 MR. BROOKMAN: Thanks, Greg. 

20 Andrew deLaski? 

21 MR. deLASKI: This is a follow on 

22 on prices and I had to step out so I hope I'm 
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1 not hitting on a point that was already 

2 covered. 

3 But, Greg, I recall from the last 

4 analysis for the 2001 final rule that the 

5 Department found on that docket that marginal 

6 prices were lower than average prices. And 

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

8 large marginal prices are now higher than 

9 average prices at least for the national as a 

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

11 expect given the trans-electricity pricing. 

12 But I'm still curious about what's 

13 happening, for example, in the hot, humid 

14 region where we see marginal prices lower than 

15 average prices. What's driving that? 

16 MR. BROOKMAN: Greg Rosenquist? 

17 MR. ROSENQUIST: Yes, hi. Some of 

18 those tariffs still have declining block 

19 rates. That was certainly the case ten years 

20 ago. I think that trend is reversing itself. 

21 Maybe Don or some other company can add to 

22 that. 
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1 But that's mostly the case there 

2 that as you use more energy, you are actually 

3 charged less. 

4 MR. deLASKI: For residential. 

5 MR. ROSENQUIST: For residential. 

6 MR. BRUNDADGE: Don Brundadge. 

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

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

9 prices for higher energy use in the summer and 

10 lower prices for higher energy use in the 

11 winter. 

12 One of the major differences 

13 between hot, humid and some of the other 

14 regions is many of our areas have nine or ten 

15 months of the year significant air 

16 conditioning usage. So you do have 

17 significant air conditioning usage during off 

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

19 marginal less than average issue. 

20 In a place like Florida, you are 

21 going to have over half the air conditioning 

22 energy use is going to be not in the summer 
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1 season. 

2 MR. BROOKMAN: Okay. So let's keep 

3 moving on. 

4 Final comments or questions with 

5 respect to average and seasonal marginal 

6 prices before we keep going. 

7 (No response.) 

8 MR. SCOTT: Okay. All right. The 

9 equivalent chart here for commercial is a 

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

11 census division basis. 

12 And the other thing that we've done 

13 here is rather than look at a single change in 

14 energy use, we're looking here at energy 

15 consumption varying by SEER level. And so we 

16 also have the effective marginal price varying 

17 by SEER level as well as location. 

18 There is a scaling factor reported 

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

20 deemed that because we had a relatively small 

21 number of commercial customers as opposed to 

22 residential customers, the -- correct me if 
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1 I'm wrong here, Greg -- the effort in updated 

2 the commercial prices for the number of 

3 utilities and the number of tariffs concerned 

4 made it sort of unworkable to update 

5 everything from 2004 to 2008 dollars directly. 

6 So what we did was we applied a 

7 correction factor to the 2004 prices in order 

8 to have appropriate prices, correct? 

9 MR. BROOKMAN: He's nodding. 

10 Andrew? 

11 MR. deLASKI: Mike, can you explain 

12 why prices vary by SEER? 

13 MR. SCOTT: Not as well as Dave 

14 can. 

15 MR. BROOKMAN: Dave Winiarski? 

16 Find a microphone, Dave. Dave Winiarski. 

17 MR. WINIARSKI: Yes, I can try to 

18 explain that. 

19 Essentially the simulation model 

20 made certain assumptions for what was assumed 

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

22 tech. And so basically what we actually 
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1 recorded out of the simulations were the 

2 hourly loads. 

3 Those were converted into annual 

4 bills, taking into account all of the 

5 different tariff structures that were used. 

6 Then when the effective marginal 

7 prices here are effectively dividing the 

8 annual bill by the energy savings to come up 

9 with an effective marginal price, and 

10 depending on whether you achieve that by 

11 improving, for instance, a higher EER 

12 effecting maybe the peaks a little bit or 

13 whether the major gain in efficiency was due 

14 to fan changes, that reflects itself in slight 

15 variations in the marginal pricing. 

16 MR. BROOKMAN: Doug? 

17 PARTICIPANT: (Inaudible.) 

18 MR. WINIARSKI: Yes. Within a 

19 given census division within those 

20 observations, I think, and between 14 and like 

21 19, you see a couple big drops. 

22 PARTICIPANT: The disconnect of 
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1 what you said is that this is connecting back 

2 to your assumption, for example, about what 

3 the EER is for a given region. 

4 MR. WINIARSKI: Exactly. And the 

5 actual commercial modeling assumptions. 

6 PARTICIPANT: Then your 

7 relationship (inaudible) 

8 MR. WINIARSKI: It's actually not 

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

10 it's that curve. 

11 MR. BROOKMAN: Tom Eckman and then 

12 to Steve. 

13 MR. ECKMAN: That was my point. I 

14 think that we have the same concern that 

15 Harvey and others raised about the linearity 

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

17 linear -- but the high correlation between 

18 improving SEER and EER. 

19 And the fact that it may or may not 

20 be the case. So this may or may not turn to 

21 be in practice what the consumer sees because 

22 they don't get the EER benefit that is being 
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1 forecast here. 

2 MR. BROOKMAN: Steve Rosenstock? 

3 MR. ROSENSTOCK: Steve Rosenstock, 

4 Edison Electric Institute. 

5 In terms of some of the numbers, 

6 were you using some of the CEBECS data for -- 

7 as a starting point for some of these -- for 

8 some of the costs? 

9 I know you were using utility 

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

11 of see what kind of, you know, what kind of 

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

13 the actual cooling costs? 

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

15 compared any of these back to the CBECS for 

16 any given region. You could look at it -- 

17 you'd have to look at the actual whole 

18 building energy use and CBECS doesn't record 

19 it marginally. 

20 MR. ROSENSTOCK: Okay. And the 

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

22 ten years ago -- the approach, the annual bill 
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1 savings divided by the energy savings to get 

2 the marginal costs for commercial customers is 

3 not really appropriate for the fact of, you 

4 know, demand charges for commercial customers 

5 can be ten, to 30, to 40 percent of their 

6 bill. 

7 And with SEER EER curve, if EERs go 

8 down, that means the peak demands are actually 

9 going to go up. That means that your bill 

10 savings are going to be a lot less than what 

11 you are probably projecting in the simulation. 

12 I'm not sure exactly how it effects 

13 your marginal prices but it would be a very 

14 significant impact on the life cycle cost 

15 analysis and on these marginal prices. 

16 I guess I am a little baffled, 

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

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

19 you go to SEER 19 because I would guess with 

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

21 I would assume the marginal prices would go 

22 down. 
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1 I'm surprised there is that kind of 

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

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

4 especially when you say something like 32 

5 cents per kilowatt hour, in census division 

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

7 know prices are high in New England. 

8 But, again, it is a matter of you 

9 are mixing and matching energy and demand and 

10 you are getting a number that is not really 

11 reflective of what the customer is really 

12 seeing or paying. 

13 MR. BROOKMAN: Dave Winiarski, 

14 please let's everybody say your name before 

15 you speak. 

16 MR. WINIARSKI: Yes, Dave 

17 Winiarski. 

18 And, again, in responding to that, 

19 these are effective or back-calculated 

20 marginal prices. They are actually not used 

21 in the analysis. 

22 The analysis relies on the actual 
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1 energy bills' savings going between levels for 

2 the building. So to the extent that you can 

3 compare these marginal prices with say the 

4 last block on the tariff, it's not the same 

5 thing. 

6 MR. ROSENSTOCK: That does help. 

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

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

9 used in terms of some of the analysis. That 

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

11 But, again, the way it is 

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

13 you are using in terms of how you are 

14 calculating the savings and eventually going 

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

16 presentation. 

17 MR. BROOKMAN: Harvey Sachs. Let's 

18 leave that microphone turned on. Harvey 

19 Sachs? 

20 MR. SACHS: This one or that one? 

21 MR. BROOKMAN: Both of them. 

22 MR. SACHS: Harvey Sachs, ACEEE. 
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1 I'm very impressed with the 

2 sophistication of this analysis for the 

3 relatively small number of commercial 

4 buildings in the analysis. 

5 On the other hand -- and the 

6 scaling factor seems to be a reasonable 

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

8 sure would like to get -- a physical 

9 explanation would help me understand why in 

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

11 at all but a minimum at SEER 16 with higher 

12 reported marginal prices at both SEER 14 and 

13 SEER 19. 

14 And that seems to be true for both 

15 heat pumps and central air conditioners. I'm 

16 just not getting it. 

17 MR. BROOKMAN: Dave Winiarski. 

18 MR. WINIARSKI: Yes, I think 

19 actually a large portion of that goes back to 

20 those assumptions built into actually how you 

21 model the equipment. 

22 In general, between 13 and 14, the 
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1 savings come from improving the condenser 

2 performance because we held the fan power 

3 assumption constant. 

4 As you move between 14 and 16, you 

5 are moving to get to those higher SEER values 

6 by improving the fan efficiency, going to an 

7 ECM motor, which has an impact on energy 

8 savings throughout the year because the fan is 

9 running all the time in a commercial building. 

10 But actually it doesn't have that big impact 

11 on the peak monthly demand. 

12 MR. SACHS: Wait a minute, Dave. 

13 This is Harvey Sachs again. 

14 You just said something really 

15 important. You said the fan is running all 

16 the time. 

17 But this is residential equipment 

18 used commercially. This is not commercial 

19 equipment equipped potentially with 

20 ventilation capabilities and economizers. 

21 MR. WINIARSKI: That is true. It 

22 is running to provide circulation air in the 
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1 building. 

2 MR. SACHS: I do not believe that 

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

4 show that that's the predominant mode of 

5 operation in these very small commercial 

6 buildings that are running residential 

7 equipment. 

