**EXECUTIVE COURT REPORTERS, INC. (301) 565-0064**  1

U.S. DEPARTMENT OF ENERGY

**PUBLIC MEETING ON THE NOTICE OF PROPOSED RULEMAKING FOR CERTAIN COMMERCIAL AIR CONDITIONING, HEATING, AND**  **WATER-HEATING EQUIPMENT**

Room 8E-089 U.S. Department of Energy 1000 Independence Avenue, S.W. Washington, D.C. 20585

9:00 a.m. Tuesday, April 7, 2009 DOUG BROOKMAN, Facilitator U.S. Department of Energy Attendees

MOHAMMAD KHAN FRANCINE PINTO, ESQ. ERIC STAS, ESQ. BRENDA EDWARDS

Attendees KARIM AMRANE, Ph.D., Vice President Regulatory and Research Air Conditioning, Heating and Refrigeration Institute (AHRI) 2111 Wilson Boulevard, Suite 500 Arlington, Virginia 22201-3001 ASHLEY ARMSTRONG, Managing Consultant Navigant Consulting, Inc. 1801 K Street, NW, Suite 500 Washington, D.C. 20006**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2

TIMOTHY BALLO, Esq., Associate Attorney EarthJustice 1625 Massachusetts Avenue, Suite 702 Washington, D.C. 20036 BELINDA CARR, Administrative Analyst Energetics, Inc. 7067 Columbia Gateway Drive Columbia, Maryland 21046

Attendees ADAM DARLINGTON, Consultant Navigant Consulting 1801 K Street, NW, Suite 500 Washington, D.C. 20006-1301
NERY DURON-LICONAS, Energy Manager Naval Facilities Engineering Command 1013 O Street, SE Building 166, Suite 100N Washington, D.C. 20384-5018

JEFF HARRIS, Vice President for Programs Alliance to Save Energy (ASE) 500 S. Myrtle Street Seattle, Washington 98108
MARK KENDALL, Manager Engineering and Research Burnham Hydronics P.O. Box 3079 Lancaster, Pennsylvania 17603 GRAHAM B. PARKER, Senior Staff Engineer Technology Planning and Development Pacific Northwest National Laboratory 902 Battelle Boulevard P.O. Box 999, MSIN K6-05 Richland, Washington 99352**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 KRISTEN RAYMOND, ESQ. U.S. Department of Justice - Antitrust 450 5 th Street, NW Washington, D.C. HARVEY SACHS, Ph.D., Senior Fellow Buildings Program American Council for an Energy-Efficient Economy (ACEEE) 529 14 th Street, NW, Suite 900 Washington, D.C. 20004

Attendees FRANK STANONIK, Chief Technical Advisor Air Conditioning, Heating and Refrigeration Institute (AHRI) 2111 Wilson Boulevard, Suite 500 Arlington, Virginia 22201-3001 DAVID WINIARSKI, Senior Research Engineer Energy and Engineering Division Pacific Northwest National Laboratory P.O. Box 999, MSIN K5-08 Richland, Washington 99352**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4

A G E N D A

ITEM : PAGE :
Welcome 5 U.S. Department of Energy Rulemaking Overview 5 Mohammed Khan Opening Remarks, Introductions and 7 Agenda Review Doug Brookman Brief Opening Remarks from Interested No Parties Comments Made Doug Brookman Determination of Scope and Test Procedures 11 Adam Darlington Market Assessment and Engineering Analysis 38 Adam Darlington Life-Cycle Cost and Payback Period Analyses 51 David Winiarski National Impact Analysis 76 David Winiarski Proposed Standard Levels 98 Mohammed Khan Discussion of Proposed Standard Levels, 99 Other Issues and Final Remarks from Interested Parties Doug Brookman Next Steps and Closing Remarks 104 Mohammed Khan**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5

P R O C E E D I N G S 1 (9:10 a.m.) 2 Welcome 3 MR. KHAN: Good morning, everyone. Welcome 4 and thank you for participating in today’s Public 5 Meeting on Energy Conservation Standards for Certain 6 Equipment that are covered in ASHRAE 90.1. 7 My name’s Mohammed Khan and I am the 8 department’s project manager for this rulemaking 9 activity. 10 I’ll be providing a brief overview of the 11 rulemaking and throughout the day, we’ll hear from 12 analysts from Navigant Consulting as well as from the 13 Pacific Northwest National Laboratory on the details 14 of the various analyses that the department has 15 performed on this rulemaking. 16 Rulemaking Overview 17 MR. KHAN: There are several purposes of 18 today’s meeting. First, we want to explain the 19 analysis methodologies and characterize our analysis 20 results. 21 Second, we want to have a two-way 22 discussion. We want to discuss some specific issues 23 associated with this rulemaking and also hear and 24 listen to your thoughts and potential concerns. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6

And the last thing, we want to describe what 1 the next steps are and what you should anticipate from 2 the department. 3 According to USC 6313, the Energy Policy and 4 Conservation Act requires DOE to consider amending its 5 Energy Conservation Standards coincident with 6 amendments to the ASHRAE 90.1 Standard. 7 Additionally, DOE must either adopt the new 8 ASHRAE amendments or promulgate more stringent 9 standards if clear and convincing evidence 10 demonstrates that significant additional energy 11 savings would result and it would be both 12 technologically feasible and economically justified. 13 Typically at this juncture, we would allow 14 participants to provide their opening comments or 15 remarks, but I don’t think there were any requests at 16 this time. 17 Regarding the second bullet, Comments from 18 Participants, again I can’t over-emphasize the 19 importance of your feedback. 20 Today, throughout the day, we’ll be asking 21 for your input on certain aspects of the analyses and, 22 as I said earlier, since we want to have a two-way 23 discussion, you’re all encouraged to ask questions and 24 add to today’s exchange. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7

Additionally, you’re invited to submit 1 comments, written comments before the close of the 2 comment period which is June 3 rd

. 3 Okay. I now will turn to Doug. 4 Opening Remarks, Introduction and Agenda Review 5 MR. BROOKMAN: We’ll provide an opportunity 6 for each person to introduce him or herself and say 7 your name and organizational affiliation. I’ll start 8 over here with Tim. 9 MR. BALLO: Tim Ballo, EarthJustice. 10 DR. SACHS: Harvey Sachs, American Counsel 11 for an Energy Efficient Economy. 12 MR. STANONIK: Frank Stanonik, Air 13 Conditioning, Heating and Refrigeration Institute. 14 MR. HARRIS: Jeff Harris, Alliance to Save 15 Energy. 16 DR. AMRANE: Karim Amrane, Air Conditioning, 17 Heating and Refrigeration Institute. 18 MR. BROOKMAN: Please. 19 MS. Raymond: Kristen Raymond, Department of 20 Justice. 21 MR. BROOKMAN: Thank you. You want to say 22 your name, please. There’s a microphone right there. 23 MR. DURON-LICONAS: Nery Duron, Department 24 of the Navy. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8

MR. BROOKMAN: Thank you. 1 MR. PARKER: Graham Parker, Pacific 2 Northwest National Laboratory. 3 MS. ARMSTRONG: Ashley Armstrong, Navigant 4 Consulting. 5 MS. PINTO: Francine Pinto, General 6 Counsel’s Office, DOE. 7 MR. STAS: Eric Stas, DOE, General Counsel. 8 MR. KHAN: Mohammed Khan, DOE. 9 MR. DARLINGTON: Adam Darlington, Navigant 10 Consulting. 11 MR. WINIARSKI: David Winiarski, Pacific 12 Northwest National Laboratory. 13 MR. BROOKMAN: Do the mikes work okay? 14 Yeah. That’s okay, that’s okay. It’s a matter of 15 courtesy. 16 I think all of you are familiar with these 17 proceedings and the specific kinds of analyses that 18 are performed. I’m going to run through the agenda 19 very quick. 20 Following this brief Agenda Review, there is 21 another Rulemaking Overview and then another 22 opportunity for each of you to make brief comments, 23 issues that are important to you, summary remarks, if 24 you will, at the outset. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9

Following that, we’ll have a description of 1 the Determination of the Scope and Test Procedures. 2 We’ll take a break midmorning, as required. Following 3 that, Market Assessment and Engineering Analysis and 4 then Life-Cycle Cost and Payback Period Analyses. 5 If we -- we’ll go as quickly as we can, 6 efficiently as we can, and still cover all this 7 material effectively. If we’re still going at 12:30, 8 we’ll take lunch, and following that, National Impact 9 Analysis. We’ll take a break mid-afternoon, as 10 needed, Proposed Standard Levels following that, and 11 then, once again, in the late afternoon, if that’s the 12 correct time for this, there’s another opportunity for 13 each of you to make summary remarks, raise other 14 issues that haven’t been raised so far, and add your 15 comments one more time to the record. 16 Then we’ll finish with Next Steps and 17 Closing Remarks from the Department of Energy. 18 That’s the plan for the day. Questions? 19 Comments here at the outset? 20 (No response.) 21 MR. BROOKMAN: I ask for your consideration. 22 Please speak one at a time. Please say your name for 23 the record. This will be a recorded session. There 24 will be a complete transcript of the meeting available 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 0

on the DOE website. 1 I’m going to be queuing people to speak. I 2 also wish to encourage follow-on comments. I’ll be 3 trying to recognize you by name as best I can and then 4 if you would, please, keep the focus here. Turn off 5 your cell phones or put them on silent and if you 6 could be concise, focused, share the air time with 7 your colleagues, that would be a great thing, and 8 that’s all I think that I want to cover. 9 Do you wish to introduce yourself? 10 MR. KENDALL: Mark Kendall with Burnham 11 Hydronics. 12 MR. BROOKMAN: Thank you, Mark. I think we 13 gave everybody a chance to do that. Okay. So now is 14 an opportunity for anybody that wishes to do so, to 15 make brief summary remarks here at the outset, issues 16 of concern, focus areas that you’d like to raise at 17 this time? 18 (No response.) 19 MR. BROOKMAN: No takers at this time. 20 Okay. So then let’s proceed. All of you have 21 received a packet of the slides that will be covered 22 in the presentation format. There are query boxes 23 throughout the slides to specifically ask for your 24 comments and also you’ve received a copy of the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 1

Federal Register Notice. 1 So let’s proceed with the presentation. 2 Determination of Scope and Test Procedures 3 MR. DARLINGTON: Okay. Good morning, 4 everyone. My name’s Adam Darlington. 5 I’m going to be discussing the first several 6 stages of our NOPR Analyses for the review of ASHRAE 7 Standard 90.1-2007. 8 The first stage was the Determination of 9 Scope. Then I’ll talk about the Test Procedures, the 10 Market Assessment and Engineering Analysis, and then 11 I’ll be turning it over to my colleagues at PNNL, 12 Pacific Northwest National Lab, and they’ll discuss 13 the Life-Cycle Cost and Payback Period Analysis as 14 well as the National Impact Analysis. 15 Now, ASHRAE Standard 90.1-2007 covers a 16 multitude of equipment types and basically the Energy 17 Policy and Conservation Act directs DOE to consider 18 amended standards only for certain commercial air 19 conditioning, heating, and water-heating equipment for 20 which ASHRAE Standard 90.1 increases the efficiency 21 level in comparison to existing Federal standard 22 levels. So, therefore, DOE began by determining the 23 scope of its review. 24 Now, in order to begin the determination of 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 2

the scope, DOE first looked at all the equipment 1 classes in ASHRAE Standard 90.1-2007 where it appeared 2 that Standard 90.1-2007 had changed the efficiency 3 levels in comparison to the existing Federal 4 standards. Then DOE went through each equipment type 5 one by one to determine whether or not there was in 6 fact a change in efficiency level from the Federal 7 standards. 8 And this slide shows a summary of the 9 equipment classes where there appeared to be a change 10 between the ASHRAE Standard 90.1-2007 levels and the 11 existing Federal levels, and it also shows the DOE’s 12 preliminary determination. So I’ll briefly go through 13 each equipment class. 14 So first, for gas-fired commercial warm air 15 furnaces, ASHRAE Standard 90.1-2007 changed the 16 efficiency metric from thermal to combustion 17 efficiency and added three design requirements for 18 this type of equipment. 19 DOE reviewed the change in the efficiency 20 metric and upon comparing the definition between the 21 thermal efficiency requirement and the existing 22 Federal standards in the combustion efficiency 23 requirement as it related to ASHRAE Standard 90.1- 24 2007, DOE determined that they both had the same 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 3

definition which was 100 percent minus the flue 1 losses, and therefore the change was in name only and 2 did not constitute an actual change or affect the 3 efficiency of these products. 4 And with regard to the design requirements, 5 they did not change the performance standard 6 efficiency level, so there was no change there. 7 Similarly, for oil-fired commercial warm air 8 furnaces, ASHRAE Standard 90.1-2007 adds three design 9 requirements and these do not affect the actual 10 efficiency level and therefore DOE was not required to 11 perform any further action. 12 And then, next, we have three-phase, small13 duct, high-velocity air-cooled air conditioners and 14 heat pumps. Sorry. I actually skipped the three15 phase through the wall. 16 So we have three-phase through the wall air17 cooled air conditioners and heat pumps and they’re 18 kind of similar to a three-phase, small-duct, high19 velocity air-cooled air conditioners and heat pumps, 20 so I’ll talk about them both. 21 Basically, ASHRAE Standard 90.1-2007 breaks 22 each of these equipment classes into a separate 23 equipment class and sets a standard -- sets an 24 efficiency level -- I’m sorry -- for them where there 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 4

had been none before. And both of these equipment fall 1 into a more general equipment class of small-duct air 2 conditioning -- I’m sorry -- of three-phase air 3 conditioning and heating equipment, less than 65,000 4 BTUs per hour, and the Energy Independence and 5 Security Act of 2007 sets standards for that equipment 6 and these standards and the Energy Independence and 7 Security Act of 2007 would supersede any ASHRAE 8 Standard 90.1-2007 efficiency levels and so DOE must 9 enforce those standards. 10 So next on the table is commercial packaged 11 air-cooled air conditioners with a cooling capacity at 12 or above 760,000 BTUs per hour, and ASHRAE Standard 13 90.1-2007 sets standards for this equipment. However, 14 in EPCA, EPCA defines commercial packaged air 15 conditioning and heating equipment in terms of small, 16 large and very large and the capacities only go up to 17 760,000 BTUs per hour. 18 So DOE did not have the authority to 19 consider equipment larger than 760,000 BTUs per hour 20 and therefore did not do any further action on these 21 products. 22 With regard to water-cooled and 23 evaporatively-cooled commercial packaged air 24 conditioners and heat pumps with the cooling capacity 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 5