8 Thank you. 

9 MR. BROOKMAN: Thank you. 

10 Final comments on this segment? 

11 (No response.) 

12 MR. BROOKMAN: Let's keep going. 

13 MR. SCOTT: Okay. Price escalation 

14 is, as in previous rulemakings, is based on 

15 the annual energy outlook, high, low, and 

16 reference cases. The information is also in 

17 the chapter. 

18 The -- it's actually not displaying 

19 very well on the screen. I just noticed that. 

20 In any event, we have a significant 

21 amount of spread between the cases. And we 

22 will update this for annual energy outlook 
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1 2010 at the NOPR stage. 

2 Repair, maintenance, and 

3 installation costs, major repairs, we based 

4 that on a base system compressor replacement. 

5 We found data in a series of websites, 

6 primarily in the literature showing a range of 

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

8 base system compressor replacement. 

9 We assumed that the probability of 

10 replacing the compressor sometime during the 

11 lifetime of the overall system would be 0.5. 

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

13 on average, once. 

14 We increased the cost of the 

15 compressor replacement with the index of the 

16 product price, that is with the efficiency 

17 level. 

18 We varied it regionally. And we 

19 annualized it so that we basically had an 

20 annualized average repair cost that we could 

21 apply. 

22 Annual maintenance costs, we found 
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1 numbers up to 120 dollars for a full-service 

2 contract on a residential system. We needed a 

3 lower bound. We put in an assumed value of 20 

4 dollars. This also -- all of this also 

5 increased with product price or efficiency 

6 level and varied regionally. 

7 And finally, we were cognizant of 

8 the fact that installation costs likely varied 

9 between product classes so we had those from 

10 RSMeans database. And we also were able to 

11 vary it regionally based on RSMeans, primarily 

12 because labor costs varied by region. 

13 We did do a bit of reality check 

14 here, a small amount of verification about 

15 whether installation costs would vary with 

16 efficiency level. And our contacts said that 

17 except for perhaps very high efficiency units, 

18 they did not. 

19 So, we're seeking additional data 

20 on maintenance installation repair costs. 

21 It's pretty sketchy at the moment. 

22 And we would like to know how they 
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1 might vary with the efficiency level. And we 

2 also are seeking comments on any additional 

3 sources that could be considered for those 

4 costs. 

5 MR. BROOKMAN: John Mandyck? 

6 MR. MANDYCK: John Mandyck with 

7 Carrier. 

8 On your last point on installation 

9 costs by efficiency level, I think you need to 

10 dig further into that from a size perspective 

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

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

13 the unit to move it and to physically adapt to 

14 it, obviously that will impact installation 

15 costs. 

16 MR. BROOKMAN: Thank you. 

17 Tom Eckman? 

18 MR. ECKMAN: Tom Eckman. 

19 This is a question for Greg, I 

20 think, perhaps. 

21 In the life cycle cost analysis, 

22 since it is a Monte Carlo simulation, is there 
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1 a correlation between the probability of 

2 expending money for replacement during the 

3 life cycle and the annual maintenance contract 

4 cost? 

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

6 one in there right now. 

7 MR. ECKMAN: Well, it seems to me 

8 if you've got an annual maintenance contract 

9 cost running 120 dollars, your unit better not 

10 fail. 

11 MR. BROOKMAN: Okay. Thank you. 

12 Harvey Sacks? 

13 MR. ECKMAN: I think there is a 

14 correlation. 

15 MR. SACHS: I apologize for having 

16 missed on slide 64, the electricity price. My 

17 memory is that EIA has been pretty effective 

18 at looking at carbon containment cost impacts 

19 and strategies. Again, it has been a DOE 

20 policy issue. 

21 And the question is that these are 

22 low growth reference and high growth but they 
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1 don't seem to have any policy scenarios that 

2 would impact electricity prices in the out 

3 years when this has been part of national 

4 policy discussions. 

5 PARTICIPANT: Maybe I can ask our 

6 EIA representative if he's still here as to 

7 what carbon -- carbon containment, is that 

8 what you asked about? Or other major 

9 policies? 

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

11 one that was here earlier. 

12 MR. SACHS: Well, again, the 

13 question is not to EIA but it is to the 

14 Department in terms of whether these analyses 

15 include policy cases that reflect active 

16 legislative consideration and active policy 

17 activities. Not that these would drive but 

18 these are alternatives that help bound the 

19 reality. 

20 MR. BROOKMAN: Thank you. 

21 Get close. 

22 MS. KOHL: This is Betsy Kohl from 
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1 DOE. 

2 When you are talking about 

3 legislative initiatives, are you talking about 

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

5 we don't consider proposed legislation draft 

6 legislation in our analyses because it is 

7 speculative whether or in what form it would 

8 be passed. 

9 MR. BROOKMAN: Harvey Sachs. 

10 MR. SACHS: Thank you, Betsy. This 

11 is Harvey Sachs. And I very much appreciate 

12 that. 

13 But if I'm considering electricity 

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

15 that EIA did consider some scenarios for 

16 future electricity prices -- 

17 MR. ROSENQUIST: Not in their 

18 reference case or low and high growth case. 

19 MR. SACHS: But in a policy case, 

20 didn't they? 

21 MR. ROSENQUIST: Well, they've 

22 analyzed, you know -- 
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1 MR. BROOKMAN: That's Greg 

2 Rosenquist speaking. 

3 MR. ROSENQUIST: I'm sorry. This 

4 is Greg Rosenquist from LBNL. 

5 They have analyzed like, for 

6 example, Lieberman and Warner (phonetic) in 

7 the past. And they did try to get after the 

8 effect of carbon legislation on electricity 

9 prices. 

10 MR. SACHS: So this would seem to 

11 be a boundary value on the Department's 

12 analyses. It is a policy scenario. 

13 But to exclude it as a forcing 

14 factor on possible excursions of electricity 

15 prices seems to be to be, again, very, very 

16 good about detail but occasionally missing 

17 some very large influences that have some 

18 probability of having effect. 

19 MR. BROOKMAN: Don Brundadge. 

20 MR. BRUNDADGE: I'm very familiar 

21 with annual energy outlook assumptions. And 

22 there are a bunch of issues like that. But 
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1 they are consistent. 

2 If it hasn't been issued into law 

3 and it hasn't been issued as a final rule by 

4 DOE, it is not counted, which implicitly 

5 assumes no new efficiency standards to be 

6 issued from now until the end of time and no 

7 carbon legislation. That's a baseline to 

8 operate off of. 

9 But at the same time, you're not 

10 going to see the efficiency effects of lower 

11 growth from efficiency standards. There are a 

12 lot of other effects in here. 

13 And I don't know if we need to 

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

15 it is. 

16 MR. BROOKMAN: I'm eager to move 

17 back to repair maintenance installation costs 

18 on slide 65. 

19 Steve Rosenstock? 

20 MR. ROSENSTOCK: Yes, actually 

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

22 to go ahead for you actually to Item 5. 
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1 MR. BROOKMAN: Keep going. 

2 MR. ROSENSTOCK: Because it was 

3 asking about comments on impact of increased 

4 efficiency standards on end user decisions 

5 about whether to replace existing installed 

6 units. 

7 I do know looking up numbers is 

8 that I know especially in the area of heat 

9 pumps, a shipment is according to AHRI and 

10 Appliance Magazine, have dropped every year 

11 since 2005 -- 2.13 million in 2005 down to 

12 1.642 million in 2009, again based on industry 

13 data. 

14 And I wanted to take the year -- 

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

16 data before the big recession, okay, so how 

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

18 was consumer choice? 

19 I'm not sure. But when you see that 

20 specific trend over five years, including 

21 times of good economic times and not so good 

22 economic times, it might be that a certain 
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1 percentage of consumers are deciding to repair 

2 and replace longer -- repair rather than 

3 replace. 

4 So yes, repair costs might go up. 

5 But consumers are choosing that over higher 

6 initial costs of a new unit. 

7 MR. BROOKMAN: Don Brundadge. 

8 MR. BRUNDADGE: I think those are 

9 valid considerations. But I think there is an 

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

11 more important than that. And that's that 

12 your installed base of air conditioning and 

13 heat pump equipment is almost entirely R22 

14 equipment. 

15 And with the phase out of R22, 

16 there will be a limited amount available for 

17 serving between now and 2020. There will be 

18 no new virgin stocks available for servicing 

19 after 2020. And it really desperately needs a 

20 separate study of the impact on that because 

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

22 significantly faster replacement based on the 
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1 equipment. 

2 I'm not sure EPA has really come 

3 out with all the regulations yet on how they 

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

5 not sure you can even do a major replacement 

6 under their new rule and stick R22 into a 

7 compressor that is made after 2010. 

8 MR. BROOKMAN: Okay. 

9 MR. BRUNDADGE: It needs to -- it 

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

11 talking about today are sort of nitpicking. 

12 This is huge. And it really needs a separate 

13 study because I think you are going to see 

14 much faster replacement of the R22 units. 

15 MR. BROOKMAN: You're next. Please 

16 say your name. 

17 MR. BEETON: Warren Beeton 

18 (phonetic) with Emerson. 

19 Just two comments or questions. 

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

21 trying to validate your numbers here. They 

22 look about right. But I think another 
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1 consideration ought to be that if the 

2 percentage of modulated equipment increases, 

3 which it will, to a higher efficiency 

4 standard, the repairs will be more complicated 

5 and more expensive. 

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

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

8 factor. 

9 MR. BROOKMAN: You started off by 

10 saying you think these numbers -- you're 

11 trying to validate these numbers. 

12 MR. BEETON: I'm trying to validate 

13 the 700 to 1,500 dollar number. But also 

14 expect that number to grow. 

15 MR. BROOKMAN: Okay. How much? 

16 MR. BEETON: We'll have to get back 

17 to you. 

18 MR. BROOKMAN: Okay. 

19 MR. BEETON: The other question we 

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

21 the prior efficiency analysis several years 

22 ago, there was attention not paid to the 
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1 refrigerant issue. 

2 I'm assuming that DOE has elected 

3 not to look at any scenarios where 410A would 

4 be phased out and some other alternatives 

5 would be phased in in the time period due to 

6 Cap and Trade or legislation. Is that 

7 correct? 

8 MR. BROOKMAN: Matt? 

9 MR. MILLARD: Yes, this is Matt 

10 Millard with Navigant Consulting. 

11 We have considered looking at that. 

12 But the response that we received from 

13 industry -- we considered looking at it as a 

14 sensitivity but the response that we received 

15 from industry is that they don't really know 

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

17 difficult for us to assess those impacts 

18 without really knowing the path forward. 

19 PARTICIPANT: Nor do they describe 

20 the phase out. 

21 PARTICIPANT: Excuse me? 

22 MR. MILLARD: Yes, well the phase 
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1 out, yes. 

2 MR. BROOKMAN: Okay. 

3 Harvey Sachs? 

4 MR. SACHS: Harvey Sachs, ACEEE. 

5 Very quickly, I think what you're 

6 hearing in a number of respects here is a 

7 critique that the Department is doing lots and 

8 lots of very detailed analyses with 

9 continuously variable things like the LCC. 

10 And what we're not seeing is the 

11 potential that would be revealed in some 

12 scenario analysis. We're not seeing that 

13 perhaps lower probability, perhaps not, 

14 impacts the very large discontinuities like 

15 the refrigerant phase out, like the potential 

16 of a carbon price that would be enormously 

17 important to the policymakers who have to make 

18 these decisions. 

19 And I think that is a critique that 

20 effects a lot of these analyses. 

21 MR. BROOKMAN: John Mandyck? 

22 MR. MANDYCK: Well, back on the 
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1 refrigerant issues. This is John Mandyck from 

2 Carrier. 

3 It is possible to model the 

4 legislation that exists today. So you can 

5 take Waxman Markey, understand where the 

6 reduction curve is, and understand that there 

7 will be shortage of refrigerant at the time 

8 that these standards go into effect, which 

9 actually require more refrigerant to be used. 

10 Higher SEER equipment is larger 

11 equipment with larger coils that requires more 

12 refrigerant charge. And so you have an 

13 intersection that is occurring here with 

14 public policies where you have climate 

15 policies that are going to restrict the use of 

16 HFCs and efficiency policies that are going to 

17 demand the greater use of HFCs at the same 

18 time. 

19 And it is critical in this 

20 analysis, assuming the Department dispenses 

21 with the consensus agreement, that you 

22 understand the impact on cost of refrigerant 
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1 because it is definitely related to this 

2 rulemaking. 

3 MR. BROOKMAN: Okay. Thank you. 

4 We've now heard that several times. 

5 MR. BEETON: Just a quick follow 

6 up. Not only that -- 

7 MR. BROOKMAN: Say your name again. 

8 MR. BEETON: Warren Beeton with 

9 Emerson. 

10 The cost of those many additional 

11 pounds of refrigerant could be much, much 

12 higher than what is paid today. So there is 

13 going to be a leveraged effect potentially 

14 from Cap and Trade and higher efficiency 

15 standards and costs. 

16 MR. BROOKMAN: I hope the comments 

17 will be novel now, Don. 

18 MR. BRUNDADGE: One additional 

19 follow up on that. Even if you proceed to 

20 accept the consensus agreement, you really 

21 need to do the study on R22 and accelerated 

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

2 lifetime for that existing equipment and it 

3 gets replaced faster. 

4 Thank you. 

5 MR. BROOKMAN: Thank you. 

6 On to discount rates. 

7 MR. SCOTT: Okay. Discount rates, 

8 the residential rates used again come from a 

9 distribution, the real rates. That is 

10 inflation adjusted rates, based on borrowing 

11 costs and opportunity costs for household 

12 investments. 

13 There are a number of instruments 

14 ranging all the way from credit cards to 

15 potentially sales of parts of one's assets in 

16 order to replace existing units. Typically 

17 with a new construction situation, we would 

18 expect the equipment to be included in the 

19 mortgage value of the house. And, therefore, 

20 it would be subject to the mortgage, average 

21 mortgage interest rate. 

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

2 4.8 percent as a mix of things for existing 

3 homeowners and three percent average when 

4 included in the mortgage. 

5 For commercial entities, the real 

6 rates, we based it on a weighted average cost 

7 of capital reported for 1,700 companies in the 

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

9 distribution as you might expect. 

10 And the average real rate is shown 

11 on the screen at 5.66 percent average. I 

12 believe that was the beginning of last year. 

13 So those are the -- that's what 

14 used for discount rates. 

15 For lifetimes, there was some 

16 fairly detailed analysis done of manufacturing 

17 shipments data that we received matched to the 

18 American Housing Survey stock data over time. 

19 And then finally matched against responses on 

20 the Residential Energy Consumption Survey on 

21 the age of the household's central air 

22 conditioner. 
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1 MR. BROOKMAN: Steve Rosenstock? 

2 MR. ROSENSTOCK: Sorry, going back 

3 to slide 67 on the discount rates. 

4 MR. SCOTT: Sure. 

5 MR. ROSENSTOCK: Especially on the 

6 residential side it says based on borrowing 

7 costs and opportunity costs for household 

8 investments. 

9 MR. SCOTT: Right. 

10 MR. ROSENSTOCK: On the new -- I 

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

12 you are assuming inflation is three percent, 

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

14 percent is either the borrowing costs or 

15 opportunity cost in terms of some of these 

16 decisions. 

17 And, again, we've had these 

18 discussions many times. And that just seems 

19 to be on the low side, especially in these 

20 days of much tighter credits. 

21 And especially there is such a -- 

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

2 your credit rating is less than perfect or 

3 stellar, your borrowing costs up quite 

4 dramatically, well above these numbers. 

5 MR. BROOKMAN: John Mandyck. 

6 MR. MANDYCK: John Mandyck from 

7 Carrier. 

8 The question is is the 4.8 percent 

9 for existing homeowners based on like a home 

10 improvement loan? 

11 MR. SCOTT: No completely. Go 

12 ahead, Greg. 

13 MR. ROSENQUIST: Greg Rosenquist. 

14 Portfolio. It's based upon data from the 

15 Bureau of Economic Analysis’ Survey of 

16 Consumer Finances. So it is many, many 

17 respondents or many, many survey records that 

18 show basically what homeowners are doing in 

19 terms of borrowing money or saving money. 

20 So this analysis reflects the fact 

21 that some homeowners are using credit cards or 

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

2 funds. So that's what this 4.8 percent 

3 represents. It's the weighted average of all 

4 that mix. 

5 MR. MANDYCK: Then I guess I would 

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

7 very low as well because if you think about it 

8 in this market, three-quarters of the sales 

9 are for replacement applications, many of 

10 those of which are unplanned. 

11 And so if a consumer is going to 

12 finance that, I question whether they have the 

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

14 application or credit extension. 

15 I believe the more common way that 

16 this would be financed is under a credit card, 

17 which is going to have a much higher cost of 

18 borrowing than this. 

19 MR. BROOKMAN: Okay. Thank you. 

20 So then let's proceed. 

21 MR. SCOTT: Okay. I was in the 

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

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

3 to essentially fix survival functions, both on 

4 air conditioners and heat pumps, and the 

5 weighted average or the average lifetime of an 

6 air conditioner doing that was 19.01, 19 

7 years. And for a heat pump, something 

8 slightly less, about 16.2 years say. And 

9 that's what was used in the analysis. 

10 The details, again, are available 

11 in the technical support document. 

12 Do you have questions on that? You 

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

14 MR. BROOKMAN: Let's roll on to the 

15 next one. 

16 MR. SACHS: Yes, a very quick 

17 comment. Harvey Sachs, referencing slide 68. 

18 Again, I think this is a perfectly 

19 reasonable pair of survival curves under a 

20 business as usual model. But we have to think 

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

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

2 think the Department heard that. It's a 

3 question of what they can do. 

4 PARTICIPANT: (Inaudible.) 

5 MR. BROOKMAN: Okay -- whichever 

6 one -- which one would be best. 

7 MR. SCOTT: Actually I'm having a 

8 sidebar discussion here with Doug. What you 

9 see on the screen here is the preliminary 

10 results for the life cycle costs and payback 

11 period. 

12 This is for the geography that we 

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

14 effect, our numbers against the geography used 

15 in the consensus agreement. So if you'd 

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

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

18 time and your interest. 

19 MR. BROOKMAN: Are there 

20 significant differences? 

21 MR. SCOTT: No. 

22 MR. BROOKMAN: Then let's look at 
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1 the consensus. 

2 MR. WES ANDERSON: This is Wes 

3 Anderson with Department of Energy. 

4 Given that the consensus agreement 

5 has not been accepted by DOE -- we have 

6 received it but we have not made a decision on 

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

8 MR. SCOTT: Okay. 

9 MR. WES ANDERSON: -- current 

10 analysis as we have it presented. 

11 MR. BROOKMAN: So we're sticking 

12 with 69. 