at or above 135,000 BTUs and less than 240,000 BTUs 1 per hour, basically ASHRAE Standard 90.1-2007 sets 2 efficiency levels for this equipment differentiated by 3 the type of heating that the equipment uses. 4 Now, Federal standards do not set separate 5 standard levels based on the type of heating and one 6 of the heating types that ASHRAE Standard 90.1-2007 7 sets the level for is actually below the current 8 Federal standards and therefore that would possibly 9 allow for backsliding there and DOE cannot consider 10 those levels. 11 The next equipment class was water-cooled 12 and evaporatively-cooled commercial packaged air 13 conditioners and heat pumps with a cooling capacity at 14 or above 240,000 BTUs per hour and less than 760,000 15 BTUs per hour, and for these equipment no Federal 16 standard currently exists. 17 ASHRAE Standard 90.1-2007 does set 18 efficiency levels for this equipment and they are 19 within DOE’s definitions of small, large and very 20 large air conditioning and heating equipment and 21 therefore DOE did further consider the ASHRAE Standard 22 90.1-2007 efficiency levels for this equipment. 23 And next we have commercial packaged boilers 24 for which ASHRAE Standard 90.1-2007 separates the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 6

existing two equipment classes into 10 equipment 1 classes. It changes the efficiency levels for all the 2 equipment classes and for eight of those 10 equipment 3 classes, it changes the efficiency metric from 4 combustion to thermal efficiency, and in this case DOE 5 again determined that it would further consider the 6 ASHRAE Standard 90.1-2007 efficiency levels as well as 7 higher levels as mandated by EPCA. 8 MR. BROOKMAN: Let’s pause here and take 9 some comments on DOE’s preliminary determination. 10 Frank? 11 MR. STANONIK: Frank Stanonik with AHRI. 12 Just a couple quick comments. 13 First of all, just to make sure everyone is 14 aware, as far as the gas-fired commercial water heater 15 and furnaces, there’s finally officially -- it was 16 approved in January -- an ASHRAE Addendum to 90.1 that 17 in fact makes the change from the descriptor of 18 combustion efficiency back to thermal efficiency for 19 furnaces. 20 So that was actually -- I’ll just say there 21 was some confusion within ASHRAE 90.1 and there is an 22 addenda because I just checked on this. If you call 23 ASHRAE, you will not get a printed version of that 24 addenda, but it’s been finalized. It’s been approved. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 7

They just aren’t going to print one until they do the 1 2010 edition of 90.1, but it was approved by the 2 ASHRAE Board in January. 3 So it just reinforces your decision, but 4 they basically acknowledge that it should be -- the 5 correct descriptor was thermal efficiency for warm air 6 furnace. 7 As far as the -- and this is more of a 8 clarification I’ll ask Francine. For the stuff over 9 the commercial packaged AC over 760,000 (BTUs), okay, 10 you’re saying DOE doesn’t have the authority. I guess 11 I just want to make sure I understand that. They 12 don’t -- they’ve not been assigned the authority, but 13 isn’t there some provision that if the Secretary 14 determined that there was some, you know, opportunity 15 to save energy they could? 16 They’re not necessarily absolutely 17 constrained to what was specifically assigned in the 18 legislation, right? 19 MS. PINTO: I’m going to defer to you. 20 MR. STAS: I think it’s the definition of 21 the different units. 22 MR. BROOKMAN: Eric Stas, get close to the 23 microphone. 24 MR. STAS: If I recall, EPCA defines these 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 8

air conditioning units, you know, small, medium and 1 large, yeah, and that’s where the size limitations 2 come in. This would be that provision where the 3 Secretary can look at additional equipment. 4 MS. PINTO: The whole process to go through. 5 MR. STANONIK: Yeah. Okay. And it’s not a 6 big point. It’s more to just kind of reinforce what I 7 tried to remember, I think I remember. Obviously in 8 this product, this is just, you know, -- again, it’s 9 not a big deal because at the moment there’s not a lot 10 to talk about. 11 I just wanted to ask the question, and then, 12 lastly, it finally clicked as Adam was describing it, 13 for the equipment in the 135 to 240,000 BTU range, 14 90.1 has a slightly lower specification if you’re not 15 using electric resistance heating and that was put in 16 there because basically they’re using a gas heater. 17 Okay. 18 You now have introduced into that system a 19 heat exchanger which causes some pressure drop that 20 doesn’t exist otherwise and I thought that adjustment 21 was just recognizing the physical effect of that 22 heating element. 23 MR. BROOKMAN: Karim? 24 DR. AMRANE: Karim Amrane, AHRI. I guess 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 9

two things here. I mean that product category has 1 been in 90.1 for a long time. 2 My understanding is it was revised in 1999. 3 ASHRAE 90.1 had the two levels of efficiency for 4 products with gas heating equipment and for products 5 without gas heating equipment. It was there. It was 6 a footnote in ASHRAE 90.1 that DOE did not pick up at 7 that time. 8 So in 2001, when DOE adopted ASHRAE 90.1-99, 9 DOE adopted just one level of efficiencies and now 10 DOE’s saying, well, you know, it’s going to be a 11 backsliding of the standards. Well, it was already 12 there. It has always been there and actually it 13 exists for all the large packaged equipment. 14 If you look at the air-cooled products, you 15 have a 0.2 reduction. So it’s just for the category, 16 DOE missed, you know, it in 2001, but ASHRAE never 17 backslided the standard. It has always been there. 18 MR. BROOKMAN: And you’re going to address 19 backsliding in a moment. 20 Frank, do you want to keep going or are you 21 finished? 22 MR. STANONIK: Oh, no. That was it. I 23 mean, I want to hit every one there, I think, with the 24

scope. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 0

MR. BROOKMAN: Harvey? Harvey Sachs. 1 DR. SACHS: Harvey Sachs, ACEEE. I guess 2 the question for my colleagues at AHRI, with respect 3 to the packaged air conditioners larger than 760,000 - 4 - 740 -- whatever, 760,000 BTUs per hour, are annual 5 sales in the range of 10, 100, 1,000? Is this a 6 significant manufacturing class? 7 DR. AMRANE: Right. This is Karim Amrane, 8 AHRI. I guess, you know, your interpretation of the 9 law is right. The impact does not go beyond 760,000 10 BTUs. So I guess we agree with that. 11 To be honest with you, there are no products 12 that cool in that capacity range anyway. So there is 13 no need to have a standard for that product. 14 DR. SACHS: Harvey Sachs repeating. There 15 is no equipment currently manufactured larger than 16 760,000 BTUs per hour as commercial packaged air 17 conditioners? 18 DR. AMRANE: Karim Amrane. That’s correct. 19 DR. SACHS: Thank you. 20 MR. BROOKMAN: Thank you. Tim Ballo? 21 MR. BALLO: Tim Ballo, EarthJustice. Just 22 reiterating a point we made in written comments on the 23 Notice of Data Availability, we believe that the 24 department’s interpretation that requires them to only 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 1

review ASHRAE levels when there has been an amendment 1 that results in a strengthening of the ASHRAE 2 Standard, we believe that’s incorrect and hope that 3 the new Administration, the people that are coming in, 4 will be willing to take a look at this provision of 5 the statute again and reconsider the department’s 6 interpretation. 7 MR. BROOKMAN: Would you give a citation or 8 is that just in your written comments? 9 MR. BALLO: It would be in the written 10 comments. It’s the one cited at the outset here, 42 11 U.S. Code 6313(a)(6). 12 MR. BROOKMAN: Thank you. Additional 13 comments about the department’s preliminary 14 determinations as shown in this slide? Because we’re 15 going to move on otherwise. Karim? 16 DR. AMRANE: Karim Amrane. I guess I’ll 17 have general comments about the three-phase through 18 the wall and the three-phase small-duct, high 19 velocity. 20 First of all, on the small-duct, high21 velocity, ASHRAE 90.1, yes, indeed, included that 22 product class, I believe, in the 2007 version by 23 mistake. It was removed and somehow when the final 24 standard was put together, that product class ended up 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 2

in the standard, but ASHRAE 90.1 today doesn’t have a 1 product class for small-duct, high-velocity system, 2 and it’s because those products on the residential 3 side under NAECA are covered through the -- I guess 4 there is a product class for them but the DOE has 5 allowed manufacturers to apply for waivers and I think 6 that has worked for the manufacturers. 7 So I don’t think we’re advocating for 8 product class for small-duct, high-velocity systems. 9 On the other hand, with the through-the-wall 10 products, what 90.1 tried to do -- and the 90.1 11 Committee, by the way, is willing to be consistent 12 with the residential rulemaking. It is DOE that 13 established product class for through-the-wall product 14 and it is DOE that established an efficiency standard 15 for through-the-wall at the 10.9 SEER that we have 16 today because of good reasons. There are issues with 17 the product. 18 ASHRAE tried to be consistent with DOE and 19 adopted the same product classes, the same efficiency. 20 Now, the ASHRAE Standard was amended well before the 21 Energy Independence and Conservation Act was enacted 22 and the Energy Independence and Conservation Act never 23 intended to have that apply to the through-the-wall 24 product. That was not the intent. The intent was for 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 3

that to apply to the conventional, you know, central 1 air conditioner product. 2 So I guess I’m confused. If DOE does not 3 intend to be consistent with the NAECA product, I 4 guess that’s what DOE is saying, is DOE intending to 5 have a separate product class for through-the-wall as 6 the level of the other product which DOE, by the way, 7 couldn’t justify what DOE did in its rulemaking on 8 central AC? It does not make sense. 9 So I guess if DOE does not intend to adopt 10 the same levels as the NAECA levels for similar 11 products, then we will be recommending that there be 12 no product classes for through-the-wall because it’s 13 going to be confusing to the marketplace. We’re going 14 to have products under NAECA with one level and you’re 15 going to have through-the-wall products covering their 16 impact with a different level. It does not make sense 17 to have the same product with a single phase and a 18 three-phase. 19 So either we are consistent all the way or 20 we are not but in either case, let’s not create a 21 product class -- 22 MR. BROOKMAN: So would you restate just 23 your recommendation briefly? 24 DR. AMRANE: My recommendation is either we 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 4

are consistent with NAECA and we adopt the levels that 1 we have in NAECA today for through-the-wall products. 2 This is what we recommended -- this is what ASHRAE 3 90.1 did, but if DOE for legal reasons cannot adopt 4 those levels, then let’s not create a product class 5 for through-the-wall products under impact because 6 it’s going to be confusing to the marketplace. 7 MR. BROOKMAN: Thank you. Thank you. Okay. 8 DR. SACHS: Clarification. 9 MR. BROOKMAN: Yes. Yes, Harvey Sachs. 10 DR. SACHS: Harvey Sachs, ACEEE. With 11 respect to the small-duct, high-velocity air-cooled 12 air conditioners and heat pumps, the record is pretty 13 confusing but the intent is clear. 14 The point I want to make is that these 15 products use outdoor units, condensing units that are 16 bought from manufacturers other than the integrators 17 who are the small-line or high-velocity manufacturers. 18 So what we’re seeing is a combination of 19 somebody’s three-phase condensing unit instead of 20 their one-phase condensing unit to make the final 21 product and we think the consistency with the 22 standards for the single-phase, small-duct, high23 velocity is quite appropriate under those 24 circumstances. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 5

MR. BROOKMAN: Okay. Thank you. Additional 1 and perhaps final comments on these preliminary 2 determinations before we move on? 3 (No response.) 4 MR. BROOKMAN: So let’s go then. 5 MR. DARLINGTON: Now for commercial boilers, 6 DOE had to be sure that the ASHRAE Standard 90.1-2007 7 efficiency levels were in fact an increase as compared 8 to the Federal standard levels. So DOE had to 9 determine whether the levels would or would not 10 violate EPCA’s anti-backsliding clause. 11 Basically, what the anti-backsliding clause 12 is, as the slide shows, it’s a clause in EPCA that 13 mandates that the Secretary may not prescribe any 14 amended standard that increases the maximum allowable 15 energy use or decreases the minimum required energy 16 efficiency. 17 Now, in many cases ensuring that some -- 18 that a product is not -- I’m sorry -- a new standard 19 is not violating the anti-backsliding clause is as 20 simple as just comparing two efficiency levels. 21 However, in the case of commercial packaged 22 boilers that was not the case because of the 23 efficiency metric change. Basically, there’s no 24 direct relationship between thermal and combustion 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 6

efficiency, no way to easily mathematically convert 1 from one to the other and because of this, DOE had to 2 rely on an analytical approach to determine the 3 relative stringency of the thermal efficiency levels 4 in ASHRAE Standard 90.1-2007 compared with the 5 existing Federal standard levels. 6 Basically in order to compare the different 7 levels, DOE looked at the average relationship between 8 the thermal -- the relationship between the average 9 thermal efficiency and the combustion efficiency for 10 equipment that was currently available in the market 11 that minimally complied with the existing Federal 12 standard levels which that would be equipment very 13 near 80 percent combustion efficiency for gas-fired 14 equipment and 83 percent combustion efficiency for 15 oil-fired equipment. And basically DOE used the 16 relationship between the combustion and thermal 17 efficiencies for this equipment to establish a 18 relationship between thermal and combustion efficiency 19 for each equipment class. 20 DOE reviewed the Institute of Boiler and 21 Radiator Manufacturers’ (IBR) Directory as well as 22 manufacturer literature which provided the thermal and 23 combustion efficiency ratings that DOE used in its 24 analysis. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 7