13 PARTICIPANT: All right. 

14 MR. BROOKMAN: And you can see it 

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

16 Mike. 

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

18 characterize what they're seeing here. And 

19 then I'll depart from the stage. 

20 Okay. So what we have here is -- 

21 as you might imagine, we've got life cycle 

22 cost savings associated with every level for 
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1 every location for each product class. And we 

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

3 And so what we've hit on here is 

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

5 corresponding HSPF for which the mean LCC 

6 savings were positive if you replace the 

7 market base air conditioners or market base 

8 heat pumps with the one at this level. 

9 And we're also showing the 

10 corresponding median payback in years. 

11 So, for example, with the national 

12 standard, that is not a regional standard, the 

13 highest split system air conditioner coil only 

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

15 highest efficiency for which the LCC was 

16 positive. 

17 For the hot, humid area, it was 15. 

18 For hot, dry, 14.5. And for rest of country, 

19 13, if you had regional standards. So that's 

20 the way to read that. 

21 MR. BROOKMAN: Mike, let's receive 

22 comments on this. 
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1 Steve Rosenstock? 

2 MR. ROSENSTOCK: Steve Rosenstock, 

3 Edison Electric Institute. 

4 Again, this is -- it is a very 

5 informative table. But one thing that, again, 

6 would be kind of -- it would be interesting 

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

8 in the technical support document, is the 

9 values where the life cycle cost savings are 

10 maximized. 

11 You know this says where they're 

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

13 two dollars or something. And that could be 

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

15 know, at least a little bit of positive for 

16 these classes. 

17 But it is also of more interest to 

18 see where the maximum values are and the 

19 corresponding mean payback. Again, but this 

20 is still very instructive and very informative 

21 in terms of how the numbers -- 

22 MR. BROOKMAN: Yes, Harvey Sachs. 
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1 MR. SACHS: Harvey Sachs. 

2 Again, the qualification that slide 

3 69 is still based on the fundamental Wassmer4 Brandemuehl EER versus SEER assumptions of 

5 slide 50. 

6 MR. SCOTT: Yes. 

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

8 MR. SCOTT: Just as good. 

9 MR. SACHS: Thank you. 

10 MR. SCOTT: By the way, if you want 

11 the detail on all the LCC analyses, those are 

12 in the technical support document so you can 

13 look at which one had the maximum in each 

14 case. 

15 MR. BROOKMAN: Jeff? 

16 PARTICIPANT: And you explain the 

17 significant difference between the split 

18 system heat pump and everything else? And 

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

20 HSPF nationally? 

21 MR. SCOTT: Why it shows up the way 

22 it does? 
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1 PARTICIPANT: Yes. Why is it, you 

2 know, an order of magnitude different than 

3 everything else. 

4 MR. SCOTT: Well, it is the 

5 consequence of where those heat pumps were 

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

7 had a discussion about that last night. He 

8 had looked at it in a little more detail than 

9 I did for that piece of it. 

10 MR. BROOKMAN: Let's hear from 

11 Dave. 

12 MR. WINIARSKI: Yes, so the 

13 question, I guess, is why the split system 

14 heat pumps look like they are significantly 

15 more cost effective at these high efficiency 

16 levels. 

17 There's really two reasons. The 

18 first one is in the analysis of the heat pumps 

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

20 assumes that you are replacing the indoor 

21 handling unit at the same time you are 

22 replacing the condensing unit. So you get 
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1 some of those benefits. 

2 So it looks like the split system 

3 AIR CONDITIONER blower coil curve in terms of 

4 what is actually being replaced in the 

5 analysis. 

6 And then, of course, you are 

7 getting the benefits for the improvements on 

8 the heating side. And to the effect that that 

9 saves energy that is above and beyond what the 

10 AIR CONDITIONER saves. 

11 MR. BROOKMAN: Jim? 

12 MR. BRESHAW: Jim Breshaw. 

13 It looks like you are saying to get 

14 a 10.3, you have to have a 19.5. And -- it 

15 looks like HSPF improvements are driving a lot 

16 of the payback. And you don't have to have a 

17 19.5 to get a 10.3 necessarily. That need to 

18 be divided out some way or another. 

19 MR. BROOKMAN: Dave Winiarski? 

20 MR. WINIARSKI: Yes. That has to 

21 do with the engineering curves that are 

22 generated where the SEER values from those 
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1 engineering curves are correlated with the 

2 HSPF values that are typical for that product. 

3 So you are absolutely right. They 

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

5 could have a variation in the HSPF. 

6 The other aspect that I want to 

7 bring up real quickly is when you look at the 

8 distribution of the RECS observations, you'll 

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

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

11 air conditioners are installed in the northern 

12 part of that U.S. map. 

13 With heat pumps, I think it is 

14 closer to about 38 percent. So when you look 

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

16 to be clustered more in the southern region. 

17 And that effects what is cost effective 

18 nationally. 

19 MR. BROOKMAN: Let's keep going 

20 folks. We've moving on to shipments analysis 

21 and national impact analysis with Greg 

22 Rosenquist. 
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1 MR. ROSENQUIST: Yes -- 

2 MR. WES ANDERSON: This is Wes, 

3 DOE. 

4 Just before we left that chart, we 

5 have the consensus agreement analysis included 

6 in the background information. So if you want 

7 to see it, you can look at it. 

8 MR. BROOKMAN: In the backup 

9 slides. 

10 MR. WES ANDERSON: In the backup 

11 slides. 

12 MR. BROOKMAN: Yes. Thank you, 

13 Wes. 

14 Okay, Greg. 

15 MR. ROSENQUIST: Okay. Thanks. 

16 Again, I'm Gregory Rosenquist from Lawrence 

17 Berkeley National Laboratory. 

18 I'll be carrying you through the 

19 next two steps of the analyses that were 

20 conducted for the preliminary analysis 

21 rulemaking stage. That's the shipments 

22 analysis and the national impact analysis. 
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1 First, discussing the shipments 

2 analysis, its purpose is to estimate central 

3 air conditioner and heat pumps shipments under 

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

5 standards -- in each of the standards cases 

6 that were considered. 

7 The method relies on developing a 

8 shipments model that uses an accounting 

9 methodology to track the shipments of central 

10 air conditioners and heat pumps in the 

11 residential and commercial building sectors. 

12 The total product stock is 

13 disaggregated according to product class and 

14 you've seen the product classes described 

15 earlier in this presentation. I want to 

16 emphasize that split system central air 

17 conditioners were divided into blower coil 

18 units and coil only units. 

19 This is disaggregated according to 

20 market sector, whether it is residential 

21 housing or commercial buildings. And it is 

22 also disaggregated according to the repair 
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1 status, whether it is a normal repair or an 

2 extended repair. And I'll talk about the 

3 extended repairs a little bit later. 

4 Each market sector is further 

5 disaggregated into three product channels. 

6 One, new construction, two, existing owners, 

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

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

9 already own the piece of equipment. 

10 Each channel is modeled to respond 

11 to new efficiency standards differently. For 

12 the new construction market, it was assumed 

13 that they would not be affected by any 

14 standards increases. In other words, the base 

15 case shipments for new construction would be 

16 equivalent to the standards case shipments. 

17 For existing owners, standards were 

18 assumed to affect the repair versus 

19 replacement decision for some consumers. That 

20 is, some consumers would decide to do an 

21 extended repair rather than replacement the 

22 equipment when it failed. 
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1 And then finally, for new owners, 

2 it was assumed that standards would affect the 

3 purchase decision for some consumers. For 

4 central air conditioner owners, it was assumed 

5 that some consumers would purchase a room air 

6 conditioner instead of a central air 

7 conditioner. And for heat pump owners, they 

8 would chose to purchase a combination warm air 

9 electric furnace and a central air 

10 conditioner. 

11 Now there are many, many inputs to 

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

13 them quickly here. 

14 First and foremost are the 

15 historical shipments. These are used to build 

16 up the stock of central air conditioning and 

17 heat pump equipment in both the residential 

18 and commercial building sectors. This 

19 shipments data was provided by AHRI and it 

20 spanned the period of 1972 to 2007. 

21 Split system central air 

22 conditioners were divided into blower coil and 
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1 coil only units. It was assumed that 90 

2 percent of annual shipments went to coil only 

3 units. And then the remaining ten percent to 

4 blower coil. 

5 And then it was also assumed, as 

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

7 shipments went to the residential sector while 

8 the remaining seven percent went to the 

9 commercial sector. 

10 The key input for determining 

11 replacement shipments is the product lifetime 

12 or survival function. And the shipments 

13 analysis used the same survival function as 

14 was developed in the life cycle costs and 

15 payback period analysis. 

16 For new construction shipments, the 

17 key inputs are new construction starts and the 

18 saturation of equipment in that new 

19 construction. For residential and commercial 

20 building starts, that came from the annual 

21 energy outlook. 

22 The 2009 version was used for the 
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1 preliminary analysis. We'll update that for 

2 the next phase of the rulemaking. 

3 The residential saturations were 

4 developed from the census's characteristics of 

5 new housing. And commercial saturations were 

6 developed from DOE's commercial building 

7 energy consumption survey. 

8 New owner shipments, at least 

9 historical values, were developed from the 

10 difference between the sum of the replacement 

11 shipments and new construction shipments and 

12 historical shipments. That is when you add up 

13 the replacement shipments and new construction 

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

15 shipments. And so that residual was 

16 attributed to new owner purchases. 

17 To forecast this out into the 

18 future, the average value of the 1990 to 2007 

19 time period was averaged and fixed for future 

20 years. 

21 The decision model to figure out 

22 how new owners and existing owners would be 
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1 affected by new standards; the key input there 

2 was the purchase price elasticity. This, 

3 again, forecasts how standards are going to 

4 impact shipments under these standards cases. 

5 The elasticity was developed from 

6 primarily data for the home appliance market 

7 after looking at how new owner historical 

8 central air conditioner and heat pump 

9 purchases correlated with purchase prices 

10 through the purchase price index, operating 

11 costs through the use of the shipment weighted 

12 efficiencies from AHRI, and household income. 

13 This particular purchase price 

14 elasticity showed that the purchase price 

15 effects, in fact, dominate that rather than 

16 operating costs or household income. And the 

17 model also assumed that over time consumers 

18 become less sensitive to that purchase price 

19 and that was determined from literature for 

20 how consumers purchase automobiles. 

21 Now the shipments model first of 

22 all was developed for the nation as a whole. 
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1 But as we've heard, we've have to develop 

2 shipments at a regional level. And this was 

3 done by DOE, basically, by regionalizing all 

4 the various inputs that go into the shipments 

5 model. 

6 This includes per until total 

7 installed costs, per unit product operating 

8 costs, historical shipments, new construction 

9 starts in stock, and new construction product 

10 saturations. 

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

12 to break your flow. 

13 MR. ROSENQUIST: Yes? 

14 MR. WES ANDERSON: But this 

15 announcement -- I just want to make this 

16 announcement before everybody leaves, this 

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

18 Wes, DOE. 

19 Unfortunately this morning we had 

20 problems with the court reporter not showing 

21 up. So we had to try to supplement that a 

22 tape recording in the back. 
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1 Unfortunately the individual once 

2 he left the room, the recorder was unplugged. 

3 So consequently -- 

4 PARTICIPANT: Is it EnergyStar? 

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

6 consequently I want to reiterate that written 

7 comments really need to be submitted. I want 

8 to harp on that. 

9 And I want to let everybody know, 

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

11 page as well when the transcript is finally 

12 ready. 

13 PARTICIPANT: Wes, earlier we heard 

14 from individuals that were wanting to have 

15 more than the time that you stated before the 

16 comments were due. Can you respond to that? 

17 MR. WES ANDERSON: Yes, we are 

18 looking to extend the comment period for you. 

19 That paperwork is going through the system 

20 now. And I will also notify everyone by email 

21 and put it on the webpage for the extension. 

22 But there will be an extension. 
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1 But please try to get your comments 

2 in as soon as possible because the overall 

3 comment period was 45 days. And it is sort of 

4 limited at this point. And we want to go 

5 ahead and start with our analysis. And we 

6 can't really do that until the comment period 

7 is officially over. 

8 So we will extend it probably to 

9 the end of the following week or something 

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

11 comments together. 

12 PARTICIPANT: All right. Thank 

13 you. 

14 MR. BROOKMAN: We're going to 

15 continue with the presentation. 

16 I will note that Brenda is starting 

17 to hand out the photocopies of individual's 

18 business cards so you've got a record of who 

19 is here. 

20 Keep going, Greg. 

21 PARTICIPANT: Excuse me, 

22 clarification? 
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1 MR. BROOKMAN: Yes, please, Harvey 

2 Sachs. 

3 MR. SACHS: Thank you, Wes. I 

4 appreciate this. This is Harvey Sachs. 

5 But I don't understand. What are 

6 we going to construct a transcript from if the 

7 tape stopped? 

8 MR. WES ANDERSON: We have -- there 

9 will be a gap and we'll let you know what that 

10 -- right now it is pretty significant for the 

11 morning. But officially I don't know how long 

12 the gap is. But significant parts of the 

13 morning discussion was not recorded. We'll 

14 have to see. 

15 MR. SACHS: Second question as long 

16 as we're at this process digression. When 

17 will we know whether or not the consensus is 

18 going to be accepted as opposed to continuing 

19 this process? 

20 MR. WES ANDERSON: Wes at DOE. 

21 I cannot answer that at this point 

22 but we will -- 
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1 MR. BROOKMAN: Steve Rosenstock, go 

2 ahead. 

3 MR. ROSENSTOCK: Did Wes have 

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

5 interrupt. I'm sorry. 

6 MR. WES ANDERSON: I'm done. 

7 Thanks. 

8 MR. ROSENSTOCK: Steve Rosenstock, 

9 EEI. 

10 In terms of shipments, I'm just 

11 kind of curious. Have you looked back on what 

12 the projections were for the last rulemaking 

13 in terms of what the shipments were going to 

14 be post-2006? And how the projections 

15 differed from the reality? And I discussed 

16 heat pumps. 

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

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

19 to look back in terms of impacts because 

20 obviously you're, you know, you're doing these 

21 models and I'm just kind of curious. 

22 What was the -- if you had a chance 
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1 to look, what was the percentage you 

2 projected, X million per year, and the actual 

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

4 of a looking back and seeing how accurate the 

5 model was previously. 

6 MR. ROSENQUIST: Haven't done that. 

7 Haven't done that retrospective. 

8 MR. ROSENSTOCK: Thank you. 

9 MR. BROOKMAN: Greg, let's keep 

10 moving. 

11 MR. ROSENQUIST: Okay. What I was 

12 saying before is that many of the inputs were 

13 regionalized in order to develop this regional 

14 model to get shipments down to the hot and 

15 dry, hot-humid, and the rest of country 

16 regions. 

17 Two of those inputs do not vary by 

18 region over the product lifetimes and the 

19 relative purchase price elasticities. 

20 For the variables that do vary by 

21 region, starting with the per unit total 

22 installed costs and per unit product operating 
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1 costs, those come from the life cycle costs 

2 and payback period analysis. 

3 To allocate shipments to the three 

4 regions, allocation factors were developed 

5 through a trial and error process, by figuring 

6 out or calculating the stock for each of the 

7 three regions and comparing it to historical 

8 values from the American Housing Survey. 

9 And those charts to the right here 

10 demonstrate that. The blue lines are the 

11 calculated values. The red lines are the 

12 values from the American Housing Survey. And 

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

14 my screen here. But I believe this is hot15 dry, this is hot-humid, this is rest of 

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

17 So the regional model does a fairly 

18 good job at matching those historical 

19 saturations. 

20 For regional new construction 

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

22 combination of the AEO which provide things at 
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1 the census division level in combination with 

2 population factors to aggregate that up to the 

3 three climatic regions. 

4 For regional new construction 

5 saturations for the residential sector, that 

6 was developed through a combination of the 

7 characteristics of new housing data, which 

8 provides it at the census region level, in 

9 combination with these population factors to 

10 aggregate that up to the regional level. 

11 And for the commercial sector, 

12 combination of CBECS data, which provides 

13 saturations at the census division level, in 

14 combination with population factors, which are 

15 used to get these saturations at the regional 

16 level. 

17 MR. BROOKMAN: Don Brundadge? 

18 MR. BRUNDADGE: Just to comment -- 

19 repeat a comment from earlier. The potential 

20 early replacement due to R22 phase out will 

21 have a huge potential impact on the shipments 

22 analysis. And I highly recommend you look at 
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1 that in detail. 

2 MR. BROOKMAN: Thank you. 

3 Additional comments on the regional 

4 model? 

5 MR. WES ANDERSON: This is Wes at 

6 DOE. 

7 If you have any insight on how to 

8 glean that information from a public available 

9 information or if you -- however you can 

10 access those projections, it would be helpful 

11 to submit that. 

12 MR. BROOKMAN: So on to shipments 

13 results. 

14 MR. ROSENQUIST: And these 

15 shipments results are for one particular case 

16 of central air conditioners split systems coil 

17 only units. 

18 And so this top figure shows the 

19 base case shipments, that is the case without 

20 standards. And you see the total figure there 

21 going up to over -- around five -- I think 

22 five-and-a-half million shipments by 2046. 
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1 It's divided up into the three 

2 regions by color. The red represents the hot3 dry region. The orange, the hot-humid region. 

4 And the blue, the rest of the country. 

5 And each one of those regions, in 

6 turn, is divided up into the three product 

7 channels, new construction, replacements, and 

8 new owners. The biggest swath there is for 

9 replacements. The smallest swath is for new 

10 owners. 

11 Then these figures on the bottom 

12 show how standards actually impact these base 

13 case shipments. And looking at the case here 

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

15 product channels, replacements, new owner, and 

16 new construction. 

17 So we can see how the standards 

18 impact shipments in each one of these product 

19 channels. Starting with replacements -- I 

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

21 there -- but there is a slight decrease in 

22 shipments under the standards case. 
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1 There is a slight decrease 

2 represented by this dotted line from the 

3 standards in the year that the standards 

4 become effective. 

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

6 for replacements, that some consumers are 

7 choosing to do an extended repair rather than 

8 a replacement. But that effect diminishes out 

9 over time as consumers become less sensitive 

10 to that purchase price increase. 

11 So overall there isn't a terribly 

12 large effect due the standard on replacement 

13 shipments. And the same can be said for new 

14 owner shipments as well. 

15 There is a slight drop in the year 

16 that the standards take effect due to the fact 

17 that some consumers are purchasing room air 

18 conditioners instead of central air 

19 conditioners. But it isn't all that great. 

20 And in new construction, as I said 

21 before, the assumption there is that this 

22 particular product channel would be 
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1 unaffected. 

2 MR. BROOKMAN: Steve Rosenstock? 

3 MR. ROSENSTOCK: Steve Rosenstock, 

4 EEI. 

5 I guess the handout wasn't synching 

6 because on our slides here it says 22 SEER. 

7 MR. ROSENQUIST: Right, right, that 

8 correction was made. 