Now, in addition to DOE’s analytical 1 approach, DOE also realized that there were several 2 other important factors to consider when determining 3 whether or not the ASHRAE Standard 90.1-2007 levels 4 would be backsliding in comparison to the existing 5 Federal levels. 6 And the first factor, as shown here on the 7 slide, is the accuracy of the thermal efficiency 8 ratings currently being reported in the equipment 9 literature and in the IBR database. 10 Now, since there is no existing requirement 11 for thermal efficiency, DOE has not mandated that 12 manufacturers test for thermal efficiency and 13 therefore manufacturers may have several different 14 ways of reporting thermal efficiency and one way might 15 be to test using the methods specified in the 16 Hydronics Institute Boiler Testing Standard 2000 which 17 is the industry test standard for commercial boilers. 18 Some manufacturers may test for it using a 19 different method or may estimate it from the results 20 of the combustion efficiency testing or some 21 manufacturers seem to just assume that the thermal 22 efficiency is the same as the combustion efficiency 23 rating and report that number for both thermal and 24 combustion efficiency or they may estimate it based on 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 8

any combustion of factors as really there’s no 1 indication of how that’s done in manufacturer 2 literature. 3 Now, this can in turn lead to inaccurate 4 thermal efficiency reporting which would add some 5 uncertainty to DOE’s analytical approach described on 6 the last slide in comparing thermal and combustion 7 efficiency. And now with DOE’s proposed standards, the 8 thermal efficiency testing would be required which 9 would give customers a better idea of the true 10 efficiency of this equipment which leads to a second 11 point which are the benefits of switching to the 12 thermal efficiency metric. 13 It’s a more complete efficiency metric. It 14 accounts for both the flue losses and the jacket 15 losses as opposed to combustion efficiency which only 16 accounts for the flue losses and leaves jacket losses 17 unaccounted for. 18 Thermal efficiency better reflects the total 19 energy losses and rating commercial boilers using 20 thermal efficiency will give customers a better use of 21 the actual -- a better idea of the actual energy use, 22 as I said. 23 And then the third factor, which DOE also 24 gives some weight to, is that there will be an overall 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 2 9

energy savings if DOE does adopt the ASHRAE Standard 1 90.1-2007 efficiency levels. 2 So based on all of these factors and the 3 analytical approach results, DOE has tentatively 4 concluded that the ASHRAE Standard 90.1-2007 levels do 5 represent an increase in efficiency when compared to 6 the existing Federal standard levels and as a result, 7 DOE performed further analysis on the ASHRAE Standard 8 90.1-2007 efficiency levels as well as higher levels, 9 levels more stringent than the ASHRAE Standard 90.1- 10 2007 efficiency levels. 11 MR. BROOKMAN: Let’s pause there. Comments 12 on these two slides, more details on the department’s 13 approach? Frank? 14 MR. STANONIK: Frank Stanonik, AHRI. Yeah. 15 Just a quick comment on this issue about the 16 backsliding. 17 While I think to some degree, whether it was 18 directly or indirectly, I’m glad that it’s been kind 19 of recognized that because of the fact there’s not any 20 fixed constant relationship between thermal efficiency 21 and combustion efficiency, that the question of 22 backsliding is not simply, if you will, looking at two 23 numbers, and what I want to emphasize, because I’m not 24 sure in an earlier rulemaking that it really got 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 0

completely, I’ll say, appreciated, is that even if you 1 had as an example, if I had a product today that was 2 83 percent combustion efficiency, it could have a 3 thermal efficiency quite a bit lower. 4 Let’s say for sake of discussion, let’s say 5 80 percent thermal efficiency, all right, and if the 6 requirement, just call that Frank’s model, okay, if 7 the requirement was now that I had to have an 81 or an 8 82 percent thermal efficiency, okay, -- I did that 9 backwards. I’m sorry. 10 I’m trying to make the point that you could 11 have a product that would meet the thermal efficiency 12 requirement, might have a lower combustion efficiency, 13 but it is still a more efficient product than what the 14 current minimum requires and so that was -- I think 15 that this analysis is starting to recognize, if you 16 will, the significance of the thermal efficiency and 17 how it’s not just a question of, you know, is 83 18 higher than 82. Well, just look at the numbers and, 19 you know, the absolute values and say yes, but there’s 20 a little more to it, and I think the analysis is 21 starting to capture that. 22 MR. BROOKMAN: You’re endorsing the 23 Department’s approach? 24

MR. STANONIK: Yes. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 1

MR. BROOKMAN: Just want to be clear. Jeff? 1 MR. HARRIS: Jeff Harris, Alliance to Save 2 Energy. Just out of curiosity, given that there might 3 be some concern that some manufacturers report the 4 same number for thermal and combustion efficiency as a 5 test of this analysis, were those cases where such -- 6 where you had the same numbers screened out? 7 MR. DARLINGTON: Yes, they were. DOE did 8 not use any efficiency ratings where the same number 9 was reported for both thermal and combustion 10 efficiency ratings. So DOE used only those where the 11 combustion efficiency was in fact higher than the 12 thermal efficiency. 13 MR. BROOKMAN: Thank you, Adam. So 14 additional comments on the backsliding slides before 15 we move on to Test Procedures? 16 (No response.) 17 MR. BROOKMAN: Okay. Then we’ll move on to 18 Test Procedures then. 19 MR. DARLINGTON: Okay. I’ll now give a 20 brief overview of the Test Procedure changes that DOE 21 is proposing in order to facilitate the proposed 22 standards for commercial packaged boilers. 23 Now, because DOE is proposing to adopt 24 efficiency levels that use the thermal efficiency 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 2

metric, DOE is also going to be required to add a 1 definition of thermal efficiency to its test 2 procedures for commercial packaged boilers and now the 3 definition DOE is proposing to add is here on the 4 slide and it is consistent with the current definition 5 in the Hydronics Institute Boiler Testing Standard 6
2000. 7 In addition, DOE will need to amend the 8 current definition of combustion efficiency. 9 Currently, there’s a statement in there that refers to 10 combustion efficiency as the efficiency descriptor for 11 packaged boilers and since that would now be thermal 12 efficiency for several equipment classes, that would 13 no longer be true. 14 So DOE is -- so this definition shown on the 15 slide is the same as the current definition without 16 that statement. And now, as I think Doug mentioned 17 earlier, throughout the presentation today we’ve got 18 several issues we’d like to highlight and they’re 19 shown in the blue comment boxes at the bottom. 20 And so the first issue today, DOE’s seeking 21 comment on its proposed definitions for thermal 22 efficiency and combustion efficiency for commercial 23 packaged boilers. 24 So now I’ll turn it over to Doug. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 3

MR. BROOKMAN: Thank you. So comments on 1 these listed definitions? Frank? 2 MR. STANONIK: Frank Stanonik, AHRI. I 3 mean, we certainly -- it’s certainly within the 4 concept of those, we agree with them. I mean, you 5 know, I’ll compare them against what we have in our 6 own test procedures guides, but I think they’re very, 7 very similar, if not the same. 8 MR. BROOKMAN: Thank you. That’s helpful. 9 Additional comments on the definitions? 10 (No response.) 11 MR. BROOKMAN: Okay. 12 MR. DARLINGTON: All right. So, in addition 13 to the changes to the definitions, DOE is proposing 14 additional changes to the test procedure. Basically, 15 there are two types of changes DOE’s proposing. 16 The first type would become effective 180 17 days after the publications of the final rule and 18 these procedures are basically changes that would 19 update the existing DOE test procedure to reference 20 the most recent version of the Hydronics Institute 21 Boiler Testing Standard 2000 and that was the revision 22 that was released in June of 2007. 23 And, in addition, these changes would 24 eliminate a reference to an alternate testing method 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 4

for steel boilers which expired on October 23 rd , 2006, 1 and is therefore no longer necessary to include. 2 Then the second type of changes are changes 3 that are necessary to facilitate the standards using 4 the thermal efficiency metric as opposed to the 5 combustion efficiency metric and basically these are 6 just requiring testing for the thermal efficiency as 7 using the method in the Hydronics Institute Boiler 8 Testing Standard 2000 for those equipment classes 9 where the thermal efficiency metric is being used and 10 these would become effective -- these changes would 11 become effective on March 3 rd , 2012, which would be the 12 effective date of the standard. 13 MR. BROOKMAN: Frank? 14 MR. STANONIK: Frank Stanonik, AHRI. Just a 15 quick note on that and we’ll send in a comment. 16 But with the merger and everything else, 17 we’re in the middle of changing all of the standards 18 that existed within either organization to be 19 designated as AHRI Standards and so I’ll send you a 20 comment to indicate officially what the name change is 21 going to be for Boiler Testing Standard (BTS)-2000. 22 The document doesn’t change, just literally the front 23 cover. I’ll let you know what we’re calling it now. 24 MR. BROOKMAN: Thank you. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 5

MR. DARLINGTON: Okay. Now this brings us 1 to the test procedures for dual output boilers. 2 Dual output boilers are boilers capable of 3 producing either heat or steam or hot water. Now, the 4 current standards for all commercial boilers, both 5 steam and hot water, are specified in terms of the 6 combustion efficiency and the current DOE test 7 procedure allows dual output boilers to be tested for 8 their combustion efficiency in steam mode only and 9 then rated using the results of the steam mode testing 10 in both steam and hot water modes. 11 Now, for DOE’s proposed standards, for its 12 small commercial packaged boilers, which would be 13 commercial packaged boilers with input capacity of 14 less than 2.5 million BTU per hour, for dual output 15 boilers of that size, both steam and hot water have 16 proposed standard levels that would be specified in 17 thermal efficiency and for those boilers DOE is 18 proposing to continue to allow these boilers to be 19 tested only in steam mode and then rated for their 20 thermal efficiency in both steam and hot water modes. 21 Now, for large boilers which are boilers 22 larger than 2.5 million BTU per hour, for hot water 23 boilers DOE is proposing standards specified using the 24 combustion efficiency metric while for the steam 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 6

boilers, for large steam boilers, DOE is proposing 1 standards using the thermal efficiency metric. 2 Now, DOE is proposing to continue to allow 3 these boilers to be tested only in the steam mode and 4 then rated in both steam and hot water modes. 5 However, DOE does note that this now would require two 6 tests in the steam mode, one test for combustion 7 efficiency to be used when rating the boiler in hot 8 water mode and then one test for the thermal 9 efficiency to be used when rating the boiler in steam 10 mode. 11 And, in addition, manufacturers could still 12 test and rate dual output boilers separately in each 13 mode if they choose to do so. 14 MR. BROOKMAN: So comments on any of this? 15 Frank? 16 MR. STANONIK: Frank Stanonik, AHRI. On 17 this last point, we really haven’t had internally a 18 lot of discussion about it. I’m not really sure how 19 significant a burden it will be. 20 Obviously, the issue will cause a lot of hot 21 water boilers -- I mean just to make sure everyone 22 understands the reason it specifies combustion 23 efficiency is because for product types of 2.5 24 million, we may be talking about products 5-6-10 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 7

million BTUs per hour to try and run water through 1 that boiler at a 70 degree rise, whatever it specified 2 to rise, for any specified length of time is -- both 3 takes a very long time to set up to get the steady 4 state condition and then also is really a very energy5 intensive test. 6 And so in that case that’s why ASHRAE 7 continued to use the combustion efficiency. It just 8 becomes a very time-consuming, expensive in many ways 9 or at many levels, test to run a boiler of that size 10 and see what it consumes to heat water in 11 significantly large volumes. 12 But as far as this issue of, you know, as a 13 burden of having to test both combustion and thermal 14 in the steam mode, I mean unless Mark has a point set 15 on that, we really haven’t talked about it much yet. 16 MR. BROOKMAN: So maybe in your written 17 comments you can address that. 18 MR. STANONIK: Oh, yes, we definitely will. 19 MR. BROOKMAN: Okay. Mark? 20 MR. KENDALL: Mark Kendall with Burnham. 21 Just to clarify, you’re saying you’ll continue to 22 allow boilers that can generate water and steam to be 23 rated for combustion efficiency in steam-only mode 24 above 2.5 million BTUs per hour and then use that 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 8

rating to determine compliance with the hot water 1 boiler standard. You’re saying you have to test it 2 both ways? 3

MR. DARLINGTON: No. 4 MR. BROOKMAN: Ashley? 5 MS. ARMSTRONG: What you would need to do is 6 you can use the steam-only mode but you have to run 7 both types. You have to run the thermal and the 8 combustion. 9 MR. KENDALL: Okay. 10 MS. ARMSTRONG: Because you have two 11 different structures there. So you could still use 12 the results of the steam for the water. 13 Market Assessment and Engineering Analysis 14 MR. DARLINGTON: And moving on, this brings 15 us to the NOPR analysis for the review of ASHRAE 16 Standard 90.1-2007 and so the next step would be the 17 Market Assessment for the equipment where DOE 18 determined that it was within the scope of review and 19 I’ll remind you that was for commercial packaged 20 boilers as well as for water-cooled and evaporatively21 cooled commercial packaged air conditioners and heat 22 pumps with a coolant capacity at or above 240,000 BTUs 23 per hour and less than 760,000 BTUs per hour. 24 Now, DOE performed a Market Assessment for 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 3 9

commercial packaged boilers. However, in the case of 1 the water-cooled and evaporatively-cooled commercial 2 packaged air conditioners and heat pumps with the 3 cooling capacity at or above 240,000 BTUs per hour and 4 less than 760,000 BTUs per hour, DOE began a Market 5 Assessment but could not identify any equipment 6 currently available on the -- that fell into that 7 equipment category and then, therefore, DOE was unable 8 to do any further analysis for that type of equipment 9 and only did further analysis for commercial packaged 10 boilers which is the focus of the rest of this 11 presentation. 12 Now, the purpose of the Market Assessment is 13 basically to determine the available equipment 14 efficiencies, the manufacturers and shipments 15 information and for the market assessment, DOE 16 typically gathers and reviews information from various 17 sources, usually product directories, manufacturer 18 catalogs, SEC 10-K reports for any publicly-traded 19 manufacturers as well as various other publications. 20 Now, when analyzing equipment, DOE typically 21 begins by categorizing the equipment into equipment 22 classes based upon the type of energy used, the 23 capacity and any other performance-related features 24 that the Secretary deems necessary to justify the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 0

establishment of separate energy conservation 1 standards. 2 Now, DOE is proposing to subdivide the 3 existing two commercial boiler equipment classes into 4 10 equipment classes, based on input capacity, fuel 5 type, output type, and draft type, and the resulting 6 10 equipment classes are shown here on the slide. 7 These are consistent with the equipment classes in 8 ASHRAE Standard 90.1-2007. 9 Okay. So the Market Analysis focused on 10 overall market characteristics as well as 11 characteristics for each individual equipment class 12 and just briefly some overall characteristics. 13 DOE estimated that there were 36,000 14 commercial package boilers shipped in 2007. These 15 were marketed and manufactured under 46 different 16 brand names. 17 The Market Analysis, as I said, the data 18 comes from various sources. One of the main sources 19 for this Market Analysis was the Institute of Boiler 20 and Radiation Manufacturers Ratings for Commercial 21 Boilers and it lists the efficiency of the IBR22 certified boilers as well as defining characteristics, 23 such as the fuel type, input rating, output type and 24 draft type. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 1