9 MR. ROSENSTOCK: Okay. Thank you. 

10 Okay. 

11 Again, I have to say again based on 

12 the past experience over the last five years, 

13 I can't believe that the impact would not be 

14 even bigger. 

15 When you talk about 16.5 SEER, 

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

17 percent increase over the current standard, 

18 that it would have an almost minimal impact 

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

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

21 believed based on what's happened to 

22 shipments, I just find that very surprising. 
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1 I'm just very surprised at the -- 

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

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

4 surprised. 

5 Thank you. 

6 MR. BROOKMAN: Don Brundadge? 

7 MR. BRUNDADGE: I would agree -- 

8 Don Brundadge -- I would agree especially on 

9 the rest of country. I mean in hot-humid and 

10 hot-dry, you can't sell a house without an air 

11 conditioner. 

12 But in rest of country where it is 

13 considered to be more of an option, to have 

14 almost no impact from a higher standards, it 

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

16 seem consistent with what happened when you 

17 went from SEER 10 to SEER 13 a few years ago, 

18 which I'm not sure any of the manufacturers 

19 much are still here but they saw some 

20 significant drop in shipments. 

21 Thank you. 

22 MR. BROOKMAN: Okay. Thank you. 
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1 MR. ROSENSTOCK: Also, again, this 

2 is Steve Rosenstock. 

3 Again, there is -- again follow up 

4 the substitution effect in terms of, you know, 

5 room air conditioners replacing central air 

6 conditioners. That is, especially in the 

7 northern parts of the country, there might 

8 have been some consumers who did that as well. 

9 So that's another possibility in terms of this 

10 shipment analysis that should be considered. 

11 Thank you. 

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

13 forge ahead now into the national impact 

14 analysis. And its purpose is to determine the 

15 national energy savings and the national 

16 economic impacts, either a burden or a 

17 benefit, from these various standards. 

18 And this first flow diagram shows 

19 how the national energy savings are 

20 calculated. It starts out with the shipments 

21 analysis, which provides both base case and 

22 standards case projections of shipments. 
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1 Those shipments, again, are used to 

2 build up a stock of central air conditioning 

3 and heat pump equipment. And then when that 

4 is coupled with the per unit annual energy use 

5 values from the life cycle cost analysis, it 

6 allows the determination of the national 

7 annual energy consumption for each year of the 

8 forecast period out from 2016 all the way out 

9 to 2046. This is done for both the base case 

10 and the standards case. 

11 To determine national energy 

12 savings, the annual values are cumulated into 

13 a single value for both the base case and the 

14 standards case. 

15 Site-to-source energy conversion 

16 factors are applied to convert that site 

17 energy savings into source energy savings. 

18 And the difference between the base and 

19 standards case provides the national energy 

20 savings. 

21 This next flow diagram provides the 

22 calculation process for determining the net 
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1 present value, which is the measure of the 

2 economic impact, either a benefit or a burden, 

3 to the nation. 

4 Again, it starts out with the 

5 shipments analysis, which provides both base 

6 case and standards case projections of 

7 shipments, which again are used to build up 

8 the stock of central air conditioning and heat 

9 pump equipment. 

10 And then taking per unit energy 

11 costs and per unit maintenance repair costs 

12 and per unit product -- or total installed 

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

14 used to develop national energy costs, 

15 national maintenance and repair costs, 

16 national product costs annually over the 

17 entire forecast period from 2016 to 2046. 

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

19 and the standards case. 

20 The operating cost savings is the 

21 difference between the cumulative values of 

22 energy and repair -- maintenance and repair 
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1 costs for the base case compared to the 

2 cumulative energy maintenance and repair costs 

3 from the standards case. 

4 And the total product cost increase 

5 is the same thing but on the product cost 

6 side, again taking that difference between the 

7 standards case and the base case. 

8 Discount rates are applied to both 

9 the operating cost savings and the total 

10 product cost increases to bring that to a 

11 present value. And if the operating cost 

12 savings are greater than the product cost 

13 increases, you have a net benefit to the 

14 country. 

15 If it is the other way around where 

16 the cost increases are greater than the cost 

17 savings, then you have a burden to the country 

18 from the particular standard. 

19 So there are, again, several inputs 

20 to the national impact analysis. The first 

21 set of inputs, the per unit total installed 

22 cost, per unit repair and maintenance costs, 
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1 per unit annual energy use come from the life 

2 cycle cost and payback period analysis. 

3 All of these per unit values are 

4 dependent upon efficiency. So the next set of 

5 inputs, the base case and standards case 

6 forecasted efficiencies, are important to 

7 develop. 

8 For the base case efficiency 

9 distributions, that was described earlier by 

10 Dave Winiarski in the energy use analysis. So 

11 I'll be showing that again for a particular 

12 product class. 

13 The standards case efficiencies in 

14 the year that the standards become effective 

15 in 2016 was determined through the use of a 

16 roll-up scenario. And then efficiencies over 

17 time were forecasted by looking at historical 

18 trends in efficiency. 

19 Electricity prices, again, were 

20 taken from the life cycle costs and payback 

21 period analysis, using the marginal prices for 

22 both the residential and commercial building 
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1 sectors. 

2 Future energy prices were forecasts 

3 using the price trends from the annual energy 

4 outlook. 

5 Electricity site-to-source 

6 conversion factors are used to convert that 

7 site savings into source savings. They're 

8 also called marginal heat rates. They are 

9 taken from the national energy modeling system 

10 or NEMS. And NEMS is used to generate the 

11 annual energy outlook. 

12 These factors or heat rates account 

13 for the losses due to generation, 

14 distribution, and transmission. 

15 Discount rates are used to bring 

16 back these costs -- these cost increases and 

17 operating cost savings -- to a present value 

18 as I said before. Seven percent and three 

19 percent real values are used based upon 

20 guidelines from the Office of Management and 

21 Budget. These are different discount rates 

22 than are used from the life cycles costs and 
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1 payback period analysis. 

2 And they are discounted to a 

3 present year. And for the preliminary 

4 analysis, the present year was chosen as 2009. 

5 MR. BROOKMAN: Tom Eckman? 

6 MR. ECKMAN: Tom Eckman. 

7 I'll add my standard postscript to 

8 the national impact analysis. How many plants 

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

10 of avoiding those plants? Because this is 

11 really a capacity-driven savings. 

12 And is that monetary cost of plant 

13 avoidance in the analysis in terms of net 

14 present value? 

15 MR. ROSENQUIST: Not currently. 

16 MR. ECKMAN: Is it going to be? 

17 MR. ROSENQUIST: It will be taken 

18 under consideration by DOE. Whether or not 

19 will be determined. 

20 MR. ECKMAN: I mean the reason 

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

22 we calculate the cost of plant avoidance and 
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1 include it in the analysis? 

2 MR. BROOKMAN: Thank you. 

3 Additional comments? 

4 (No response.) 

5 MR. ROSENQUIST: Okay. As I said 

6 before, it is important to determine these 

7 base case and standards case efficiencies 

8 because the inputs from the LCC analysis are 

9 all dependent upon them. 

10 And this table shows you the 

11 example of how these distributions of 

12 efficiencies were generated for the year that 

13 standards become effective for split system 

14 air conditioners coil only units. 

15 The base case efficiency 

16 distribution is what you've seen earlier in 

17 Dave Winiarski's presentation in the energy 

18 use section. That results in a shipment 

19 weighted efficiency of 13.65 SEER. 

20 And then you can see how the roll 

21 up scenario effects these distributions. 

22 Looking at standards case three, which is 14.5 
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1 SEER, you can see that all products below that 

2 standard level are rolled up to 14.5. And 

3 then all the market above that standard level 

4 is unaffected. 

5 So you can see the shipment weight 

6 efficiency levels for all the different 

7 standards cases here. 

8 Now it is also important -- 

9 MR. BROOKMAN: Don Brundadge? 

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

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

12 reasonable to assume efficiencies are going to 

13 stay frozen from 2008 to 2016. There has been 

14 a huge increase in utility incentive programs 

15 for higher efficiency units. You've had 

16 stimulus programs. You've had lots of other 

17 things. 

18 And I think in real life, there's 

19 some increase in the shipment weighted 

20 efficiency between 2008 and 2016. 

21 MR. BROOKMAN: Thank you. 

22 Andrew deLaski? 
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1 MR. deLASKI: And just to follow up 

2 on Don's point. You know I also think that in 

3 2016 that those programs don't disappear so 

4 that there would need to be a distribution 

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

6 this depends somewhat what the standard level 

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

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

9 distribution above that. The higher you go, 

10 the harder it is to have a distribution. 

11 So I think the analysis has to be 

12 somewhat flexible to reflect how a different 

13 standard might impact the distribution post 

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

15 done in the past, in times has been to do 

16 scenarios, a roll up and a ship scenario. And 

17 I think that is an appropriate approach. 

18 MR. ROSENQUIST: Yes, this next 

19 slide sort of speaks to your point, Andrew, 

20 about how these distributions change over 

21 time. 

22 This graph, this chart shows for 
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1 the case of split air conditioner coil-only 

2 units how the shipment weight efficiencies 

3 change over time for the base case in each of 

4 the standards cases. 

5 So -- 

6 MR. SACHS: Greg? Excuse me. 

7 MR. ROSENQUIST: Yes? 

8 MR. SACHS: This is Harvey Sachs 

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

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

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

12 MR. ROSENQUIST: Okay. So actually 

13 you want to look at column three, not row 

14 three, column three. 