In addition to this, DOE also reviewed the 1 Canadian Standards Association International Boiler 2 Database along with the South Coast Air Quality 3 Management District’s Boiler Database to find any non4 AHRI member commercial boiler manufacturers and then 5 for those manufacturers where sufficient information 6 was available through their online manufacturer 7 catalogs and datasheets DOE would add the information 8 for those boilers to its analysis to be included in 9 the analysis. 10 And now more details about the Market 11 Analysis as well as the results of the Market Analysis 12 for each individual equipment class of commercial 13 packaged boiler are in Chapter 2 of the TSD that 14 accompanied the NOPR. 15 Now, dual output boilers, as I mentioned 16 previously, are capable of delivering either steam or 17 hot water. Now many of the boilers listed were 18 capable of delivering steam and hot water and many of 19 these boilers had only a single efficiency rating or 20 the same efficiency rating in both modes of operation 21 and now when that was the case, due to the test 22 procedure which allows these boilers to be tested only 23 in steam mode and then rated in both steam and hot 24 water mode, since that was the case, DOE considered 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 2

boilers with only one efficiency rating. 1 They were classified as only steam boilers 2 because DOE believed that that was -- the rating 3 reflective of the efficiency in steam mode due to the 4 test procedure requirements. 5 And then this is the second issue for which 6 DOE is seeking comment and that would be just 7 basically any data or information that would allow DOE 8 to correlate the two ratings, the hot water mode and 9 the steam mode ratings. 10 MR. BROOKMAN: So you can see the question 11 box there for your consideration. Frank? 12 MR. STANONIK: Frank Stanonik, AHRI. On 13 that particular issue, -- 14 MR. BROOKMAN: Converting the steam ratings 15

-- 16 MR. STANONIK: Right. 17 MR. BROOKMAN: -- in the IBR Directory. 18 MR. STANONIK: Right. Well, historically, I 19 think you’ve -- the analysis has recognized 20 historically within the HI Boiler Certification 21 Program. They simply allowed the hot water rating to 22 be the same as the combustion efficiency rating. 23 I’ll get back with our members. I’m not 24 sure there really is all that much data of 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 3

measurements. I mean, clearly, as this rule goes 1 forward, that’s likely to change, but right now I’m 2 not sure we have a lot of, you know, real information, 3 real data on that simply because in the past it was 4 acknowledged that if you took that steam product and 5 you add the hot water test, it would be at least as 6 good. 7 MR. BROOKMAN: Mark? 8 MR. KENDALL: Mark Kendall with Burnham. 9 You wanted this information so that you can have a 10 larger population of hot water boiler ratings for your 11 analysis? Is that the purpose? 12 MR. DARLINGTON: Yes, to get a better idea 13 of the efficiency in hot water mode. 14 MR. BROOKMAN: Additional comments about 15 this issue? 16 (No response.) 17 MR. DARLINGTON: Okay. The next step in 18 DOE’s review of ASHRAE Standard 90.1-2007 levels for 19 commercial packaged boilers was an Engineering 20 Analysis. 21 Now, the purpose of the Engineering Analysis 22 is to characterize the relationship between increased 23 efficiency and the additional costs necessary to 24 achieve the related increases in efficiency. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 4

Now, DOE developed a set of cost efficiency 1 results that demonstrate the increase in equipment 2 costs to a mechanical contractor that result from 3 achieving increased efficiency for a number of 4 representative commercial packaged boilers and the 5 results of this analysis, as shown, is used in the 6 downstream analysis, the Life-Cycle Cost and Payback 7 Period Analysis as well as the National Impacts 8 Analysis. 9 DOE’s general approach to the Engineering 10 Analysis was an efficiency level approach which DOE 11 chose due to the wide variety of boiler designs 12 available in the market in each equipment class. 13 Now, this allows DOE to examine the relative 14 costs of increasing the energy efficiency without 15 having to focus on specific design options that 16 manufacturers would employ to achieve these increases 17 in efficiency. 18 So DOE considered only the efficiency levels 19 that were available in the market as determined in the 20 Market Assessment and DOE gathered baseline costs and 21 costs for incremental increases in efficiency through 22 discussions with mechanical contractors. 23 DOE chose to focus on several representative 24 output, gross output capacities for data collection. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 5

DOE looked at the output capacities as opposed to the 1 input capacities because the size of the commercial 2 boiler is most often specified based on the gross 3 output required for the application and the input 4 capacity would vary, based on the thermal efficiency 5 of the boiler. 6 So DOE focused its data collection efforts 7 on the four representative gross output capacities 8 that were previously identified in the April 2000 9 analysis and those were 400, 800 and 1,500 KBTU per 10 hour for small commercial packaged boilers and 3,000 11 KBTU per hour for large commercial packaged boilers. 12 MR. BROOKMAN: Harvey Sachs? 13 DR. SACHS: Harvey Sachs, ACEEE. I would 14 like to turn to Slide 20 and point out again that 15 this, and the analysis described on Slide 21, are 16 assertions and challenge the Department to go back and 17 document their validity. 18 It is clearly the case at some point in time 19 there’s an increase in cost for increasing efficiency. 20 We do not believe that the Department has established 21 at any time that if we look at a time series, 22 including the improvements in manufacturing, 23 improvements in design, that costs to the buyer 24 increase, even with significant changes in efficiency. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 6

That may even be true for this class of 1 products which are not produced in huge numbers, but 2 we are concerned that the Department continues to 3 adopt methodologies -- to utilize a methodology which 4 has not been verified, although there is an abundant 5 record from the Department’s own proceedings to allow 6 that empirical review to be done. 7 We think this is an important point as we go 8 forward on all of these standards rulemakings, not 9 just this one. 10 MR. BROOKMAN: Okay. Thank you. Karim? 11 DR. AMRANE: Karim Amrane, AHRI. Again, I 12 disagree with Harvey on this. 13 I think there’s plenty of evidence that as 14 efficiency increases the cost of the equipment 15 increases. I mean, there are rulemakings and there’s 16 data available. So I don’t think we need to go into 17 that in this discussion today, but there is a lot of 18 evidence. 19 MR. KHAN: Mohammed Khan, DOE. I appreciate 20 both comments, but I just want to add that, again to 21 help the Department make its analysis as accurate, 22 complete and robust as possible, we’re always looking 23 for additional data, any new data that would become 24 available to help in that regard. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 7

DR. SACHS: Harvey Sachs. Thank you very 1 much, Mohammed and Karim. 2 The point of my prior comment was to call 3 for the Department to do that review off its estimates 4 of increased costs versus the historical record. 5 There are some indications for some product classes in 6 the peer-reviewed literature, some of which was 7 commissioned by the Department. 8 Karim has pointed out an important issue. 9 Implicitly, that we have to control for unpredicted 10 changes in the prices of commodities for changes in 11 refrigerants and things like this. 12 Nonetheless, to continue for many years to 13 use an asserted -- to use a methodology that is 14 asserted to be true without an effort to verify seems 15 to me to be something which is unfair to the entire 16 community, including the manufacturers. 17 MR. BROOKMAN: Okay. Thank you. 18 MR. DARLINGTON: Okay. And continuing on 19 with the Engineering Analysis, so DOE’s Engineering 20 Analysis involved first collecting the data, then 21 aggregating the data and identifying the relationship 22 between costs and efficiency. 23 Now, to collect data DOE identified several 24 groupings of equipment with similar construction 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 8

across a range of efficiencies and different 1 manufacturers and utilizing different designs for each 2 equipment class, and then for the equipment that DOE 3 identified, DOE contacted mechanical contractors and 4 obtained pricing for the selected equipment. 5 Now, for the small commercial boiler 6 equipment classes in particular, DOE collected data at 7 the three aforementioned representative capacities, 8 then normalized the data by capacity to get one 9 representative capacity of 800 KBTU per hour and that 10 was the median of the three small representative 11 capacities. 12 Now then, for each of the equipment classes, 13 DOE aggregated all of the cost efficiency data and fit 14 a curve that best characterized the cost efficiency 15 relationship. 16 Then DOE treated the levels in the ASHRAE 17 Standard 90.1-2007 as a baseline for comparison 18 purposes and subtracted those costs to get the 19 incremental costs of increasing -- of going to 20 efficiency levels higher than ASHRAE Standard 90.1- 21
2007. 22 Now, the results of the Engineering Analysis 23 are a set of cost efficiency results that show the 24 average costs to increase the efficiency of a boiler 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 4 9

in each equipment class and it should be noted that 1 they don’t represent any manufacturer or single boiler 2 construction or design or material but instead are an 3 average of the average cost efficiency relationship 4 across all manufacturers and designs for the given 5 equipment class and the results data and additional 6 details are provided in Chapter 3 of the TSD. 7 MR. BROOKMAN: Comments on the method? 8 Frank? 9 MR. STANONIK: Frank Stanonik, AHRI. And 10 this is just really a question for my understanding. 11 It’s certainly not a criticism. 12 When you were looking at the costs of 13 boilers, I’m assuming you just said, okay, here’s a 14 certain efficiency level and what does this -- you 15 know, steam or hot water, what would be the cost of 16 it, and you didn’t necessarily look at, let’s say, the 17 specific design or the specific basic construction. 18 What I’m trying to differentiate is clearly 19 you have a lot of cast iron boilers, you have what 20 might be called a copper tube boiler or whatever, all 21 of which will be in this range. They all compete. 22 I just wonder in the analysis whether there 23 was some looking at those differences. 24 MS. ARMSTRONG: This is Ashley. I can say 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 0

that they were all included. 1 MR. STANONIK: Okay. 2 MS. ARMSTRONG: So we looked for a variety 3 and that’s why Adam pointed out at the end that the 4 results are aggregated, so that you have a bunch of 5 different types where you might see large differences 6 in costs because of the material or the specific 7 construction, but all those types were included in the 8 analysis. 9 MR. STANONIK: Okay. 10 MR. KHAN: Mohammed Khan, DOE. Another way 11 that was captured was the fact that we didn’t look at 12 just one manufacturer’s design. We were looking 13 across manufacturers. We were automatically going to 14 capture the different kinds of designs for those. 15 MR. BROOKMAN: Harvey Sachs. 16 DR. SACHS: You may have put this in the TSD 17 and it may have slipped by me. This is Harvey Sachs. 18 In your cost curves, did you include the 19 discontinuities represented by condensing units and 20 then try to interpolate from those back down into the 21 non-condensing? 22

MR. DARLINGTON: No. 23 MS. ARMSTRONG: No. We got separate costs 24 for each. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 1

MR. BROOKMAN: Ashley, thank you. All set? 1 MR. DARLINGTON: Thank you. 2 MR. BROOKMAN: Okay. Additional comments on 3 this? 4 (No response.) 5 MR. DARLINGTON: Okay. And that’s the end 6 of mine. So with that, I’ll turn it over to Dave 7 Winiarski. 8 MR. BROOKMAN: Thank you. You want to take 9 a break here? Yeah? Okay. Let’s take a break here. 10 (Recess.) 11 MR. BROOKMAN: So let’s start back up and 12 Dave Winiarski is going to be presenting Life-Cycle 13 Cost and Payback Period Analysis. 14 Life-Cycle Cost and Payback Period Analysis 15 MR. WINIARSKI: Okay. All right. Well, as 16 Doug said, my name’s David Winiarski. I’m with 17 Pacific Northwest National Laboratory, and I’ll be 18 explaining some of DOE’s Life-Cycle Cost and Payback 19 Period Analysis that was done for the commercial 20 boiler products as well as following that explaining 21 DOE’s National Impact Analysis. 22 To start off with, what’s the purpose of the 23 Life-Cycle Cost Analysis? 24 Essentially, what DOE’s trying to do is to 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 2

characterize the reduction in operational expenses 1 that will occur for adoption of higher-efficiency 2 standard levels for commercial boilers as well as the 3 increases in installed costs, first costs and 4 installation costs, that would also come with those 5 higher-efficiency boilers, and then to bring those 6 together into a resultant life-cycle cost to a 7 customer, the total net expenses over the life of the 8 commercial boiler. 9 In addition to the Life-Cycle Cost Analysis, 10 DOE also does an analysis of simple payback periods 11 for higher-efficiency standards for commercial 12 boilers. When I say higher standards, I’m referring 13 to standards higher than what DOE has determined to be 14 the appropriate baseline for this analysis which is 15 the 90.1-2007 efficiency levels for the 10 classes of 16 commercial packaged boilers that were identified 17 previously. 18 The Life-Cycle Cost Analysis is primarily 19 composed of three different components. The first of 20 those is an attempt to estimate the energy use that 21 would -- and the reduction in energy use that would 22 come from higher-efficiency boilers. 23 In addition, in order to come up -- because 24 this is done from the customer’s perspective, in order 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 3

to come up with what the customer’s cost for purchase 1 of those higher-efficiency boilers is, we have to take 2 the data that was developed in the Engineering 3 Analysis which was based on contractor prices, and 4 convert that to a customer cost, and we do that by 5 looking at the mark-ups for a simplified distribution 6 chain, going from the contractor’s first purchase to 7 the actual installation at the customer site. 8 With those two sections of the analysis, we 9 bring them together into actually doing life-cycle 10 cost calculations and simple payback calculations. 11 Those calculations are relatively straightforward. We 12 do have to bring in some other data to do that and 13 I’ll discuss some of that data and the sources in 14 subsequent slides. 15 So how do we develop life-cycle costs? 16 Well, the life-cycle cost is done in terms of the 17 initial installation date for the boiler. It’s 18 basically constructed -- we look at the operating 19 costs over time for the life of the boiler. We then 20 discount all those operating costs which include both 21 energy costs as well as repair and maintenance costs 22 for higher-efficiency boilers. We discount those down 23 to a present value with the year of discount being the 24 same year as the initial purchase of the boiler by the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 4

customer. 1 The installed cost for the boiler on that 2 first year is equal to the customer price which is 3 developed using the Engineering Analysis and the mark4 ups and an estimate of the installation costs for 5 those higher-efficiency boilers. 6 Once those are in constant years dollars, 7 after the discounting of all the operating costs, we 8 simply combine them and we produce life-cycle costs 9 results for each different efficiency level analyzed. 10 DOE actually presents those results in terms 11 of life-cycle cost savings, if there are savings, 12 which is equal to the baseline life-cycle costs minus 13 the standard level life-cycle costs, and, in addition, 14 DOE does a simple payback analysis based on the first 15 year’s energy costs and the initial differences in 16 installed costs between the baseline and higher17 efficiency boilers. 18 So to start off with, I’ll explain a little 19 bit how we did the energy analysis. 20 The analysis methodology that we used here 21 was very similar to what was used in DOE’s 2000 22 Screening Analysis and in fact we used much of the 23 same data set. We used what’s called a full-load 24 equivalent operating hour (FLEOH) approach. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 5

The full-load equivalent operating hour is 1 essentially the ratio of the boiler’s annual heating 2 load that it satisfies to the boiler capacity that was 3 installed and those FLEOH values were developed based 4 on some commercial building simulations that were done 5 back in 2000. 6 Those simulations use seven different 7 building types and 11 different climate locations. 8 Those climate locations were then converted into 9 specific climate regions and estimates of the total 10 boiler stock in those regions was used to weight the 11 results of the full-load equivalent operating hours 12 that were developed for each combination of region and 13 building type. 14 So there were seven building types, 11 15 regions, that’s 77 separate market sectors, and that 16 formed sort of the basis of the loads analysis for 17 commercial boilers. 18 I’ll skip the middle part there for a 19 second. The annual energy consumption for the 20 commercial boilers at each efficiency level is then 21 estimated based on for each market segment, the full22 load equivalent operating hours times the specific 23 boiler capacity that we’re analyzing. The FLEOH’s 24 sort of a normalized value appropriate to lots of 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 6

different sizes of boilers. That’s multiplied by the 1 boiler capacity to get back the original annual load 2 estimate and that’s divided by an estimate of the 3 efficiency of the boiler at each level. 4 I’ve shown seasonal efficiency here. We 5 actually used the thermal efficiency rating for each 6 of the non-condensing classes of boilers. When we got 7 up to the high-efficiency condensing boilers, we 8 recognized that there’s a concern that the actual 9 performance of the boiler is a function of the entire 10 hydronic system and particularly the return water 11 temperature back to the boilers and so we adjusted -- 12 used some analysis to adjust that thermal efficiency 13 for the condensing boilers to a value of about 88 14 percent annually. 15

Yes? 16 MR. BALLO: Tim Ballo, EarthJustice. Is 17 that not also the case for non-condensing boilers? 18 MR. WINIARSKI: They are not so much 19 affected by the return water temperature in general. 20 It has to do with the boiler design, but once you get 21 into condensing boilers, effectively what you can do 22 is you can get a very, very high efficiency on a 23 condensing boiler, 99 percent plus, as long as you 24 have a very low return water temperature, 60 degrees, 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 7

but 60 degrees is not appropriate for most commercial 1 building designs today, and since the majority of the 2 market is a replacement market, we have to kind of 3 look at what’s sort of the most typical applications 4 today for those boilers. 5 MR. BROOKMAN: Harvey Sachs. 6 DR. SACHS: Harvey Sachs, ACEEE. I 7 understand the point, but I would like to comment in 8 two respects. 9 First, and by far the more important 10 technically, is that even with non-condensing boilers, 11 and I claim no great expertise on commercial boilers, 12 there’s room for modulation for outdoor reset 13 equivalent, and I would assert that’s true in almost 14 every system, that there’s a long history of controls 15 changes giving real savings. 16 To ignore that in non-condensing boilers, 17 while computing small differences in life-cycle costs, 18 seems to be rather grotesque. 19 MR. WINIARSKI: And I will be a little more 20 clear then. We did not ignore that. What we did do 21 is we looked at essentially a typical commercial 22 building air-handler and recognized that during 23 periods when you’ve got sort of the peak heating load 24 from the building, that’s typically when it’s coldest 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 8

outside during the year, to meet those peak heating 1 loads that air-handler and the coil within that air2 handler have been designed for a certain supply water 3 temperature and that supply water temperature, in 4 conjunction with the load, provides a certain return 5 water temperature back. Right? 6 The boiler efficiency under those conditions 7 is constrained to some extent by that return water 8 temperature and by the fact that you’re not 9 modulating, you’re at full load capacity, and then we 10 looked at different time periods over the year to sort 11 of estimate how much that efficiency will change as we 12 do reset the return water temperature. 13 DR. SACHS: Harvey Sachs again. Dave, our 14 middle models of the typical application are clearly 15 very different, that your model is that this is 16 providing supplemental heat in a VAV system. That 17 seems to be what you’ve described. 18 My middle model for the more typical 19 application, particularly in the replacement market, 20 is this is providing hydronic heat, either as base 21 heat or as perimeter heat, but it’s the hydronic 22 application for which temperature modulation is highly 23 applicable as long as you maintain that necessary 24 return temperature. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 5 9

There are a lot of ways you can get there 1 and I’m very concerned and would very much like to see 2 the assumptions that you’ve used in your analysis made 3 much more explicit. 4 MR. WINIARSKI: Okay. 5 DR. SACHS: Again, when we’re trying to make 6 decisions on efficiency levels on the basis of very 7 small life-cycle cost percentages, if we’re assuming 8 things that may be of larger impact in our analytical 9 methods but not carrying that sensitivity through, 10 sir, we may have a problem. 11 MR. WINIARSKI: Right. Actually, I would -- 12 I can talk a little more, if you want, a little more 13 in depth. There’s a discussion in, I forget which 14 appendix it is, that discusses sort of the general 15 approach we used, which was actually not based on a 16 VAV system but rather based more on a system design 17 like you discuss, serving a load that is primarily a 18 function of outside air conditions and outside air 19 temperature and varying essentially linearly. 20 DR. SACHS: I think we can take this 21 offline. 22 MR. WINIARSKI: Yeah. 23 DR. SACHS: I look forward to reading the 24 appendix. I’m not prepared to take a test on it yet. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 0

MR. WINIARSKI: Sure. Okay. 1 DR. SACHS: Thank you. 2 MR. BROOKMAN: Tim? 3 MR. BALLO: Tim Ballo, EarthJustice. One 4 follow-up question. 5 I can understand the impact being greater on 6 condensing boilers, but suppose you decrease the 7 efficiency by roughly maybe three percent or so on the 8 90+ percent efficiency boilers. So am I to understand 9 that for a non-condensing boiler, it’d be something 10 less than one percent, the efficiency would be 11 impacted? 12 MR. WINIARSKI: Yeah. And we did not 13 separately adjust the thermal efficiencies for non14 condensing equipment, based on how they might change 15 with a reset water temperature, for instance. 16 MR. BROOKMAN: Other comments on these 17 issues? 18 DR. SACHS: Harvey Sachs again. I’d just 19 like to follow up again by stating I’m far from an 20 expert on boilers, but the argument that we’ve just 21 walked through is very much parallel to the basis 22 under which the advocates and industry negotiated a 23 consensus agreement on residential boilers. That 24 consensus agreement to consider the benefits of 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 1

specific types of controls was rejected by the 1 department a couple of years ago, but it’s a very 2 parallel argument and consequently I am concerned 3 about its treatment in this analysis. 4 MR. BROOKMAN: Thank you. Frank? 5 MR. STANONIK: Frank Stanonik, AHRI. Just a 6 little, I guess, caution about getting too caught up 7 in this question of your conditions of, let’s say, 8 outgoing water temperature and return water 9 temperature. 10 We are at AHRI, we’re involved in putting 11 together some, I’ll say, basic, I’ll daresay, rules 12 for commercial boiler manufacturers to actually 13 provide additional information on how the model will 14 operate at different inlet water pairs, if you will, 15 okay, because in fact, you know, we are getting 16 information from my members that that’s -- when you 17 get into the commercial market, certainly you get into 18 a little more professional designers of systems and so 19 they want that information because they have some 20 ideas of how they intend to, -- there are obviously 21 new applications -- you know, design the system. 22 My point here is that, so you get into this 23 commercial market, there is, I believe, a broader 24 range of what might be considered the design 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 2

conditions of what they want to come out of the boiler 1 and how they want it to come back and so I understand 2 what Harvey’s saying, but I have a little caution 3 about let’s not get too involved in that because it’s 4 not going to be one set of numbers. 5 DR. SACHS: But it will certainly be the 6 best set of numbers. 7 MR. STANONIK: I don’t know -- 8 DR. SACHS: It won’t be a worse set of 9 numbers. 10 MR. STANONIK: Well, it may be worse. I’m 11 not sure about the best. 12 (Laughter.) 13 MR. STANONIK: Universal best, quite 14 obviously. 15 MR. WINIARSKI: Thank you, Frank. 16 MR. BROOKMAN: Mark? 17 MR. KENDALL: Mark Kendall with Burnham. 18 I’m not sure of the relevance to the whole discussion, 19 but I’ll join in. 20 MR. BROOKMAN: Well, would it be useful for 21 the department, the pairings that you’re talking 22 about? 23 MR. STANONIK: It will certainly be useful 24 information, but we’re not ready yet. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 3

MR. BROOKMAN: Okay. 1 MR. STANONIK: I mean, we have an internal 2 working group trying to work that out because within 3 our Certification Program, also, you know, it will 4 have some value for us there, too, to obviously, you 5 know, determine you comply with Federal requirements 6 and then have this, if you will, guidelines by which 7 you have some uniformity of what other information 8 manufacturers provide to their customers. 9 MR. BROOKMAN: Mark, please. 10 MR. KENDALL: Dave, what you said, would it 11 be then accurate to say that in your analysis, you 12 considered outdoor reset for condensing boilers but 13 not for non-condensing boilers? 14 MR. WINIARSKI: Well, technically, what we 15 probably did is we considered the effect that outdoor 16 air temperature reset on the boiler supply water would 17 have on the efficiency when we looked at loads 18 throughout the year for the condensing equipment and 19 we really didn’t look at that effect on non-condensing 20 equipment at all. 21 MR. KENDALL: So the building simulation, 22 did that consider energy losses through distribution 23 losses? 24 MR. WINIARSKI: We have to be kind of 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 4

careful here. The original FLEOH analysis, full-load 1 equivalent operating hour analysis, really only looks 2 at the loads and we didn’t actually do a building 3 simulation of the operation of different boiler 4 efficiency levels. 5 MR. KENDALL: Okay. 6 MR. WINIARSKI: We’ve just done sort of a 7 loads analysis and then sort of scaled those loads 8 with efficiency to come up with what the energy would 9 be and the seasonal analysis is more of a hand 10 calculation for condensing boilers. 11 MR. KENDALL: Okay. Thank you. 12 MR. WINIARSKI: Okay. So once DOE had 13 sort-of annual energy use numbers for each efficiency 14 level and for each class of boiler, we turned our 15 attention to a mark-up analysis. 16 We did a fairly simplified mark-up analysis. 17 For those of you who’ve been involved in other rules, 18 we basically described two general distribution 19 channels for commercial boilers, boilers that are 20 going to new construction and boilers that are going 21 to replace existing boilers that have failed. 22 For the replacements, we assumed that the 23 primary distribution channel is essentially just the 24 mechanical contractor. The owner is having him come 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 5

in and replace a boiler. For new construction, we had 1 both mark-ups that were from the mechanical contractor 2 as well as additional mark-ups from general 3 contractors who would basically be purchasing the 4 service of the mechanical contractor in a new 5 construction situation. 6 DOE went down a route that some of you are 7 familiar with here where we actually tried to develop 8 baseline mark-ups which were applied to sort of the 9 base cost for commercial boilers at the ASHRAE 90.1- 10 2007 efficiency levels and incremental mark-ups which 11 were applied to the incremental costs to go to 12 contractor costs for higher-efficiency boilers. 13 In order to generate those mark-ups, DOE 14 used financial data from mechanical contractors, used 15 a combination of data from ACCA, Air Conditioning 16 Contractors of America, and U.S. Census Bureau data 17 that was available for plumbing, heating and air 18 conditioning contractors. 19 For general contractors, we used a separate 20 set of U.S. Census Bureau data from 2002 for all 21 commercial building and institutional building 22

contractors. 23 In addition, one aspect of the mark-up 24 analysis is to try to capture the impact of sales tax 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 6

and state by state sales tax data was used to assess 1 how much that increases the mark-up on average. I 2 think the national average sales tax is like seven 3 percent and that tax is certainly seen by the eventual 4

customer. 5 Because we had two different distribution 6 channels, we had to develop a split between what 7 fraction of the mark-ups went to new construction 8 versus replacement. The estimate that was developed 9 was roughly two-thirds to one-third, one-third going 10 to new construction. 11 From the analysis, the financial analysis we 12 developed resulted in baseline mark-ups, again 13 starting from the contractors, mechanical contractors’ 14 purchase price to the customer of about 1.48 for the 15 replacement market and 1.77 for new construction, 16 again reflecting the general contractor costs. This 17 averaged with weightings about 1.56 for the entire 18 market. Again that’s the baseline mark-ups applied to 19 baseline contractor costs for the 90.1-2007 levels. 20 DOE also developed the incremental mark-ups 21 that were applied to the increased costs. Those were 22 1.2 for the replacement market and 1.29 for the new 23 construction market, including sales tax. 24 Next, another input that’s important in the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 7