15 So column three is the distribution 

16 for standards case three or the standards case 

17 of 14.5 SEER minimum. So that product below 

18 that standard level of 14.5 is rolled up to 

19 14.5. So -- 

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

21 Thank you. 

22 MR. ROSENQUIST: Okay. 
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1 MR. SACHS: I just had the row-wise 

2 mind, I guess. Thank you. 

3 MR. ROSENQUIST: Okay. 

4 MR. deLASKI: So, if I could 

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

6 having trouble, you know, reconciling this 

7 table with the table that Dave showed earlier, 

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

9 base case, to cluster around exactly the SEER 

10 that was set but rather he showed a 

11 distribution between 13 and 14 SEER in the 

12 current marketplace. 

13 MR. ROSENQUIST: Right. 

14 MR. deLASKI: So it just strikes me 

15 that if that exists today, and I know there is 

16 a question as to whether it does or not, but 

17 if that's your base case assumption, I think 

18 you need to carry that through to your 

19 standards case assumption -- 

20 MR. ROSENQUIST: Right. 

21 MR. deLASKI: -- where you can see 

22 that same kind of reaction in the marketplace, 
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1 which is why I asked the question earlier, you 

2 know, are manufacturers overshooting a little 

3 bit to certain of meeting the standard because 

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

5 it in the future. 

6 MR. ROSENQUIST: Yes. The analysis 

7 here assumes that in the year that standards 

8 become effective, you have a roll up. But 

9 what this chart tries to display is that after 

10 2016, you continue to have an increase in the 

11 shipment weight efficiency. And that is you 

12 continue to have more products being sold 

13 beyond that minimum standard. 

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

15 like do a roll up in the year that standards 

16 become effective. And then after that you 

17 gradually increase that efficiency trendwhere 

18 the distribution increases in time. 

19 MR. deLASKI: Okay. 

20 MR. ROSENQUIST: And so that's what 

21 the analysis did. And that's what this slide 

22 demonstrates is that over time, after 2016, 
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1 the analysis assumed that there would be 

2 efficiency growth in the base case equivalent 

3 to what was seen between 1992 and 2005. 

4 MR. deLASKI: So thank you because 

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

6 On that second point, though, I 

7 think we still haven't captured this other 

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

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

10 the base year are we capturing how 

11 manufacturers comply with the standards. 

12 I think what we're seeing in the 

13 base case assumption is that they are 

14 complying by going about the standard by more 

15 than we would have expected. 

16 MR. ROSENQUIST: Right. And this 

17 shipment weighted efficiency trend through 

18 every year after 2016 reflects that as well. 

19 MR. deLASKI: Okay. 

20 MR. ROSENQUIST: There is still -- 

21 I mean it's basically stemming off that 

22 initial base case efficiency distribution, 
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1 right? So -- 

2 MR. deLASKI: Thanks. 

3 MR. BROOKMAN: Steve Rosenstock? 

4 MR. ROSENSTOCK: Steve Rosenstock, 

5 Edison Electric Institute. 

6 I mentioned this last time but in 

7 terms of impacts, we saw in 2005, there was a 

8 surge of production of below 13 SEER units. 

9 And those were shipped out and sold well after 

10 January 2006 in the United States. 

11 And those effects, those SEER -- 

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

13 been sold through 2008 or even 2009 for all we 

14 know. 

15 So that had an impact obviously on 

16 the national energy savings as people were -- 

17 because they were produced before the deadline 

18 but sold after the deadline, people were still 

19 able to purchase them in the market as 

20 replacements or for new construction. 

21 And, again, it looks like, again, 

22 that that, you know, I think it -- I don't 
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1 know if it happened in 1992 but I think there 

2 is that possibility where, again, a surge of 

3 units at the lowest cost are produced to be 

4 sold, distributed, you know, warehoused 

5 afterwards. 

6 And at least for the first few 

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

8 national energy savings. 

9 I'm not exactly sure how to model 

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

11 there were two significant, you know, 

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

13 and then 2006. I think we have some history 

14 in terms of what exactly happened and how long 

15 those sub-new efficiency levels were sold in 

16 the market and had an impact. 

17 Thank you. 

18 MR. SACHS: Six months. 

19 MR. deLASKI: Six months? 

20 MR. SACHS: Harvey Sachs. Six 

21 months, okay. 

22 MR. deLASKI: I've a couple of 
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1 years myself, but -- 

2 MR. BROOKMAN: Okay. 

3 MR. ROSENQUIST: So to continue on 

4 with this chart, I wanted to also talk about 

5 the standards case efficiency trends. They 

6 have a very similar growth to the base case 

7 efficiency trend but it's actually slightly 

8 lower. 

9 That's because under the standards 

10 case situation, the per unit total installed 

11 cost between the base case and the standards 

12 case was held constant. So actually each one 

13 of these standards case efficiency trends 

14 slightly decreases over time relative to the 

15 base case efficiency trend. 

16 Of course, these trends continue in 

17 time until they hit the max tech level of 

18 16.5, at which point they flatten out because 

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

20 max tech level. 

21 This next chart shows just an 

22 example of what the national total installed 
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1 costs look like and the national operating 

2 cost savings look like for a particular 

3 standards case for a particular product class. 

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

5 units. 

6 The purple bars represent the total 

7 installed costs to the nation on an annual 

8 basis. Those are represented as a negative. 

9 The green bars are the operating 

10 cost savings. Those are expressed as a 

11 positive. The red line shows the net. 

12 The analysis accounts for all 

13 shipments coming in to the stock up to the end 

14 of the forecast period -- up to 2046. That's 

15 why you continue to see operating cost savings 

16 out to 2080 is because we're accounting for 

17 the operating cost savings for all those years 

18 that were installed before 2046 until they 

19 die. 

20 And then finally, the last slide in 

21 the national impact analysis is just an 

22 example of the type of energy savings and NPV 
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1 results you get for a particular product 

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

3 central air conditioners. 

4 Showing national regional savings 

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

6 units. The graph on the right is for blower 

7 coil units. The scales are identical even 

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

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

10 cumulative over the forecast period. 

11 In the scale, on the X-axis are the 

12 particular standards cases. For coil only 

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

14 the same scale as for blower coil units just 

15 so you can easily compare things. 

16 And you can see that because 90 

17 percent of shipments are assumed to go to coil 

18 only units, most of the energy savings comes 

19 from the coil only units. 

20 The bottom two graphs show the 

21 national and regional NPVs. Again, the figure 

22 on the left is for coil only. The figure on 
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1 the right is for blower coil. 

2 These have different scales on the 

3 Y-axis. So they're not equivalent. 

4 For coil only units, none of the 

5 standards cases produce a benefit to the 

6 country either at the national or regional 

7 level. There is a slight difference there for 

8 the blower coil units. For the hot-humid and 

9 hot-dry regions, there is a slight benefit 

10 going out to around 18 SEER for hot-humid and 

11 around 16, 16.5 SEER for hot-dry. 

12 So if you don't have any more 

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

14 to talk about the preliminary manufacturing 

15 impact analysis. 

16 MR. deLASKI: I did have one 

17 question. 

18 MR. ROSENQUIST: Okay. 

19 MR. deLASKI: I was surprised 

20 because I noticed what you just said, that for 

21 that example there was no -- the NPV was 

22 negative yet the LCC was positive. And I 
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1 couldn't reconcile those in the time that I 

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

3 MR. BROOKMAN: That was Andrew 

4 deLaski. And now Greg. 

5 MR. ROSENQUIST: Right, right. I 

6 think there were some positives at 13.5 SEER 

7 for example, under the coil only unit 

8 condition. And I can only explain that by the 

9 fact that when we are forecasting things out 

10 over time, also in addition with these 

11 efficiency trends, that drops down -- what you 

12 would see as a positive LCC at 13.5 to a 

13 negative in the NIA. 

14 MR. deLASKI: Right. I mean it 

15 just strikes me that they are both pretty 

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

17 conclude is that -- 

18 MR. ROSENQUIST: Yes, that's really 

19 it. 

20 MR. deLASKI: -- those numbers are 

21 basically zero -- 

22 MR. ROSENQUIST: Right. 
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1 MR. deLASKI: -- for all 

2 statistical purposes. 

3 MR. ROSENQUIST: Yes, for the coil 

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

5 can get higher in the southern regions. 

6 MR. deLASKI: Got it. Okay. 

7 Thanks. 

8 MR. MILLARD: Hello. My name is 

9 Matt Millard again. And I will be discussing 

10 the preliminary MIA and some of the next steps 

11 after the preliminary analysis. 

12 Here you can see that, as I 

13 mentioned earlier, the preliminary 

14 manufacturer impact -- or the manufacturer 

15 impact analysis is fed by the engineering 

16 analysis. So the purpose of the manufacturer 

17 impact analysis is to identify the impacts of 

18 energy conservation standards on 

19 manufacturers. 

20 And this is done through three 

21 phases. In the first phase, DOE creates an 

22 industry profile to characterize the industry 
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1 and identify important issues that will 

2 require consideration. 

3 In the second phase, DOE will 

4 prepare a cash flow model and an interview 

5 questionnaire to guide discussions with 

6 manufacturers. 

7 And then in the third phase, these 

8 actual discussions will occur with 

9 manufacturers and DOE will assess the impacts 

10 on those manufacturers, both quantitatively 

11 through the government regulatory impact model 

12 and also qualitatively by looking at impacts 

13 on competition, manufacturing capacity, 

14 employment, and regulatory burden. 