LCC Analysis is what’s going to be the impact of fuel 1 prices going into the future. The lifetime for the 2 boilers was assumed to be 30 years in this analysis 3 starting from the initial installation date and so we 4 had to characterize what natural gas and fuel oil 5 prices in the commercial sector would look like out to 6 essentially mid or early 2040s. 7 To do that, we relied on some fuel cost 8 indices that come from the Annual Energy Outlook that 9 DOE publishes. This was the 2008 Outlook. Those 10 indices go out from 2020 to 2030 -- pardon me. They 11 go out to 2030. 12 We then had to forecast out for the 13 remainder of the analysis period what those indices 14 and increases in fuel costs would look like and that 15 was done by basically extrapolating the last 10 years 16 of data that EIA had, from 2020 to 2030. 17 In addition, the LCC Analysis was actually 18 done on a state by state level. So we used state 19 average commercial oil and natural gas prices that 20 were available from EIA. We then made some fuel price 21 adjustments for each of the different building types 22 by developing sort of ratios of the average costs 23 that’s represented in the 2003 Commercial Building 24 Energy Use Consumption Survey for the specific 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 8

building categories to the national averages in the 1 commercial sector for that year, and so we had some 2 slight fuel price adjustments for each building type 3 that were applied to the state level data and then we 4 forecasted those, as I explained, in the future, out 5 to the end of the analysis period. 6 One thing I do want to point out here is for 7 DOE’s LCC Analysis, the analysis period for boilers is 8 the same period for both boilers at the ASHRAE energy 9 level and developed in the life-cycle cost savings and 10 for boilers at higher-efficiency levels. 11 The reason we did that full 30 years is even 12 though we recognized that there is a time difference, 13 whether DOE adopts standards that are based on ASHRAE 14 versus DOE trying to go further in its analysis 15 period, for life-cycle costing, it’s the analysis from 16 the customer perspective and the customer makes one 17 purchase. He doesn’t do it at two different times. 18 So we kept the same analysis period for both the 19 analysis of life-cycle cost at the ASHRAE level and 20 life-cycle cost at higher-efficiency levels. 21 In addition, other LCC inputs included 22 estimates of installation costs for commercial 23 boilers. We essentially used data that was available 24 in Means Cost Works for 2008 for natural gas, hot 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 6 9

water and steam boilers in looking for the baseline 1 installation costs and in looking at that data, 2 there’s also some data there for oil boilers. It 3 didn’t differ very much and in most cases but for 4 certain classes of boilers, there were not substantial 5 differences, depending on where you looked and so we 6 just assumed that baseline installation costs would be 7 essentially identical for hot water and for oil-fired 8 boilers. 9 DOE also tried to develop installation cost 10 adders that would be appropriate for boilers with 11 higher combustion efficiency levels that would require 12 the use of non-corrosive venting. It’s a fairly 13 simplified analysis of that which I’ll talk about a 14 little later, but essentially I think for hot water 15 boilers, it looks like for boiler efficiencies, 16 combustion efficiencies above about 83 percent, DOE 17 assumed that there would be some additional costs for 18 dealing with the installation of non-corrosive 19 venting. 20 For boilers that went to the replacement 21 market, it was assumed that they would actually have 22 to replace existing venting. For boilers that went to 23 the new construction market, the analysis only 24 included sort of the differential costs between the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 0

stainless steel-type L vents and the baseline, I 1 think, Type B venting. 2 In addition, because the analysis was done 3 at the state level, the installation costs were 4 adjusted using means cost work data for each state, 5 reflecting differences in labor rates primarily. 6 DOE developed discount rates based on data 7 from the businesses that would be appropriate to the 8 seven classes of commercial buildings. The primary 9 source for that was the private businesses. For 10 public assembly and education, we used public sector 11 discount rates and I think roughly those discount 12 rates in real terms were about four to five percent 13 for the private businesses, like office and retail, 14 and a little higher than two percent for the public 15 sector businesses. 16 As I said, equipment lifetime was 30 years. 17 DOE also developed baseline repair costs, again using 18 MARS Facility Cost Database for Commercial Buildings. 19 The repair costs were assumed -- for higher-efficiency 20 levels, repair costs were assumed to increase 21 proportional to the increase in the price of the 22 boiler, reflecting assumedly that you paid more for a 23 piece of equipment, you’ve got more expensive 24 components in that equipment, and you have to replace 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 1

those. 1 DOE also developed maintenance costs based 2 on the RS Means cost works but assumed that those 3 costs would be essentially preventative maintenance 4 and would not vary by efficiency level. 5 Any questions? 6 (No response.) 7 MR. WINIARSKI: So this gets into some 8 issues that DOE would like to get any public comment 9

on. 10 One is the development of installation costs 11 for higher-efficiency levels. DOE’s analysis was 12 admittedly fairly simple here. We looked at 13 essentially replacing a 35-foot flue length that we 14 assumed might be appropriate for commercial boilers, 15 going from a Type B to a Type L venting, and received 16 costs for that by going out to separate Internet sites 17 for vendors of that type of venting. 18 In addition, we assumed that there were some 19 additional costs, although relatively small, for 20 control modifications for higher-efficiency boilers 21 and for condensate removal for both near-condensing 22 and condensing boilers. 23

Yes? 24 DR. SACHS: Harvey Sachs, ACEEE. With 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 2

respect to bullet 2 of slide 30, does this mean that 1 in your purchase price assumptions for the lowest 2 efficiency boilers, you’re assuming a naked boiler and 3 not a replacement of the control package with one 4 specific to that boiler? 5 MR. WINIARSKI: I think for the ASHRAE 6 level, that is true. 7 DR. SACHS: First of all, by your 8 assumptions, a third of the boilers are new 9 installations, so they have to come with a control 10 package and even for the replacement market, it would 11 seem that a reasonable level of understanding of both 12 the potential of a controls package shipped with that 13 base boiler and how many manufacturers are selling it 14 as a naked boiler without controls? Both of these 15 would -- in other words, I’m challenging the 16 assumption that there are no control costs for the 17 lowest- efficiency boilers as shipped. 18 I don’t know that to be the case, but it 19 seems to be an assumption worth thinking about. 20 MR. WINIARSKI: Yeah. And I don’t disagree 21 with you. I think that the -- I forget the total 22 control cost. I think it was on the order of a couple 23 hundred dollars, $500 maybe, equivalent to a control 24 point or so for the system, and we did not necessarily 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 3

assume explicitly that there were no controls shipped 1 with the boiler or not, but we did include a 2 differential control cost for the higher-efficiency 3 boilers and I think you could make a question of 4 whether that would actually be needed or not. 5 MR. BROOKMAN: I was wondering whether data 6 exist, Frank, about -- are these things associated 7 with modular? I was wondering if the controls -- how 8 often -- 9 MR. STANONIK: Frank Stanonik with AHRI. 10 I’m not aware of any available data that would really 11 address this specific issue of, say, the difference in 12 control costs for, let’s say, condensing versus a 13 standard of efficiency. 14 I mean, certainly, at least in one aspect on 15 the condensing product, there probably is going to be 16 some type of control to monitor that you’re getting 17 rid of the condensate, you know. If you have some 18 kind of blockage in your condensate line, it’s going 19 to probably turn the thing off or send some kind of 20 signal. So that would be a control you wouldn’t have 21 otherwise. 22 But as far as any other real data, we don’t 23 have any. I’ve already made a note to the specific 24 question and we would certainly see if we could 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 4

provide some information on what are the, you know, 1 increased installation costs for higher-efficiency 2 equipment, particularly when you get into any issues, 3 and we’ll ask the members. I don’t have anything 4 right now. 5 MR. WINIARSKI: Right. And certainly, you 6 know, one of the control costs that’s obviously in 7 question is how do you incorporate reset controls 8 which are key to the operation of some of the higher9 efficiency boilers and when those come in and may be 10 less key to the operation of more standard efficiency 11 boilers. 12 MR. BROOKMAN: So additional comments on how 13 installation costs could change or potentially 14 increase with higher-efficiency commercial packaged 15 boilers, with respect especially to venting? Any 16 other comments on that? 17 (No response.) 18 MR. BROOKMAN: Okay. No additional comments 19 on that. Okay. Dave, keep going. 20 MR. WINIARSKI: Yeah. And obviously we 21 pointed out here that we don’t have a lot of data to 22 calibrate that, so any information that could be 23 provided would be great from the audience here. 24 So then, in the NOPR, basically DOE 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 5

expresses the LCC savings as national average LCC 1 savings for higher-efficiency levels as well as looks 2 at a distribution of LCC savings that might be 3 expected for higher standards based on its assessment 4 from the market assessment of what efficiencies are 5 actually being sold into the market today and which 6 fraction of the public would actually be impacted by 7 standards set at different levels. 8 Oh, and to add to that, in the distribution 9 of LCC savings, because you’ve got different markets 10 with different loads, you get just a standard 11 distribution, even if you didn’t consider the impact 12 of what efficiencies are being sold into the market, 13 but customers that have high heating loads versus 14 lower heating loads and the different building sectors 15 and different climates. 16 Also within the NOPR, DOE expresses not just 17 the LCC but the payback period results for different 18 classes of commercial boilers, both in terms of a 19 national average payback as well as in terms of a 20 distribution of paybacks for the boiler market. 21 MR. BROOKMAN: Frank? 22 MR. STANONIK: Frank Stanonik, AHRI. Dave, 23 I’m thinking back just a little bit here. 24 In this analysis, specifically on the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 6

condensing boiler, did you include any factor for 1 possible requirement of having to, I’ll say, treat the 2 condensate? 3 MR. WINIARSKI: Not explicitly, no. 4 MR. STANONIK: Okay. 5 MR. WINIARSKI: No, no, and if there’s any 6 data that could be provided that would be great. We 7 did not have any for the commercial boilers. 8 National Impact Analysis 9 MR. WINIARSKI: Shall I go on? Okay. If 10 there’s no questions on LCC, I’ll describe briefly the 11 National Impact Analysis that DOE did. 12 National Impact Analysis looks at both 13 national energy savings over a 30-year analysis period 14 for commercial boilers, in this case ending in 2042, 15 as well as looks at the economic impact to the nation 16 as represented by what it calls a national net present 17 value estimate for each class of commercial boilers at 18 each efficiency level. 19 Again, the purpose was to look at adoption 20 of commercial packaged boilers higher than ASHRAE 21 Standard 90.1-2007 levels. However, in order to do 22 that we actually have to look at because there is this 23 shift in timing between whether DOE adopts ASHRAE and 24 puts standards in place in 2012 or DOE decides to go 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 7

higher and put standards -- higher than ASHRAE and 1 puts standards in place in 2014, we have to actually 2 look at or make an estimate of the current -- what the 3 base case would look like without adoption of the 4 ASHRAE Standards. 5 Then we’d come up with savings for adoption 6 of ASHRAE and then savings for going higher than 7 ASHRAE. The analysis components that are principal 8 for the National Impact Analysis include an assessment 9 of shipments into the future going out through the 10 2042 analysis period, the national energy savings 11 calculations which are based primarily on national 12 average values developed in the LCC Analysis for 13 things like energy costs impacts for the first year 14 and first cost impacts for boilers, and the remainder 15 of the national net present value calculations. 16 To start with, I want to discuss the 17 Shipments Analysis real quickly. Basically, the 18 purpose was to estimate commercial boiler shipments 19 over time for each equipment class. DOE didn’t have a 20 lot of data, historical data on shipments for that and 21 so it essentially took data that was provided by GAMA 22 for 2007 commercial boiler shipments for the classes 23 that would be covered by this rulemaking. I think 24 that was about 36,000 boilers. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 8

It then used data from the Market Assessment 1 to disaggregate that data into shipments by each of 2 the 10 classes of commercial boilers. It put that 3 aside for a second. It then had to make some 4 assumptions in order to generate sort of a shipment 5 profile into the future and one of those assumptions 6 was that on a sort of boiler capacity per square foot 7 basis the new construction market is assumed to look 8 or have the same saturation as the current stock of 9 commercial boilers. 10 It then looked at an average boiler life of 11 30 years which means that essentially the stock that’s 12 out there gets replaced on average about one out of 13 every 30 years or about three? percent of the boiler 14 market is replaced in any given year. 15 It looked at, for new construction, -- well, 16 for those two things, those two assumptions 17 essentially allow us to look at the existing boiler 18 stock being replaced, one every 30 years, and if we 19 know the total square footage out there for the 20 existing commercial stock for buildings using boilers 21 and we know the rate of new construction growth, we 22 can then basically develop a ratio between the 23 fraction of boilers that are expected to go to new 24 construction versus the fraction of boilers that are 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 7 9

expected to go to replacements. 1 It then took the -- for all future new 2 construction in any outyear, it ratioed the growth in 3 boiler shipments for new construction in that year to 4 the 2007 number, based on the ratio of building stock 5 projected for that -- or building growth projected in 6 that year to the 2007 number. That allowed us to make 7 estimates of what the boiler shipments going to new 8 construction would be. 9 For the stock, it’s a little more difficult. 10 For the stock, we have to actually look at a boiler 11 replacement scenario where some fraction of the 12 boilers are removed from the stock and those are 13 replaced but the stock is also continually being added 14 to by new construction and so the shipments model 15 basically used a lifetime for commercial boilers. 16 This time they didn’t use a simple 30-year 17 life but actually used a distribution of lifetimes for 18 commercial boilers and looked at essentially a 19 vintaging process, trying to make an estimate of 20 what’s the vintage in the commercial stock for each 21 year and then what fraction of, say, boilers that are 22 20 years old are going to need to be replaced in any 23 outyear, based on the stock, and that allows us to 24 develop an assessment of the boiler shipments into the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 0

stock. 1 We’ve already got a shipment of boilers in 2 the new construction and you add those together and 3 you get a total assessment of the boiler shipments. 4 MR. BROOKMAN: Harvey? 5 DR. SACHS: David -- Harvey Sachs, ACEEE. 6 This sounds very elegant and you’ve thought about a 7 lot of parameters. I’m a little confused about a 8 couple of things, though. 9 I’d like to draw our attention to Bullet 2 10 under Methodologies, Slide 34. By saturation rate, 11 you mean basically BTUs per square foot? 12 MR. WINIARSKI: Or in our case, it was -- 13 more explicitly, it’s assuming that the 36,000 boilers 14 that are shipped in 2007 on a per square foot basis, 15 you’re going to get essentially the same type of total 16 shipments out there, but it’s not really explicitly in 17 terms of the BTUs, but essentially that’s it. The 18 boilers per square foot. 19 DR. SACHS: This would seem to be 20 problematic on several grounds. One of them is we 21 certainly seem to see replacements of larger boilers 22 with trains of smaller boilers and large-scale 23 retrofit construction for a variety of different 24 reasons. I do not have quantitative numbers on that. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 1

It seems as a second point that since 1 boilers are rated on input capacity but output rises 2 with efficiency for a given input, that there’s 3 automatically some trend towards smaller sizes, even 4 if the envelope standards for new construction have 5 not changed. 6 So taking all of these factors into account, 7 at least for that one-third of the market which are 8 assumed to be new commercial, which we assume means -- 9 includes large-scale retrofits, that we may have 10 substantial changes in your model that are not 11 accounted for in terms of shipments, and I haven’t 12 even talked about what we assume to be very large 13 over-sizing which may be getting a sharper pencil in 14 terms of replacements and new construction than has 15 historically been the case. 16 Low cost of incremental capacity has 17 certainly led to anecdotal suggestions that 18 residential boilers, and I assume commercial boilers 19 are way over-sized relative to actual loads, and that 20 circles back to the controls question, as well. 21 MR. WINIARSKI: Right, right. And I can try 22 to respond maybe a little bit to what I think was 23 maybe the first point there, which is the issue about 24 sort of replacing larger boilers with modular boilers, 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 2

and in fact based on how we did this, the real 1 assumption here is that the boiler stock -- maybe it’s 2 not a correct assumption, but that the boiler stock in 3 terms of total BTUs of boilers out there would look 4 very similar to the current shipment distribution. 5 So if there’s a -- what we’re essentially 6 assuming here, because we’re trying to develop the 7 ratio between shipments to new and shipments to 8 existing stock, is essentially that the total 9 shipments or that the market looks very similar 10 between those two and maybe that’s a good way to -- 11 your assumption that’s basically on BTU capacity basis 12 is probably the cleanest way to think about that. 13 We are actually assuming that I need to 14 replace this fraction of the square footage, however 15 that’s served, whether it’s large or small boilers, 16 with something that looks very similar to what’s 17 shipped in the current market. 18 DR. SACHS: What I’m trying to drive at on 19 that point -- Harvey Sachs again -- is that the 20 explicit goal of 90.1-2010 is a 30 percent load 21 reduction relative to ’99. 2007, which is what’s on 22 the table today, is partway down that curve or of that 23

curve. 24 So that, again, I don’t know how it comes 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 3

out and we want to fully support the agreements we 1 came into the room with, but in terms of ongoing 2 analytical methodologies, the assumption seems to be a 3 good zero order of approximation but I’m not sure it’s 4 first order. 5 MR. WINIARSKI: Right, right, right. 6 DR. SACHS: Thank you. 7 MR. BROOKMAN: Thank you. Frank, you okay? 8 MR. STANONIK: No. I mean -- Frank 9 Stanonik, AHRI. I mean, as Harvey said, clearly there 10 is some replacement situations where a large boiler 11 gets replaced with either modular boilers or even a 12 set of staged boilers and I don’t really have any, you 13 know, information as to what level that occurs. 14 I mean, you know, we all see that it happens 15 and there’s certain reasons why in some applications 16 it makes a lot of sense. 17 On this 90.1 issue, I mean certainly the 18 focus of 90.1 has been trying to promote, well, first 19 of all, better sizing and better system design, 20 certainly was a target to reduce overall consumption 21 by 30 percent compared to ASHRAE 90.1-1999. 22 I mean those were all factors, but beyond 23 recognizing that, I don’t have any remote idea of how 24 much they really matter or what effect they have. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 4

Obviously they have some effect. 1 MR. WINIARSKI: Right, right. So I guess 2 the only last point on there is because we didn’t have 3 good shipment data on the vintages and the existing 4 stock going out, you know, going back 30 years or 5 however long boilers last, we had to make an 6 assessment of what those vintages might look like and 7 that assessment was fairly -- again, maybe it’s a zero 8 order approximation, but it was assumed that within 9 that stock we had sort of a steady state shipment of 10 commercial boilers in that stock and then using the 11 survival function with its average 30-year life tried 12 to make an assessment of, you know, what fraction of 13 those boilers in older buildings were, you know, 14 getting ready to be replaced or nearing the end of 15 their life versus those in newer buildings which might 16 last longer. 17 So once we got the Shipment Analysis, we 18 actually start really doing the National -- yeah. Go 19 ahead. 20 DR. SACHS: I’m sorry. Harvey Sachs again. 21 MR. WINIARSKI: Should I go back to 22 Shipments? 23 DR. SACHS: Please. 24 MR. WINIARSKI: Okay. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 5

DR. SACHS: You piqued my interest with the 1 reference to a survival function in the last primary 2 bullet. 3 MR. WINIARSKI: Mm-hmm. 4 DR. SACHS: That would imply a fair fraction 5 of very early replacements and a long low replacement 6 life that want to start dying at the same time, dying 7 quickly. 8 Is there any evidence for a lot of early 9 replacements in the commercial boiler market or how do 10 you handle not having that occur? 11 MR. WINIARSKI: I’m not sure I understand 12 the question. When you say a lot of early 13 replacements? 14 DR. SACHS: It depends on a lot of infant 15 mortality, stuff that’s -- 16 MR. WINIARSKI: Well, the function basically 17 gives us a -- I think there’s in the TSD, there’s a 18 picture of what the life-cycle or the survival 19 function looks like, but essentially what it does is 20 instead of just stopping at 30 years, what we actually 21 see is that some fraction of the boilers are dying 22 maybe at the 20-year time frame and some are lasting 23 out to the 40-45, but in that particular function, 24 there are very, very few early, really early 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 6

replacements. There’s sort of a general trend that 1 goes out to 20 and then slows down. 2 MR. BROOKMAN: Go ahead, Frank. 3 MR. STANONIK: One other factor, admittedly 4 regional, okay, but one of my favorite places is 5 Southern California. They have been very aggressive 6 with NO X emissions regulations on boilers and to the 7 extent I would say they’ve put in some requirements 8 that in fact would promote the replacement of boilers 9 not because they’ve failed but in fact because they 10 wanted -- because of their air pollution needs and so 11 they’ve actually put in some programs that -- because 12 I’ve been involved in those discussions -- that you 13 could say, well, this boiler is only nine years old 14 but, unfortunately, you installed it back at the wrong 15 time and we want to have ones that only emit, you 16 know, 50 nanograms, so you’re going to need to replace 17 it by three or four years down the road. 18 So that might be -- my only point is that 19 other influencing factors are going on, I think, in 20 many places that affect how long you kept that boiler 21 that you bought. 22 MR. WINIARSKI: Right. So, as I said, the 23 national energy savings was calculated for a period 24 that started from 2012 through 2042 for all efficiency 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 7

levels. However, for levels that were higher than the 1 actual baseline, it was assumed that that would only 2 go in place in 2014. So it is an effect of this two3 year delay for not adopting the ASHRAE Standards and 4 that does have an effect on the total energy savings 5 over the life of the product. 6 The national net present value calculations 7 cover the total life-cycle cost and installation and 8 operational expenses that occur for all the equipment 9 shipments in that original energy savings analysis 10 period which means that boilers that are shipped out 11 in 2042 would last till the end of their life which 12 goes all the way out to, in this analysis, 2085. 13 I think by 2085 there’s something like one 14 percent of the boiler stock that hasn’t been replaced 15 and we just said that was good. 16 Let’s see here. As I said, there was a two17 year delay that was taken into account. Energy 18 savings for adoption of the ASHRAE Standard 90.1-2007 19 levels were based on Market Assessment of the average 20 of thermal efficiency of boiler shipments and the 21 stock below that ASHRAE efficiency level and replacing 22 those boilers. 23 The analysis is again based on national 24 average values from the life-cycle cost, including 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 8

customer prices, annual energy use and energy prices, 1 annual repair and maintenance expenditures from the 2 LCC Analysis. 3 Because we have to look at the operational 4 costs over this long life period, we actually have to 5 extend or make estimates for fuel prices going out to 6 2085 which is something I was really loathe to do, as 7 you might guess, but we’ll talk about that in a 8 second. 9 Let’s see here. The analysis used a 10 distribution of boiler shipments assumed to be the 11 base case distribution for those of you who are 12 familiar with other rules. That distribution was 13 again based on the Market Assessment which was itself 14 based largely on estimates of the models available at 15 each efficiency level. 16 As higher energy standards were assumed to 17 come into place, including the ASHRAE Standard, as 18 well as higher ones, the effect of that on the 19 distribution of efficiencies in the market was assumed 20 to essentially roll up the efficiencies for all 21 products that, in the base case, were shipped below 22 the assumed standard level up to the standard level. 23 It was also assumed to not have any impact 24 on the shipments of higher-efficiency boilers, the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 8 9

underlying assumption being there that purchasers of 1 higher-efficiency boilers have already done their 2 economic analysis and they’ve decided this is the 3 level that was satisfactory to them and they would not 4 be affected by a change in the national standards, 5 national minimum standards. 6 This is the fuel crisis. It’s just like the 7 LCC Analysis. They’re based on an extrapolation of 8 the EIA data from AEO2008, 2020 to 2030. Of course, 9 because you’ve got operational costs extending out to 10 2085, that’s a long ways to extrapolate those type of 11 gas and oil prices and we’re fully cognizant of that. 12 So we welcome any better suggestions on how that could 13 be done. 14 MR. BROOKMAN: Harvey? 15 DR. SACHS: For Lane Burt with NRDC, when 16 did you include a carbon factor? 17 MR. WINIARSKI: Well, -- 18 DR. SACHS: When did you begin including a 19 carbon factor? 20 MR. WINIARSKI: -- we have not actually done 21 that yet. 22 DR. SACHS: Thank you. 23 MR. WINIARSKI: However, I will talk a 24 little bit to that. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 0

As DOE was working through the process of 1 this rule and trying to follow the law as outlined in 2 EPCA, which basically said that DOE had to carry 3 through sort of an LCC and an NIA Analysis, that’s 4 sort of a shortened list to get to this point in the 5 rulemaking. 6 DOE was not required to do certain other 7 steps that actually exist for other rulemakings for 8 other products, including with those was a 9 manufacturer impact analysis which some of you have 10 seen before. 11 Also included was an environmental 12 assessment. However, to address that point and to 13 address other concerns within NEPA, DOE is going 14 through the process of developing an environmental 15 assessment for boilers. 16 MR. BROOKMAN: Tim, you have a comment? 17 MR. BALLO: Tim Ballo, EarthJustice. First, 18 I’m not clear on why the Department thinks that part 19 of the analysis was not required at the NOPR stage for 20 this rulemaking. 21 MR. BROOKMAN: Ashley? 22 MS. ARMSTRONG: Like Dave said, it’s being 23 done right now. It’s going to be online as part of 24 the NOPR comment period. 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 1

MR. BALLO: Oh, okay. So it will be 1 available? 2 MS. ARMSTRONG: It will be available online, 3 so it’s coming. It’s just not -- it wasn’t published 4 in the NOPR. 5 MR. STAS: And if we could go back in time, 6 we would have put it in there. 7 MR. BROOKMAN: Thank you, Eric. Tim? 8 MR. BALLO: Second question. In the 9 rulemakings concerning residential products that are 10 fossil fuel-fired, the department has begun 11 calculating the impact of the efficiency standards at 12 various levels along the actual price of energy, on 13 the price of natural gas that is consumed? 14 I’d encourage the department to do something 15 similar in this rulemaking. I don’t know if that’s on 16 the table or not, but it was shown in the preliminary 17 TSD to be a very significant economic impact and there 18 may be a significant economic impact here, as well. 19 MR. BROOKMAN: Okay. Frank? 20 MR. STANONIK: Frank Stanonik, AHRI. A 21 different question and I just want to make sure I 22 understand this. 23 So when you looked at this analysis and you 24 had this distribution of efficiencies, you didn’t -- 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 2

besides -- except for the roll-up, you didn’t assume 1 any change in that distribution? As an example, you 2 know, clearly for other products, we have seen growth 3 in the condensing product market, driven by, you know, 4 market forces and other things. 5 So in this analysis, you didn’t assume as an 6 example that there would be some, let’s say, steady 7 growth in condensing, certainly gas-condensing 8 commercial boilers over the years? 9 MR. WINIARSKI: We didn’t, and we actually 10 have a question for what might be a better assumption 11 or what data we might be able to use to develop a 12 better assumption of how the market might change in 13 the absence of DOE setting standards or even in the 14 case where DOE does set standards but there’s more 15 room left in the market. 16 MR. STANONIK: We are -- we’ve -- well, let 17 me separate residential from commercial. Commercial, 18 I think we’re still in the process of trying to in 19 fact create some statistics program that would try and 20 capture that growth, but if we can, we’ll certainly at 21 this stage try and give you what we would see as at 22 least a good estimate. 23 We can’t go back and recreate the historical 24 data we don’t have. We’ll try and answer at least 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 3