15 So following the framework 

16 document, DOE conducted some preliminary 

17 manufacturer impact analysis interviews with 

18 manufacturers. And you can see some of the 

19 issues that came up where, which are fairly 

20 standard at the early phase involving impacts 

21 on profitability regarding increased standards 

22 and how these could cut into profit margins, 
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1 conversion costs, and that relationship to the 

2 diminishing returns on consumers, issues with 

3 product innovation and how increased equipment 

4 costs will -- or the cost to remodel equipment 

5 to meet the current standard, would take away 

6 from the development of new products. 

7 And cumulative regulatory burdens 

8 and an example of one of those would be the 

9 new regulations that were being worked on by 

10 DOE for residential furnaces as well as 

11 international standards. 

12 So at this point, we'd like to 

13 request comment on the possible impact of 

14 increased efficiency standards on domestic 

15 manufacturers. 

16 MR. BROOKMAN: Harvey Sachs. 

17 MR. SACHS: Harvey Sachs, ACEEE. 

18 Two notes, one of them is I think 

19 the record should reflect that the 

20 manufacturers had another meeting. And there 

21 are no manufacturers in the meeting for the 

22 manufacturer impact analysis phase. And I 
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1 think that should be in the record. 

2 If I'm wrong, would any 

3 manufacturers present please correct me. 

4 (No response.) 

5 MR. SACHS: Thank you. 

6 And the second thing is to note 

7 that these concerns have all been implicitly 

8 addressed in the consensus agreement, that 

9 among other things, the phasing of the 

10 furnaces and air conditioner/heat pump 

11 standards implementations in the consensus 

12 agreement reflects all of the concerns raised 

13 by the manufacturers to the extent that they 

14 felt they should be considered. 

15 And I think they would have wanted 

16 to make that point if they were here. 

17 MR. BROOKMAN: Okay. Thank you. 

18 And, Dave, everybody has 

19 demonstrated that they are on the record. 

20 Everybody is on the record. 

21 PARTICIPANT: If we signed it, we 

22 signed it. 
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1 MR. BROOKMAN: Let me see, Tim? 

2 MR. BALORWORTH: Tim Ballo, 

3 Earthjustice. 

4 Just to raise something that we've 

5 raised before but as I still haven't yet 

6 gotten an answer on it, just to raise it 

7 again. 

8 Manufacturers of air conditioners 

9 and heat pumps, a lot of them also produce 

10 furnaces. So if there is some substitution 

11 that occurs as the result of an increase in a 

12 standard, it is not necessarily going to be a 

13 completely adverse impact on those 

14 manufacturers. 

15 MR. BROOKMAN: Okay. Thank you. 

16 Steve Rosenstock? 

17 MR. ROSENSTOCK: I'm Steve 

18 Rosenstock, EEI, again. 

19 Kind of looking back, I'm kind of 

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

21 of curious if there is some record about the 

22 impact of the last jump in standards on the 
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1 air conditioning and heat pump manufacturers 

2 in terms of jobs and everything and/or 

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

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

5 kind of curious if there is any data out 

6 there. 

7 MR. MILLARD: We have received some 

8 very limited data from manufacturers. And 

9 we're trying to look forward with this 

10 standard as opposed to looking backwards. But 

11 we received the same comment from a lot of 

12 manufacturers as far as looking at the impacts 

13 of the last standard and how it compares to 

14 what was expected. So we can look into that. 

15 MR. ROSENSTOCK: Okay. Just a 

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

17 quick follow up, were there job losses 

18 associated with the last standard? Domestic 

19 job losses? 

20 PARTICIPANT: Constantin (inaudible) 

21 of Navigant Consulting. 

22 I think the answer is very 
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1 difficult -- it is a very difficult answer 

2 because you are looking at a wonderful 

3 confluence between an economic meltdown and 

4 the standard at the same time. 

5 So I think even if you are a 

6 manufacturer, to disaggregate the two events 

7 from each other would be nearly impossible. 

8 But I mean obviously we would have to wait for 

9 manufacturers to give us their own individual 

10 answers. 

11 MR. ROSENSTOCK: Steve Rosenstock, 

12 EEI. 

13 The meltdown really started, 

14 according the National Economic Council, in 

15 late 2007. And the standard took effect in 

16 January 2006. So -- and the standard was 

17 basically finalized in 2004 after all the 

18 things. So -- 

19 PARTICIPANT: Right. 

20 MR. ROSENSTOCK: -- you know, there 

21 is some disaggregation in my view. 

22 PARTICIPANT: Well, I would tend to 
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1 agree with you if you had a complete depletion 

2 of existing pre-2006 stock in the time coming 

3 up to the meltdown. 

4 And I think the meltdown started 

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

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

7 you disaggregate the two events from each 

8 other. 

9 MR. ROSENSTOCK: For new 

10 construction, I agree with, yes. 

11 MR. BROOKMAN: Harvey Sachs? 

12 MR. SACHS: Harvey Sachs, ACEEE. 

13 And I take umbrage at the remark 

14 that was just made in this proceeding that we 

15 try to look forward instead of back. The 

16 historical record on the impacts of energy 

17 efficiency ratings is there. 

18 It's been treated in the referee 

19 literature to some extent. And several times 

20 today I've heard the remark from different 

21 people that it appears as though this 

22 framework, this point we're at today has been 
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1 developed without looking back at prior DOE 

2 rulemakings. 

3 And it is disturbing because there 

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

5 from the data that were developed then, and 

6 what was learned in the subsequent years. 

7 And if we're never going to 

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

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

10 the same results. 

11 MR. BROOKMAN: Yes. Constantin? 

12 PARTICIPANT: And if I can respond 

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

14 would have to consider in that context would 

15 be that the technology has not marched on, 

16 that things haven't changed. 

17 And, you know, copper prices aren't 

18 where they are -- where they were or where we 

19 projected them to be. And neither are energy 

20 prices. 

21 So the notion that, you know, back 

22 then we had perfect information looking 
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1 forward and we should compare that information 

2 that we used to what actually happened and so 

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

4 fact, because so many factors, environmental 

5 factors have changed. 

6 MR. SACHS: Constantin, this is 

7 Harvey Sachs. 

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

9 trying to be brief and was not more explicit. 

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

11 Rosenstock has raised about disentangling the 

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

13 the rather abundant record from the prior 

14 rulemaking. It's a much broader issue. 

15 MR. BROOKMAN: Harvey, we've heard 

16 that several times today. So thank you for 

17 bringing that back to us. 

18 Let's have the final slide. And 

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

20 submit their comments. 

21 MR. MILLARD: Okay. So in going 

22 forward, we will be moving on to the NOPR, the 
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1 Notice of Proposed Rulemaking. And in the 

2 NOPR, we will revise our analyses for the 

3 preliminary analysis based on the comments 

4 that we receive and any new data that we may 

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

6 and name off the remaining analyses but there 

7 will be a variety of additional analyses 

8 conducted for the NOPR. 

9 MR. BROOKMAN: In your packet, 

10 you'll see this final slide. 

11 Wes? 

12 MR. WES ANDERSON: Wes at DOE. 

13 We went over this earlier in the 

14 presentation. So I won't repeat it. 

15 However, I would like to emphasize 

16 that even though the comment period was posted 

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

18 considering extending it. However, I would 

19 ask you to still get in your comments as soon 

20 as possible. 

21 MR. BROOKMAN: And there is one 

22 more element. Please fill out the evaluation 
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1 form. It's also our tradition in these 

2 meeting to provide an opportunity for final 

3 comments on things that would be novel, things 

4 that haven't been said already that might need 

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

6 already today. 

7 So any additional and final 

8 comments before we adjourn? 

9 Steve Rosenstock? 

10 MR. ROSENSTOCK: Steve Rosenstock, 

11 Edison Electric Institute. 

12 A lot have been covered. And I 

13 just was actually looking through the 

14 background slides again. 

15 And there is, again, the 

16 monetization of emissions reductions. We said 

17 this during the furnace rulemaking. We'd like 

18 to reiterate again. We're concerned about 

19 this social cost of carbon. 

20 I know it had developed via 

21 interagency review. I'm concerned about how 

22 it is going to be used in current and future 
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1 rulemakings. 

2 I'm also worried about how it is 

3 going to be used in terms of justifying new 

4 rulemakings and also the impact of double 

5 counting if there are regulations on carbon 

6 emissions, that there is a very high 

7 likelihood of double counting the benefits 

8 because a lot of the costs of carbon reduction 

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

10 gas or electric or fuel oil, et cetera. 

11 Thank you. 

12 MR. BROOKMAN: Thank you. 

13 Other final comments that we 

14 haven't covered already? 

15 MR. WES ANDERSON: One last point. 

16 Please make sure you submit your comments due 

17 to the technical difficulties we had this 

18 morning. 

19 And I would personally like to 

20 thank you for coming out. And thank those who 

21 stuck through this full presentation without 

22 the benefit of a lunch break. 
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1 So thank you for your comments and 

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

3 that we need to get everything in writing, you 

4 know. And there will be an email and 

5 something posted on the webpage to notify 

6 those who are not here. 

7 Thank you. 

8 (Whereupon, the above-entitled 

9 meeting was concluded.) 

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CERTIFICATE

MATTER: PRELIMINARY A]\TALYSIS PTIBLIC MEET]NG

FOR RESIDENTTAI CENTRAL AIR

CONDITIONERS & HEAT PUMPS

DATE: MAY 5, 2010

f hereby cert,ify that the attached

Lranscript.ion of pages 1 to 22I incl-usive is

t,he correct,ed version of the t.ranscript,ion for

t,he publ-ic meeting dated May 5, 2010 and is t,o

the best of my belief and abilit.y a true,

accuraLe, and compl-ete record based on edits

made by the Department of Energy of the above

referenced proceedings as cont.ained on the

provided audio recording.

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