part of that question. 1 MR. BROOKMAN: Let’s go to the Questions 2 slide. 3 MR. WINIARSKI: Right here. SO DOE in its 4 National Impact Analysis, in review of that analysis, 5 came up with three separate issues that I wanted to 6 discuss here. 7 The first one is based around the term I’m 8 not sure everyone’s familiar with which is “rebound 9 effect” in the analysis. A rebound effect is 10 essentially what might happen to the market in terms 11 of energy use for boilers if you change the efficiency 12 of a product, raise the efficiency from an 80 to, say, 13 an 85 percent. 14 Will people actually use the boiler more at 15 the 85 percent level because it’s less costly to 16 operate and therefore you don’t capture all the energy 17 savings that you might have if you just looked at the 18 change in efficiency levels and sort of a constant 19 load, you don’t capture all that because there’s this 20 rebound in energy use based on greater utilization of 21 the product? 22 DOE, in this analysis, did not examine the 23 rebound effect or what the implications might be. 24 Generally, the idea is that if there is a rebound 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 4

effect, the total energy savings you calculate for 1 higher-efficiency products is less than you would 2 calculate if you didn’t assume that. 3 I think for the primary reason DOE is not 4 assuming one is basically that these are for 5 commercial buildings. It’s assumed that those 6 buildings are basically providing a constant level of 7 service in keeping the space temperatures appropriate 8 and there would be no additional utilization of 9 boilers just because they’re more efficient. 10 MR. BROOKMAN: Briefly describe the other 11 two questions. 12 MR. WINIARSKI: The other ones gets to what 13 Frank was talking about. If there’s -- on DOE’s 14 assumptions about the market and anything that results 15 in over-estimation of the savings that can be based on 16 the assumptions about the baseline market for boilers, 17 and DOE requests any data that would allow it to 18 better characterize increases in packaged boiler 19 efficiencies that would occur over the analysis 20 period, absent amended standards. Exactly what you 21 were saying, Frank. 22 DOE also seeks comment on its forecasted 23 base case distribution of efficiencies and how that 24 amended energy conservation standards might affect 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 5

that distribution of efficiencies. Primarily, DOE’s 1 getting at the issue of is it a simple roll-up or in 2 fact if DOE sets a standard at a higher level, will 3 the market shift to purchase -- greater purchases of 4 equipment at even higher levels? The idea that maybe 5 there’s some fraction of the market that purchases two 6 percent over whatever the base standard is. 7 MR. BROOKMAN: So three questions for you to 8 consider, if you have responses to those. 9 MR. STANONIK: Well, we don’t really have 10 anything right now, but we’ll submit something -- 11 MR. BROOKMAN: Okay. 12 MR. STANONIK: -- in our written comments. 13 MR. BROOKMAN: Thank you. 14 MR. WINIARSKI: So the NOPR presents the 15 national energy savings that were calculated for each 16 of the efficiency levels analyzed and for each product 17 class or equipment class. 18 DOE calculates the net present value 19 savings. Because those are discounted in the future, 20 DOE uses both three and seven percent as sort of 21 spanning the range of discount rates that might be 22 appropriate for the analysis, and again the net 23 present value assumes that in the ASHRAE case, the 24 standards go in place in 2012 and DOE adopting higher 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 6

standards, those standards would not go in place until 1
2014. 2 And I think that’s it for National Impact 3 Analysis. 4 MR. BROOKMAN: So no additional -- okay. So 5 thank you, David. 6 Now, there’s another opportunity for anybody 7 that wishes to make supplementary remarks, bring any 8 other issues to the floor that haven’t been mentioned 9 so far, make concluding summary remarks, that sort of 10 thing. 11 So if anybody wishes to do so before we hear 12 from Mohammed, his closing comments? Yes, Mark? 13 MR. KENDALL: Mark Kendall from Burnham. 14 I’ll just say that from Burnham’s perspective, we 15 support the direction DOE is heading in its NOPR and 16 we urge you to carry it to its natural conclusion and 17 issue a final rule as soon as you can possibly do it. 18 MR. BROOKMAN: Thank you. Harvey Sachs. 19 DR. SACHS: Harvey Sachs, ACEEE. We 20 appreciate the department’s work. Some pieces of the 21 ASHRAE 2007 Standards involve a consensus among 22 manufacturers and certain members of the advocacy 23 community and we are bound by those agreements. 24 MR. KENDALL: Oh, gee, what an overwhelming 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 7

endorsement. 1 (Laughter.) 2 MS. ARMSTRONG: Can I do one follow-up just 3 to clarify those consensus for boilers? 4 DR. SACHS: Now you’re putting me on the 5 spot. 6 MR. BROOKMAN: And those binding agreements, 7 they’re pretty much reflected in what’s here. 8

DR. SACHS: Yes. 9 MR. BROOKMAN: Also for the record, yes. 10 Frank? 11 MR. STANONIK: Frank Stanonik with AHRI. 12 Just want to make sure everybody keeps this in mind 13 and it’s something we certainly -- I’ve said probably 14 too many times. 15 In a bigger picture way, you know, 16 supporting where DOE is going with this, there is a, 17 I’ll call it, residual value from changing over to 18 thermal efficiency, you know. We, unfortunately, have 19 had to debate twice this whole how this combustion 20 efficiency compares to thermal efficiency for boilers 21 and all of that. 22 If we make this transition as we go forward 23 and between what ASHRAE’s trying to do and what now is 24 in Federal regulations, you know, these requirements 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 8

will be revisited with obviously an eye towards 1 increasing them somewhere down the -- in the future. 2 I mean if ASHRAE doesn’t do something, I 3 think DOE has to look at commercial requirements every 4 seven years. Anyhow, so there are things in place 5 that, you know, these will be discussed further in the 6 future with an eye towards obviously raising them, but 7 making this transition to thermal efficiency certainly 8 now better positions us all to discuss reasonably and 9 with -- you know, let’s say focusing on how we do save 10 more energy without worrying about how the hell we 11 measure it in the future and that is -- you know, 12 that’s not an insignificant value in this whole 13 rulemaking. 14 MR. BROOKMAN: Thank you. Additional final 15

comments? 16 (No response.) 17 MR. BROOKMAN: Okay. Then yes. 18 Proposed Standard Levels 19 MR. KHAN: I just wanted to get these on the 20 screen here. We already talked about, I guess, some 21 of the last and final comments that you may have. 22 These were in the Notice obviously. This is a Summary 23 of the Standard Levels, okay, and again just to 24 conclude and summarize about submitting comments, 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 9 9

again they’re very, very appreciated and we would like 1 to get whatever comments and data, of course, that you 2 can provide and the way to do that, Brenda Edwards, 3 she’s not in the room right now, I think she might be 4 outside, we would like for you to please submit your 5 written comments to her via these ways here, then 6 again, by the close of the comment period which is 7 June 3 rd , 2009. 8 So I think we’ve had a very good exchange of 9 information here and all of your comments and concerns 10 we will address and consider fully. 11 Discussion of Proposed Standard Levels, Other Issues 12 and Final Remarks from Interested Parties 13 MR. BROOKMAN: Harvey Sachs. 14 DR. SACHS: Harvey Sachs, ACEEE. Mohammed, 15 thank you very much for a well-organized process. 16 I guess with respect to the preceding Slide 17 40, I don’t understand the last column, Effective Date 18 March 2 nd , 2022. Where did that come from? 19 MR. WINIARSKI: I can maybe speak to that. 20 MR. BROOKMAN: Dave Winiarski, find a 21 microphone. 22 MR. WINIARSKI: My understanding was that in 23 the development of the ASHRAE 90.1 efficiency levels, 24 for certain classes of boilers, ASHRAE effectively 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 00

said that -- and I think it’s the natural draft steam 1 boilers, that in 2020, in the standard, that the 2 ASHRAE Standard efficiency levels would be raised for 3 those classes of boilers from what was being proposed 4 to be the standard in 2010, moved up, I think, like 5 two percentage points or something like that. 6 MS. ARMSTRONG: Yes, 0.77. 7 MR. WINIARSKI: Right. So because of that 8 effectively, DOE, when it set standards, has to 9 incorporate that in its final language, standards 10 language. 11 DR. SACHS: Well, I don’t understand how 12 that extrapolates from natural draft steam boilers to 13 all the other product classes. 14 MS. ARMSTRONG: It’s just the way it’s shown 15 here. 16 DR. SACHS: I’m sorry. I’m not a lawyer. 17 I’m pretty naïve, but this column seems to bear the 18 intent of the Department to declare an effective 19 standard of, for example in the first row, 80 percent 20 E of T for hot water commercial packaged boilers that 21 are gas-fired between 300,000 and 2.5 million BTUs per 22 hour and I think that’s far beyond the scope of what’s 23 been discussed. 24 MR. WINIARSKI: You mean the second column? 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 01

DR. SACHS: Yes, the second column, the 1 second yellow column, the far right column, Effective 2 Date March 2022. 3 I would request that the Department delete 4 that column entirely. I don’t think it’s relevant to 5 this rulemaking. 6 MR. BROOKMAN: I see. We get your point. 7 MS. ARMSTRONG: We get your point and Dave’s 8 point is that you’re anticipating something that might 9 -- do you know it’s going to happen? 10 MS. ARMSTRONG: No. Where it says 77 to 79, 11 Harvey’s saying just retain that March 2 nd , 2022, 12 effective date for just those two equipment classes, 13 leave the other ones out. 14 DR. SACHS: I’m suggesting, now that I -- 15 and again, this is new to me. I hadn’t expected to 16 see this and it’s my deficiency in not doing all the 17 homework. I didn’t think this would be on the test. 18 But I do not believe it’s appropriate in a 19 rulemaking about effective date March 2 nd , 2012, to 20 pre-ordain any standards for -- to be effective March 21
2 nd of 2022. 22 MS. ARMSTRONG: Even those two Tier ones 23 that were set by ASHRAE? 24 DR. SACHS: I cannot see any reason why the 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 02

department would choose to bind itself today to any 1 standards in 2022. I don’t believe that was the 2 subject of any of the ASHRAE discussions. 3 MR. STANONIK: Well, it wasn’t. 4 MR. BROOKMAN: Frank? 5 MR. STANONIK: Frank Stanonik with AHRI. I 6 can -- specifically to the issue of the steam natural 7 draft, in this case we would disagree with Harvey. 8 It is, from our view, worth having that 9 second level with the effective date. It was part of 10 the ASHRAE discussions and really what’s behind all 11 that is, first of all, this category, natural draft 12 steam gas-fired boiler, very roughly small part of the 13 market, and what was -- what we were trying to do 14 then, it was actually part of the negotiations, what 15 we were trying to do is some, I’ll daresay, initial 16 incremental change and essentially agreed to allow a 17 little more time to really make a bigger efficiency 18 change for this small segment of the market and so the 19 reason we would prefer -- it’s here because it does 20 indicate to the people making that product, okay, you 21 know, this first level has some effect but be aware 22 that essentially in 10 years, we want -- well, the 23 agreement was that that steam product would be as 24 efficient as other -- well, in this case the non- 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 03

natural draft, I think it is. 1 MR. BROOKMAN: Okay. Thank you for those 2 comments, both those comments. 3 DR. SACHS: Harvey Sachs, ACEEE. I will go 4 back to those who were involved on our side, but at 5 this point, my request would be that the right-most 6 column be deleted unless our comments indicate that we 7 are bound by the two rows for atmospheric or natural 8 draft. 9 MR. BROOKMAN: Okay. Thank you. Yes, Mark? 10 MR. KENDALL: Mark Kendall with Burnham. 11 The levels in the proposed rulemaking are going to 12 result in energy savings. They’re going to result in 13 boilers being modified, boilers being taken off the 14 market. 15 That’s no more clear than in the gas natural 16 draft steam boiler products which essentially are 17 being eliminated by this standard in 2022 and the 18 accommodation was given to those products to have an 19 extra 10 years because commercial buildings with 20 basement with boiler rooms that have a low head room 21 currently have no product that can be used in those 22 applications, except for these products, and the 23 general feeling of ASHRAE, I suppose, was that this 24 extra 10 years can help building owners and 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 04

manufacturers decide what to do about that. 1 The presentation format by the Department, I 2 would agree, does mislead people to think that these 3 rules have been determined for all the other nine 4 product classes for the next 20-30 years which 5 certainly isn’t ASHRAE’s intent and wasn’t the intent 6 of the negotiating party that made the proposal to 7

ASHRAE. 8 But regardless, it’s DOE’s prerogative to 9 change those any time ASHRAE makes a change and that 10 column will, if it shows up in the rule, will just be 11 there until it’s changed. 12 DR. SACHS: Point well taken, Mark, but the 13 dynamic at ASHRAE would be -- would likely be 14 influenced by reference to what DOE has done. 15 MR. BROOKMAN: Okay. I think we’ve heard 16 it. Thank you. 17 Then closing remarks from Mohammed and I 18 would encourage all of you, at the back of your packet 19 there’s an Evaluation Form, please take a few seconds 20 to fill it out. The department reads them carefully. 21 Next Steps and Closing 22 MR. KHAN: Again, thank you for the final 23 comments regarding these final slides here and the 24 clarifying points that everyone has just made, as 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 05

well. 1 We will make that clear in the final rule, 2 what the intent is, and again I just want to express 3 our appreciation for your participation and please get 4 us the comments that you will submit. 5 Thank you very much. 6 MR. BROOKMAN: Thank you. 7 (Whereupon, at 11:45 a.m., the public 8 meeting was concluded.) 9
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**REPORTER'S CERTIFICATE** 22

23 This is to certify that th e attached proceedings 24

before: 25**EXECUTIVE COURT REPORTERS, INC. (301)**  **565-0064** 1 06

**UNITED STATES DEPARTMENT OF ENERGY** 1

In the Matter of: 2

**PUBLIC MEETING ON THE NOTICE OF PROPOSED RULEMAKING** 3 **FOR CERTAIN COMMERCIAL AIR CONDITIONING, HEATING, AND** 4 **WATER-HEATING EQUIPMENT** 5 6 Were held as herein appe ars and that this is the 7 original transcript ther eof for the fi le of the 8
Department, Comm ission, Board, Admini strative Law Judge 9 or the Agency. 10 Further, I am ne ither counsel for or related to any 11 party to the abov e proceedings. 12

13

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### Wendy Greene 15 Official Reporter 16 Dated: April 10 , 2009 17

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